Land value

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tom4018

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I'm sure thats a part of how they arrive at the tax value. The tax values go up frequently, I dont know as much about this as I should. Lots of folks around have always went and argued the values down because the land is being used for agricultural purposes. I'm afraid that may be counter productive when it comes to selling though.
Tax values are set so much for timber ground, pasture and crop. They are taxed at lower rates than say a 5 or 6 acre tract. I grew up in Lexington and moved in 1995. We tried buying just a few acres within 30-40 minutes of Lexington and it was crazy high, back then hard to too much for less than 5,000 a acre. I spoke with a realtor about a farm someone was trying to sell me, 12-1500 for timber land, most pasture 2500 or so, crop ground 3500 or so, some areas around me are a lot higher but have seen several farms average 3500-4000 a acre with no buildings. Road frontage and how dividable it is plays a part not counting the buildings. Size of the tract affects value a lot also. Roughly how big of a place is it?

I had to have mine appraised 4 years ago for a equity loan and they put $1700 average on the land with about 60% of mine being wooded, hardly any road frontage as we are off the main road on a chip and seal road.
 
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greybeard

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I'm sure thats a part of how they arrive at the tax value. The tax values go up frequently, I dont know as much about this as I should. Lots of folks around have always went and argued the values down because the land is being used for agricultural purposes. I'm afraid that may be counter productive when it comes to selling though.
Taxable value and 'fair market value are 2 different things in most states, due to the production value/potential of the land. (we get a different kind of valuation on ag land here in Texas which equates to a tax exemption but that does not affect market value when it coms to sale time. The ability of land to qualify for 'ag' here is always considered a plus unless the buyer is a subdivision developer)

But you are correct. Arguing down general valuations for tax purposes is a double edged sword that cuts both directions.
OTOH, places that sell for more than they are realistically worth (like the places I pictured above) are one of the causes of encountering high land prices when buying.
There's appox 125 acres in that picture and my father once owned all of it in the three 41.4ac parcels. He paid a total (interest not included) of right at $42,000 for it in '64/'65. Approx valuation today is around $960,000.
 
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Ky hills

Ky hills

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Tax values are set so much for timber ground, pasture and crop. They are taxed at lower rates than say a 5 or 6 acre tract. I grew up in Lexington and moved in 1995. We tried buying just a few acres within 30-40 minutes of Lexington and it was crazy high, back then hard to too much for less than 5,000 a acre. I spoke with a realtor about a farm someone was trying to sell me, 12-1500 for timber land, most pasture 2500 or so, crop ground 3500 or so, some areas around me are a lot higher but have seen several farms average 3500-4000 a acre with no buildings. Road frontage and how dividable it is plays a part not counting the buildings. Size of the tract affects value a lot also. Roughly how big of a place is it?

i had to have mine appraised 4 years ago for a equity loan and they put $1700 average on the land with about 60% of mine being wooded, hardly any road frontage as we or off the main road on a chip and seal road.
136 acres on the side of the road that we live on and a 12 acres on the other side with a rental house.
 

tom4018

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136 acres on the side of the road that we live on and a 12 acres on the other side with a rental house.
I would think in the Winchester area it would have some good value unless the ground is really rough or way off the beaten path.
the 12 acres sold separately would have more potential buyers than the larger tract. I am 30 minutes from Bowling Green and it seems to be getting high there.
 
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Ky hills

Ky hills

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I would think in the Winchester area it would have some good value unless the ground is really rough or way off the beaten path.
the 12 acres sold separately would have more potential buyers than the larger tract. I am 30 minutes from Bowling Green and it seems to be getting high there.
Yes I can imagine that property is getting higher in and around Bowling Green it’s really grown. Ours has some hills but close to town and road frontage on a state road. If it came down to it we could section off the bigger tract.
 

simme

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An appraisal is probably the best way to estimate value. But in the end, a piece of property (real estate, cow, tractor, vehicle) is worth whatever someone will pay for it - no more. There can be a great deal of variation in that over time depending on circumstances and awareness, supply and demand. To the owner, it can be "worth" whatever he wants it to be. But in order to sell, agreement is required from BOTH the buyer and seller.

