Buying farmland can be a complex matter. Farmland prices are at all-time highs, and agricultural land values aren’t likely to decline any time soon. For those seeking land investments, it’s important to understand farmland values. It’s crucial for buyers and sellers alike to educate themselves on the varying nuances of land prices. Here’s your guide to price per acre.
Editor’s Note: This is not financial, investment, legal, or real estate advice. Consult with a financial planner, investment specialist, real estate lawyer, and real estate professional before buying or selling real estate.
Price Factor No. 1: Property Layout
Field layout matters. Of the various agriculture practices, crop ground tends to sell the highest. For example, flatter ground is more desirable for tillable acreage. Therefore, it’s more valuable. Hillier terrain is less desirable for crop land. So, it usually sells at lower price points.
Additionally, the shape of fields matters as well. Square and rectangular fields are more desirable for agricultural practices. These shapes are better for planting, maintaining, and harvesting crop fields. Oddly shaped fields with many different point rows (subsequently shorter crop rows), increase complexity, require more time, and aren’t as efficient.
Price Factor No. 2: Soil Types (and Ratings)
Soil types (and associated quality ratings) matter, too. It’s important to conduct soil tests to ensure the soil health is good, and if not, determine the cost, or even possibility, of correcting it. Why? Because these things impact price per acre and can play into negotiations of the sale.
“From an agronomy perspective, at the 30,000-ft view, soil types, soil ratings, etc., are important” said Andrew Malott, a Whitetail Properties Land Specialist in northern Indiana. “There are different scales depending on types of crops, soil rating productivity, and more.”
Malott notes that Cation Exchange Capacity (CEC) levels of the soil reveal soil state. These display how well soil retains nutrients and positively charged ions, of which impact plant health, and in terms of agricultural production, per-acre yield totals.
Secondly, National Commodity Crop Productivity Index (NCCPI) ratings, which also rank soil quality via numerical values, also measure soil quality. Like CEC, the ratings signify its abilities to produce quality crop yields. It especially analyses soil depth, drainage, texture, and more.
“A landowner, seller, or buyer can look at these values, and then talk to a local co-op,” Malott said. “Consult with local FSA or NCRS office. There are plenty of websites you can look up, such as Web Soil Survey. It will provide you with a lot of soil data, and what your property consists of.”
Price Factor No. 3: Soil Nutrients
Generally, agricultural data maps can provide good information. However, crop production indexes might vary from the historical crop productivity index shown on the map. For example, the farmer using the land the past five or so years might have sucked all available nutrients out of the soil. This wouldn’t necessarily show up on available mapping services. Therefore, data maps are good starting points, but not ideal for accurate confirmation of soil quality.
Of course, better soil quality leads to increased crop production tonnage. How well a property is maintained throughout the years matter, too. If the N (nitrogen), P (phosphorous), and K (potassium) have been maintained correctly, that soil is likely in great shape. If these haven’t been, and the soil was stripped of its nutrients, the land isn’t worth as much.
Of course, soil tests will reveal soil quality. In some instances, Bob Stalberger, a Whitetail Properties land specialist in Minnesota, says the best thing you can do is place an offer contingent on important factors, such as soil test results (and soil index maps mentioned above).
Price Factor No. 4: Soil Drainage
Soil drainage is another element. In many areas, properties are receiving fewer slow, soaking rains, and instead, are receiving quick and heavy downpours. Of course, the former ensures proper soil and plant health. The latter leads to flooding and crop prevention or destruction.
In some areas, fields enjoy adequate natural drainage. In other areas, where natural drainage is nonexistent or inadequate, landowners install drain tiles.
“Drain tile can be $1,000 to $2,000 per acre [in Minnesota], depending on whether it’s pattern tiled (or not) and the spacing and size of the tile,” Stalberger said. “That adds value to the property.”
Price Factor No. 5: Proximity to Wildlife
Wildlife populations also impact property values. Sold as recreational ground, it can increase pricing. Sold as crop land, due to depredation, it might reduce it. For example, crop land next to big timber, with higher deer populations, might lead to deer heavily browsing those first 10-15 rows (or more). That will produce different yields than straight farmland with minimal wildlife cover around it.
Price Factor No. 6: Proximity to Cities
Although not agriculture related, proximity to cities influences pricing, too. Oftentimes, land adjacent to towns and cities are eventually absorbed by urban sprawl. Such land sells for a lot of money. (It can be much more than typical ag ground goes for.)
“One thing that really drives value is proximity to towns and larger cities,” Malott said. “If it has development potential, it’s driving land values higher.”
Price Factor No. 7: Proximity to Farming Operations
Stalberger also notes location is crucial for other reasons. The neighborhood you’re in can drastically change the value. Five miles one way or the other can impact prices.
“If there are big producers that want more land, they’re going to compete and pay more for it,” Stalberger said.
Land prices aren’t just reliant on row croppers, though. Land for livestock drives the market, too. Many lands ill-suited for crops are viable for raising animals.
“If someone has cattle, hogs, or chickens, they’re going to pay more for a property closer to them, than further away,” Stalberger said. “This is because they have management processes they must follow.”
Plus, it requires more time and money to farm ground that’s further from their home or core farming operation. Therefore, they’re willing to pay more for land that requires less travel time and resources.
