If you are thinking about selling a piece of land, you probably have an idea of how much it’s worth. But if you want an objective valuation from someone in the business, get a professional property appraisal.
“There’s no emotion involved when you hire a state-certified, accredited rural appraiser,” says Jimmy Chambers, chief executive officer of Central Texas Farm Credit.
Most appraisals are done as a requirement of a loan application. Under federal law, all loans require an appraisal, and most loans over $250,000 require a property appraisal that conforms to the Uniform Standards of Professional Appraisal Practice (USPAP).
While lenders use appraisals to decide how much to lend on real estate, appraisals serve many other purposes, as well — purposes ranging from estate settlement to taxation issues.
Determining Fair Value
“Real estate buyers will often get an independent appraiser to help them determine how much to offer for a property or to determine how much of the value of a property they can use for depreciation,” Chambers says.
This is often the case during private transactions, notes Ken Hobart, chief appraiser for Southern AgCredit in Mississippi and Louisiana.
“Someone might be selling a property to a family member and just want to establish a fair price that is acceptable to both parties, so they’ll hire an appraiser who is familiar with that type of property,” Hobart says.
Situations in which you might need a professional real estate appraisal include:
- Establishing property value before selling, purchasing or insuring a property
- Partnership dissolution
- Tax assessment review and advice
- Estate planning and estate settlement
- Divorce settlement
- Dispute resolution concerning foreclosure, easements and zoning issues
- Advice on eminent domain and condemnation matters
- Private mortgage insurance removal
- Land-use studies
- Cost-benefit or investment analysis
Specialists in Rural Property
If you hire your own appraiser to valuate rural property, consider the advice of Bill Beam, past president of the Texas chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA). He recommends hiring a rural appraisal specialist who is familiar with your geographic area and specializes in your type of property.
“We are seeing more and more special-use clients, who have unusual and complicated situations,” he says. Beam, who is with Western Appraisal LLC in Abilene, Texas, reports that it’s not uncommon to be asked “to do follow-up” for clients who did not start with a rural appraisal specialist.
ASFMRA members have appraisal expertise in ranchland, farmland, feed yards, dairies, vineyards, gins, poultry and timber operations, and other specialized types of agribusinesses. Members are required to take continuing education to maintain their state certification.
“With agribusinesses, it takes a very high level of appraisal expertise,” Chambers says.
Working Their Network
Professional rural appraisers can offer their clients access to other rural valuation experts, as well, according to Robby Vann, vice president of collateral risk management at the Farm Credit Bank of Texas.
“We share knowledge and expertise. There’s a lot of networking within our profession — we can generally find someone who has expertise in any particular area that a customer needs,” says Vann, who is vice president of the ASFMRA’s Texas chapter.
Hiring an accredited rural appraiser also can be beneficial in legal cases, such as right-of-way projects.
“If the appraiser has a designation, such as the ARA (Accredited Rural Appraiser), it can provide credibility when the case goes to litigation,” Beam says. “We have a very high standard of ethics, and we have a lot of integrity.” Professional appraisers are bound by a code of ethics restricting them from appraising types of property for which they are not trained.
Hiring a Rural Appraiser
Farm Credit associations employ state certified accredited rural appraisers or highly qualified evaluators who are specialists in agricultural properties, or they hire fee appraisers.
“Farm Credit appraisers and evaluators are some of the most knowledgeable people in this business because they are exposed to every type of rural property,” Hobart says.
Some associations also offer appraisal services to their customers for a fee, and all associations can assist customers in finding a qualified rural appraiser.