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The Voices of Land blog

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27Jan

Setting the Right Value and Price for Your Inherited Land

As owners of ranches, farms and other types of rural lands get older, they often prepare to give inherited land to the next generation. Estate land can enrich your family in multiple ways. If heirs plan to sell estate land, you can help by setting a price point that attracts buyers while getting the full value of the land.

Setting the best price isn’t an easy process. With the right guidance from a seasoned land real estate professional like an Accredited Land Consultant, you can set a price point for inherited land that strikes a middle ground without going too high or too low.

Changes in Land Ownership Signal Transitions Ahead

Shifts in how rural land is owned, and who owns it, are part of a movement toward more land being passed down. In Iowa, for example, 82 percent of farmland is owned free of debt, a significant increase from 62 percent in 1982 and 78 percent in 2012; 60 percent of farmland is owned by people 65 years or older; and 35 percent is owned by people 75 or older, according to the Farmland Ownership and Tenure Study from Iowa State University.

“There are some big transitions ahead as land is passed down to the next generations,” says Randy Hertz, ALC, of Hertz Real Estate Services, which averages over one farm sale a day and manages some 600,000 acres of farmland.

Consider Factors That Can Influence Inherited Land Value

Numerous factors can influence the value of rural land. Some things to consider include:

  • Its proximity to major roadways or population centers.
  • Whether your land already has infrastructure for water, electricity, sewage and internet connectivity.
  • How the lay of the land could make future developments easier or more challenging, such as whether it lies in a flood- or drought-prone area.
  • Whether your property has valuable timber, minerals or other valuable attributes.

If you own 100 acres of productive farmland in a great location, you can probably get a higher price for your property. If you have poor-quality land located in the middle of nowhere, you should probably consider a lower price point. An RLI member, particularly those who hold the elite Accredited Land Consultant (ALC) Designation, can help you weigh these factors to determine the highest and best use and ensure the right value.

Selling Land for Continued Use

Depending on your land’s location, it might make the most sense to sell it to someone interested in continuing work as a farmer, rancher or hunter. In such cases, you might enjoy the idea that someone will continue working the land as you did and appreciate keeping the land as a farm instead of selling it to a developer.

You still want to give your heirs a fair price point that enriches their lives and helps the property sell quickly. An assessor or a seasoned land real estate professional can help you determine your land’s current value. You can also look at the estimated values of similar properties near you.

Increased Interest in Rural Land Boosts Value

Don’t assume that your estate land will only appeal to people who want to purchase rural farmland, ranchland and recreational land. The COVID-19 pandemic changed the way a lot of city-dwellers think about their living arrangements. As urban areas became less appealing and remote work opportunities more common, many urbanites started eyeing land outside of cities.

Now, it makes a lot of sense for people to move away from crowded cities. Lower housing costs play a role in attracting those people, but your estate land’s value can still increase significantly as more buyers consider it.

Look at development projects in your region and think about whether your estate land’s value could increase and help the next generation make more money from their inherited land. If your land gets purchased by a developer that wants to sell individual plots, your family could make a lot of money.

Put Everything in Order Before Passing Land Down

Ideally, you will have time to make arrangements that ensure your land gets passed to beneficiaries with as little trouble as possible.

It’s never a bad idea to talk to an estate-planning lawyer who has worked with clients transferring rural land to the next generation of their families. An experienced attorney should know how to help you minimize taxes and fees that will reduce the amount of money your beneficiaries get. Estate-planning lawyers can also review your wishes to make sure they’re accurately represented in your will. You don’t want a small mistake to create a rift in your family.

Get Assistance from an Accredited Land Consultant (ALC)

It is clear that a lot of knowledge about local property values and upcoming developments is necessary to choose the right price point for inherited land. Accredited Land Consultants and members of the REALTORS Land Institute can make the process much easier. RLI members and ALCs have years of experience in the industry and adhere to a strict code of ethics, which means they have knowledge and connections that can benefit you before you sell or inherit land.

Don’t make a mistake that will lose money for your family’s next generation. Find a Land Consultant in your area to get an expert’s opinion about the value of your land.

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