I am sure of this - People often pass on the purchase of land thinking it is too expensive and they can't afford it. Then 20, 30, 40 years later, they can't believe they passed up on it. They realize it was a bargain. Amount of land is fixed. Amount of farm land is decreasing. Number of people wanting to buy land is increasing. Price is going up most places.
 

Bigfoot

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For tax purposes here (west Ky), our pva office goes by the soil map. Better ground higher appraisal. Thankfully, comparable sales are not used.

Your land is worth much more than what can be “farmed” out of it, just based on location. Your in a spot, where it’s worth whatever somebody will pay. Hang out there as high as you want, and hope somebody buys, that won’t be working off an appraisal.
 

kenny thomas

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For tax purposes here (west Ky), our pva office goes by the soil map. Better ground higher appraisal. Thankfully, comparable sales are not used.

Your land is worth much more than what can be “farmed” out of it, just based on location. Your in a spot, where it’s worth whatever somebody will pay. Hang out there as high as you want, and hope somebody buys, that won’t be working off an appraisal.
I totally agree that your sale potential is way more than can ever be farmed out of it.
You are a millionaire several times over I'm betting and havent even thought about it like that. Dont get in a hurry. Its worth a fortune just because of where it is.
 
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Ky hills

Ky hills

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Well..... there are some questions which shouldn't be asked especially on the internet. How much money do you have in the bank, how many cattle do you have, and how much money you made on a deal are a couple of them.
My wife would agree 100% with that. When people ask how many cattle we have she will sometimes respond by saying that's like asking how much money you have.
 

RDFF

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The "value" of "farm land" is high, not because it's "worth that" as farm land, but because everybody is counting on its "value" to keep going up, and up, and up. Historically, that assumption is right. Land IS a limited commodity. Populations DO keep increasing, thereby increasing demand for land. But this phenomenon of people who have financial resources to "invest" in land, rather than "purchase land to make a living from it" is exactly why the day of a "farmer" actually OWNING the farm that he farms on, is becoming a thing of the past. More and more and more "tenant farmers", because most of it is becoming owned by "investors". And THAT is driving the young farmers opportunities right out the window.

It is what it is. I can't blame anyone who is in a position to be selling for looking for the highest bidder. But that's not likely to be a young fellow wanting to make a living farming. It's why ranchers in Idaho and Montana complain that the neighborhood is being taken over by Californian's looking for vacation properties. They're developing grazing ranchlands into housing subdivisions... and no rancher can begin to compete with the money they bring to the table. So they too eventually cave to the $$ pressure, and sell their ranch to the highest bidder too... or they'll be taxed right off of it.

Very sad to see. And it's everywhere, all across the country. Show me how you could ever compete with offers of $6000/acre, and pay that when you need 20-50 acres per C/c pair or more just to keep her fed? Can't be done. Can't even be done on land costing $1000/acre..... think of it, even at VERY low interest, let's say 3%........... $1000/acre x .03 = $30/a interest x 20 acres = $600 per year... JUST INTEREST. Is that one calf going to generate that much profit? Not a chance. And those are bare bones MINIMUM dollars.

Ah, but you say, if you can just pay the interest, it's going to be worth X$$$ when you want to sell it. Not for grazing ground it won't. And there goes the neighborhood, AND the industry. The face of our nation is changing, and farming/ranching as we know it is going to become a thing of the past unless we change this progression. We have a choice to make, and it's not going to be easy. Either we preserve agricultural land for agriculture, or we throw in the towel, and admit we're going to let it all be developed for housing and commercial purposes.

I'm in pure cash cropping area, live in a township where all of the land is zoned "ag protection district", with fairly restrictive "anti-development" resolutions on the books. The land is STILL mostly bought up by investment $$ by absentee landowners, or by the "big operators" with future sale planned to the same. It's ALL then "investment $$$" based on increasing land values driven by development for purposes OTHER than agricultural uses. NO opportunity for the young agriculturalist in that environment.
 

greybeard

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My sister signed the contract with realtor yesterday to sell 41ac immediately south of me. Completely unimproved & wooded, currently under ag exemption cattle grazing. (but would lose that next year because it isn't 75% clear open space) 2/3 of it floods badly (worse than mine) Asking $249,900 for it.
The realtor's ad came out on website today. Someone is coming tomorrow to look it over.
People are nuts.