Price Factor No. 8: Timber Value
Marketable timber influences land as well. Generally, those investing in timberland are doing so in anticipation of selling timber to a logger.
“In my area, most landowners do a good job of maintaining the timber,” Stalberger said. “Meaning, they generally don’t sell it with a lot of timber value on it. It’s in-between cuttings.”
Therefore, timber is a much more passive, and less reliable, form of land-based income. Oftentimes, with select cuts, 15-30 years span between timber harvests. With heavy timber harvests, that timeframe is longer.
“Timber properties selling after three or four years of being selectively cut might run $5,000 to $7,000 per acre,” Stalberger said. “Again, it depends on location, access, neighborhood, and more.”
Price Factor No. 9: Recreational Opportunities
Increasingly a factor for buying land, recreational opportunities impact pricing, too. Recreational tracts, such as those attuned to hunting, trail riding, etc., can attract big bidders. The top 10-20% of recreational ground, specifically hunting, is especially valuable. Those who invest in such lands can invest in land and enjoy it, too.
Determining Fair Market Value
Given the complexity of land values, determining fair market value isn’t simple. From the seller’s and buyer’s perspective, it’s important to understand the above factors. Once both parties are informed, they can reach a fair and reasonable price that aligns with market value.
Oftentimes, buyers are presented with listed properties. Or they attend auctions and see the sum rise to the eventual sale price in real time. In either instance, it’s vital to maintain emotions and determine if the price is a fair deal, or not.
When analyzing listing prices, or studying listings in preparation of making an offer, there are key factors to consider when gauging acceptable price per acre. Many of these were noted above. However, for more specialized land uses, it’s crucial to spend more analysis energy on factors that most closely impact intended use of the property.
Properties with mixed land types are more difficult to judge prices for. That said, Stalberger encourages buyers to break it down into grouped acreages (tracts) by each type. Divide each one by the associated percentage of the overall asking price. Then, analyze the breakdown of each section of the farm. This provides better details as to what each part of the property is priced per acre. This is more intuitive than just gauging the overall price per acre for the entire farm.
“If you don’t know, get with someone who does,” Stalberger said. “Talk to a real estate professional who understands what they’re hoping to know more about or invest in.”
Comps are also quite important. Analyzing comps, or similar property types nearby that recently sold, further solidifies the market value of a tract of interest.
Of course, comparing land prices from two different regions, states, or even counties, isn’t feasible. At least, not for drawing a conclusion on a specific property of interest. Again, land comps must be closer geographically and situationally.
Even adjacent properties are rarely apples to apples. For example, two properties that border one another can have significantly different values depending on access, composition, zoning, building capabilities, best available uses, and more.
Even with properties that seem comparable, there might be factors that lead to price variations. For example, a tract might have poor access, flood-prone areas, etc.
“Talk to local farm service agencies to see what they know about properties,” Stalberger said. “Of course, they aren’t in the real estate business. They’ll only go off of tax sales. Or talk to the local tax assessor. But again, they’re only looking at what’s sold in the county. They might not necessarily give you a perfect answer to what the market might be in your area.”
At times, there might not be enough recent sales to identify good comps. With these situations, it’s even more important to seek the help of seasoned real estate agents and true land specialists alike, among other professionals.
“For the most accurate information, you can hire an appraiser,” Stalberger said. “Of course, that isn’t free. Still, there are instances where that would be very beneficial.
“The next step is consulting the county assessor,” Stalberger continued. “They see the sales from the past year and assign tax values based on these. They don’t put boots on the ground, though. Instead, they provide general answers.”
Incredibly, two properties within short drives of one another can vary greatly in market values. Of course, many things are in play to influence this. The soil quality itself is very influential. Is it capable of producing 250 bushels of corn per acre, or 150 per acre? Can it do 50 bushels of soybeans, or 30 bushels?
“In my area, for tillable acreage, it ranges from $7,000 to $14,000 per acre,” Stalberger said. “Drive two hours south of me into Iowa and it’s $20,000 per acre for tillable land (if in the right neighborhood).”
Regardless of the situation, always proceed with caution. Check all available resources and then revisit conclusions to determine accuracy.
Price Per Acre Variance
In general, according to Statista.com, in 2024, the average value of farmland in the U.S. was $4,170 per acre. That said, according to data from 10 years prior, values increased nearly 40%. This is a direct result of inflation and increased demand.
According to the Virginia Tech Extension Office, data show the number of land transactions increases virtually every year. For most areas, over the past couple decades, the overall trajectory is up significantly. This shows increased demand, and prices continue to climb accordingly.
Contact a Reliable Real Estate Agent
When working with a real estate professional, it’s crucial to consult one who knows the area. Seeking the assistance of a real estate agent further from home (even if licensed in your area) might be less effective than working with one that’s more knowledgeable of your specific location.
“My No. 1 recommendation is working with a Whitetail Properties land specialist,” Malott said. “Get someone who knows the area, soil types, what you’re working with, and more.”
Furthermore, Whitetail Properties land specialists are already familiarized with local comps. Therefore, it can save you time and energy trying to compile, learn, and study data they already have and understand.
Additionally, not all real estate professionals have access to the same knowledge, tools, etc. Therefore, choosing those which have access to leading technologies, such as Whitetail Properties, increases odds of buyers and sellers alike being represented in the best possible way.
