Both ranchers looking to sell and investors looking to buy should consider several factors when determining the value of ranch property.
Those factors go beyond the head-count for livestock or the acreage needed for a productive hay crop. The business end of owning ranch property is much more complex today, and both buyers and sellers need to look at the big picture.
Here are four foundational factors that ranchers and investors need to consider before pricing land for sale or making an offer on ranch property:
Water
The availability of water on ranch property is elementary. A ranch loses much of its inherent value without water, even if the acreage is enviable. Access and rights to water are absolutely vital. It’s needed for any agricultural effort. It can contribute a recreational aspect to a ranch’s overall value. It’s vital for a healthy landscape. Before buying, investors should be crystal clear on the state of water access on any ranch they’re considering. Ranchers, in turn, should be very candid about water access, water rights and water use on the property they’re trying to sell.
Recreation
Today’s ranchland investor may not be interested or dependent on agricultural revenue from ranch property. Instead, many ranch properties are bought and sold because of the recreational opportunities these lands provide. From hunting and fishing to hiking and camping, ranch property values often hinge on the ability to recreate. For many investors, recreational opportunities translate into potential income. Hunting and fishing access on private lands in the West is priceless to many sportsmen and women. Many ranch property buyers factor in recreation and recreation access when making purchase offers.
Proximity to public lands
In the Rockies, much of the land is managed by federal agencies. The U.S. Forest Service and the Bureau of Land Management serve as property managers for the American public. Together the two agencies manage millions of acres of public lands for all Americans. For many, public lands are the country’s real national treasure. For private landowners, nearby or adjacent public lands add real value to their property.
Owning ranch property adjacent to public land is a significant benefit. When public lands start where the property line stops, landowners can rightfully assume that they won’t have any neighbors. Ever. Even just a few acres of private land adjacent to thousands of acres of public land is markedly more valuable than stand-alone private land. Ranchers who own land adjacent to public lands should consider that factor when pricing their land for sale. Buyers, too, should be ready to pay a premium for property that adjoins public lands.
Improvements
Bare land has intrinsic value, but improvements make land much more valuable. Everything from a home to outbuildings, like shops, garages and barns, should be considered when determining a ranch’s value. And quality construction matters. Even older ranch homes, if they’re maintained, add to a ranch’s overall worth. Ranchland sellers should ensure that all of a ranch’s improvements, from roads and trails to pole barns for hay storage, are in good shape. When marketing a ranch for sale, improvements should be listed as an asset. Conversely, buyers should take a critical look at a ranch’s improvements. If everything is in good shape, they should be ready to pay more for the land. If there’s work needed, the price should reflect that.
Other factors
Certainly, there are other factors to consider when pricing a ranch for sale. But the above-mentioned elements rise to the top. That said, both sellers and buyers should factor in a host of items before listing a property or consider a purchase. Buyers should know what they want from the ranch property, be it from a business perspective or a personal one. For instance, how private is the property? Are neighbors close by? Is the property at the end of a road? Is the road to the ranch a busy traffic artery? Ranch sellers should be candid about issues like these. Buyers should look at all these issues with a critical eye. After all, these factors determine the value of the property in question.
