Summer 2015

LAND MAGAZINE // LEGENDARY LIVING COVER RANCH
While Webster’s New World Dictionary defines a ranch as “a large
farm, especially in the Western U.S., for raising cattle, horses,
or sheep,” the fact is that this traditional definition of a ranch
only scratches the surface of what transpires on many of
today’s larger western properties.
Raising livestock and agricultural production often remain primary concerns
but in today’s dynamic market, other factors like recreation and scenic
amenities are becoming just as important when considering the value of
the property. Because technology now allows individuals to work and live in
areas that were once considered too remote and isolated, media moguls and
institutional investors are entering the market and changing the game. For
this emerging group of buyers, purchase decisions are rarely driven by income
potential. Subsequently, the market has shifted away from one that was purely
production driven, to one that is influenced by a whole new set of variables
including spike in demand.
Ranch properties are large and diverse, each with its own unique physical
features and characteristics. A mix of internal and external factors like
location, topography, productivity, recreation, commodity markets, interest
rates, and inflation still often influence the demand for ranch properties
but many of the factors that drive the “new” ranch market are not easily
quantified. Livestock production is more frequently becoming a minor
part of the property value while highly subjective factors are holding more
stock. Analysis of the impact of other qualitative factors on value is highly
subjective and difficult to quantify requiring an in depth analysis of each sale.
This is compounded by the variability of many of these factors over time and
amongst individual buyers.
Given the many unique features and characteristics encompassed by
ranch properties, finding truly comparable properties in a market that is
characterized by scarcity can be difficult and requires a depth of knowledge
and experience to make the appropriate adjustments. Yet amidst the
complexity, one simple fact remains: ranch ownership continues to draw a
great deal of interest from competing uses.
Understanding the background and motivations of buyers and sellers is key to
interpreting market data. Unlike other professional industries, the appraisal
of ranch properties requires in depth analysis of market data that is often not
readily available. Accurate interpretation of this limited data requires creativity
and a unique skill set that allows one to be able to dig below the numbers to
truly understand the dynamics of this unique marketplace.
Staying abreast of ancillary market influences in ever-changing economic
conditions requires a broad professional network to tap into. Finding an
appraiser who not only understands the numbers but also the differences
in value from one area to another is a critical part of making an informed
decision. Being part of the appraisal team at Hall and Hall, formed entirely
of Accredited Members of the American Society of Farm Managers and Rural
Appraisers® (ASFMRA® ), provides us with that critical network of brokers and
lending professionals.
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