Why shouldn't I just rely on a traditional appraisal to set the selling price for my farm or ranch land?

Last updated on November 27, 2025

📺 Watch Our Podcast Episode: Ep. 08 | Inherent Difficulties in Appraising Farmland

Appraisals are a best guess at what a property might sell for with proper marketing and price discovery, based on past comparable sales. Appraisals work well for chattels as chattels can be moved from one area to another, keeping prices in line. A John Deere 2018 S770 Combine with 1200 thresher hours will be virtually the same price in Rosetown, SK, Bruxelles, MB or Bentley, AB. If prices differ much, dealers will bring them in line by buying in the cheaper market and selling in the higher market, a practice known as arbitrage. Because its movable, 100% of the value of a chattel is intrinsic to the chattel itself, as opposed to external surroundings that can change at any time.

Land is said to be the only commodity in the world that cannot be moved once purchased, and therein lies the problem with appraising Farm or Ranch land. Appraising houses in an urban setting might be slightly more challenging than appraising a chattel but far less challenging than appraising farmland. You cannot move a house in town; however, urban residents themselves are mobile. If a house in one part of town is cheaper than the same house in another similar area, buyers tend to buy the more affordable house and, as a result, bring prices in line over time, identical to arbitrage.

Appraisals of farm or ranch land show comparable quarters on the map as movable squares like a chattel, but such is far from reality. To complicate matters, farmers and ranchers are not mobile and cannot just pick up and move the way people in an urban setting can change streets. A wide open 160-acre quarter section of land with #2 soil near Lacombe, AB, may sell for $1,300,000.00, and an identical 160 acre quarter section of land with #2 soil near Tisdale, SK, may sell for $650,000.00 even though the soil class and growing degree days are the same. 50% of the value of the Lacombe quarter must then relate to extrinsic factors as opposed to the land itself.

Because arbitrage is not available for an immovable asset such as land, a significant portion of land value relates to extrinsic factors to the parcel of land itself. Intrinsic factors such as soil class and acres cultivated are reasonably easy to quantify. Extrinsic factors, however, are next to impossible to value yet can have a huge effect on the price. Extrinsic factors may include things such as demographics of neighbours – namely, are they exiting or buying, is there perhaps a river that cuts off many potential buyer’s access, is there a narrow bridge into the area restricting access, is there a small concentration of buyers, does the land fit perfect with neighbours existing assemblage, potential for future irrigation etc. Factors so ambiguous that no farm or ranch appraisal can identify let alone quantify; however, in the end, they will significantly affect the final price. Yet comparables used in Farm or Ranch appraisals are often based 100% on intrinsic factors such as soil class or arable acres. Because external factors are almost impossible to quantify, they are treated as if they don’t exist and are never addressed in appraisals. Yet, they can have as big of influence on value than intrinsic factors. Because each comparable used in an appraisal has different external factors impossible to quantify affecting its selling price, using these comparables can be more dangerous than using none at all.

At CLHbid.com, we have sold farm and ranch land for over double its appraised value, reinforcing how hard it is to value external factors such as assemblage by neighbouring farmers. We repeatedly see that relying on appraised value may leave hundreds of thousands of dollars on the table or on the converse have owners list their farm or ranch for a number that guarantees it will never sell. A huge misnomer is farmers or ranchers assuming appraised value is synonymous with true market value – in many cases they are hugely divergent given the complexities referenced above. Only an open market with true price discovery can identify and then properly quantify all intrinsic and extrinsic factors and get you the value you deserve for your farm or ranch.