I will be out of cows and out of this county just as soon as I can get it all done and sold.
 

sstterry

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My wife just sold 18 1/2 acres this fall here in Tn for around 9k an acre. Property and home sales are through the roof around here.
 

RDFF

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10 ac piece adjoining my land sold a year ago (it "should" be a part of my farm... just that little corner taken out of my "half section"). Partially brushy woods, full of brush on what used to be "farmland"... hasn't had anything done to it in over 30 years, not even an animal on it, old wood post barbed wire fence that was mostly on the ground. About 1/4 of the "farmland" is so wet that cattle sink up to their knees most of the year, the rest is "passable" for pasture, but not generally driveable most of the time. You'd have to pick your days if you wanted to mow it without getting stuck. Old old house that needed tearing down (a bachelor did actually live in it, but "cellar" with water in it year round, and newspapers and spray foam plugging the holes, rotted floors, etc.), couple other buildings that also needed to go before falling down completely. Sand point well that's not good enough to qualify for financing, no septic system. Bunch of junk still laying around, owner was a "collector of junk".... On his auction, to get some of the pieces that sold off the "sale yard", even though the auctioneer had a big JD payloader, he ended up having to bring in a QuadTrac just to drag the stuff out of the mud... so you can imagine what condition the place was in.

I offered the guy $6000/ac, he thought I was trying to steal it from him. He got it sold soon after that to a young fellow here locally for $14,000/ac. cash money, never listed it even. New guy spent the past year cleaning it up, burying/burning the buildings, renting payloader, Cat, tracked skid loader, he's still burning tree stumps. Bushhogged the "fields/brush", put new HT fence with 8" wood posts all the way around (yup, not even lighter posts for line posts!... never even asked if I would help pay for "my half" of the boundary fenceline), put 6 cows on it this past summer, is hoping to build a house on it this next year. Doing a nice job on it... looks much better than it ever has in the 25 years that I've been here!
 

tom4018

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10 ac piece adjoining my land sold a year ago (it "should" be a part of my farm... just that little corner taken out of my "half section"). Partially brushy woods, full of brush on what used to be "farmland"... hasn't had anything done to it in over 30 years, not even an animal on it, old wood post barbed wire fence that was mostly on the ground. About 1/4 of the "farmland" is so wet that cattle sink up to their knees most of the year, the rest is "passable" for pasture, but not generally driveable most of the time. You'd have to pick your days if you wanted to mow it without getting stuck. Old old house that needed tearing down (a bachelor did actually live in it, but "cellar" with water in it year round, and newspapers and spray foam plugging the holes, rotted floors, etc.), couple other buildings that also needed to go before falling down completely. Sand point well that's not good enough to qualify for financing, no septic system. Bunch of junk still laying around, owner was a "collector of junk".... On his auction, to get some of the pieces that sold off the "sale yard", even though the auctioneer had a big JD payloader, he ended up having to bring in a QuadTrac just to drag the stuff out of the mud... so you can imagine what condition the place was in.

I offered the guy $6000/ac, he thought I was trying to steal it from him. He got it sold soon after that to a young fellow here locally for $14,000/ac. cash money, never listed it even. New guy spent the past year cleaning it up, burying/burning the buildings, renting payloader, Cat, tracked skid loader, he's still burning tree stumps. Bushhogged the "fields/brush", put new HT fence with 8" wood posts all the way around (yup, not even lighter posts for line posts!... never even asked if I would help pay for "my half" of the boundary fenceline), put 6 cows on it this past summer, is hoping to build a house on it this next year. Doing a nice job on it... looks much better than it ever has in the 25 years that I've been here!
That guy must have a good paying job. Sure won't pay for it with cows.
 
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Ky hills

Ky hills

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A little over 50 acres just sold that joins us. Owner must have sold it himself, had a homemade sign out front for around 3 years. He kept his cards close and no locals ever knew what he was asking. I think he probably had a lot more in mind than farmers around here could see. Word on the street is that a dr bought it.
 

C-Ranch

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This past summer we just went through the same thing. With the same results, bottom line is the realtor wanted the land and then would turn around and sell for more $$$. After finding this out we hired an appraiser ($750) and now know what the place is worth. If you truly want to sell get a true market analysis done.
 

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