Zillow for Agriculture

Farm Real Estate Dives Into Digital Age

Granular's AcreValue is the first service to automate farmland value estimates by field. (DTN photo)

HADDONFIELD, N.J. (DTN) -- Online real estate listings such as Zillow.com and Realtor.com revolutionized the housing market this century. Today pick any residential address in the U.S. with those free online services and you'll get rough estimates of the home's current value, its number of bedrooms, square footage, property taxes, the quality of its schools and the neighborhood's crime statistics. Now technology promises to bring the same transparency to the $2.4 trillion farm real estate market.

"Prior to services like Zillow, you had to depend on a broker to get information on inventory or comparable home prices," said Tamar Tashjian, general manager of AcreValue, a free online service first launched by Granular in April 2015. "This technology empowered home buyers."


Today's farmland markets are much like home real estate a decade ago, said Tashjian, former product manager at the residential real estate site Trulia.com. Farm real estate buyers and owners must depend on word-of-mouth tips and broker networking to find out what's really going on. Lack of information is compounded by the fact that only about 1% to 2% of farmland transfers hands each year.

What's even more challenging is how few land sales are reported in public forums. At least 50% of farmland transfers are private transactions, versus 8% in residential real estate, Tashjian estimated. That means plenty of deals between landlords and long-time tenants, heirs and family aren't widely disseminated.

West of the Mississippi, even professional ag appraisers complain they have difficulty ascertaining real sales prices because property records remain a closely guarded secret. Texas law even forbids disclosure of real estate sales information. Counties in many states don't yet publish records online, requiring someone to physically visit their offices.


With AcreValue.com, anyone can access rough estimates of Grain Belt farmland values, drilled down to actual field boundaries instead of generic counties or statewide averages. While not a substitute for appraisals, it offers an impartial estimate of what farms should be worth based on their expected productivity and income generation. It doesn't predict what an emotionally charged farmer-next-door would pay at auction.

"Even if the formulas aren't the beat-all-to-end-all solution, they're helping people be better informed about what land is worth," said Dave Nebel, a professional appraiser who heads Hertz Appraisal Services in Nevada, Iowa. When Hertz compared AcreValue's estimates to its own appraisals on the same properties, it found values differing by 5% to more than 20%.

AcreValue, the most robust tool at the moment, publishes soil and cropping information on 46 states, but currently estimates land values only for Iowa, Illinois, Indiana and Minnesota. More states and cash rent estimates are likely to come in the future.

The service marries information from USDA's National Cooperative Soil Survey (which measures the productive capacity of underlying soils), state productivity indexes; the National Agricultural Statistics Services' Cropland Data Layer (satellite imagery of crops planted on actual fields); the Farm Service Agency's common land unit boundaries; as well as public real estate survey data, which indicates land value trends.

Land quality is only one factor in valuation. AcreValue supplements that with proprietary adjustments for location, interest rates, the county's tax environment and expected grain basis. At the moment it can't measure improvements, such as tile drainage or irrigation. It may need a feature for current owners to correct for that data, much like Zillow permits homeowners to correct valuations if they believe estimates are flawed.

Still, basing valuations on economic factors is a start. "There's so much disparity between what one piece of farmland or another sells for," said Steve Bruere, president of Peoples Co., a land management and realty firm in Clive, Iowa. "When the lights turned on for me was when institutional investors began demanding soil data and three years of yield history before they'd look at buying a farm. Brokers didn't have that. We were all underwriting farms based on their Corn Suitability Rating, and it was a flawed system."

Peoples Co. launched WhatsMyFarmWorth.com with partner AgSolver in late January, primarily as a service to reach potential clients, Bruere said. The site is still working out kinks (for example, it lacks a search feature so it's hard to locate a precise field from the U.S. map). At the moment, it estimates farmland values and rents in 14 states based on a farm's actual field boundaries, soil type and historical productivity. The service roughly calculates farm profitability based on five-year averages for those soil types to determine economic-based land values or cash rents.

Given variability in soils, climate and other local factors, it will take time for data science to replace the judgment of human appraisers, however.

Bruce Sherrick, directs the TIAA-CREF Center for Farmland Research at the University of Illinois. He believes it's too early to assess the accuracy of AcreValue's forecasts. However, he said the service delivers "a nice index of relative land values" as well as a compilation of useful information, such as Farm Service Agency field boundaries, cropping history and soil types.

Longer term, AcreValue and a slew of similar services will decrease the cost of data collection, improve farm appraisals and make valuation reports more uniform, Sherrick said.

The technology for robotic appraisals is in its very early stages, but it could be transformative. "Fifteen years ago Google maps didn't exist. Now we carry the world in our pockets," Sherrick said.

For more information go to www.AcreValue.com or see Sherrick's article on estimating Corn Belt land values at http://goo.gl/…

Marcia Taylor can be reached at marcia.taylor@dtn.com

Follow her on Twitter @MarciaZTaylor