I want to sell my farm, but I don't know how much it is worth The valuation of a rustic property is always a complex issue with multiple nuances and assessments to take into account... but in what cases do we need to have the valuation of a professional? The most common is that a sale is going to take place, a transaction in which two parties want to know a valuation of a good. When carried out by a professional, an objective valuation is obtained that takes into account all the differential characteristics of the property, offering the seller its real value, away from emotional aspects and beliefs, and offering the buyer important information to evaluate their investment. However, it is possible that the reasons are other, such as the need to prove the value as a guarantee or endorsement in an operation of another nature, or that it is necessary to know its value when contracting or requesting insurance (especially if these are rustic farms with agricultural or livestock use). Other additional reasons could be the expropriation of part or all, or derived from any possible dispute with the administration. How much is my farm worth? Before starting the process of appraisal/valuation of a rustic property, it is key to have adequate information and in sufficient quantity, since it will allow the company and/or professional in charge to carry out their work much better. After collecting information, it is key to be able to carry out an 'in situ' visit to the property in order to check the accuracy of the data available in the Cadastre and in the Registry, and obtain any additional information and measures that may be necessary. This visit will also provide a better understanding of key aspects when appraising the property, such as the access roads and their state of conservation, as well as other details relating to the use and performance of the land (if available). of information). Key aspect in those rustic farms with agricultural or livestock purposes, but also forestry, pastures or other primary uses. Additionally, the visit to the property will serve to evaluate the actual state of conservation of the buildings or constructions, verify their typology, and their use. Another aspect to take into account is the possible use of the land, since it could be the case that the property had such a system that a change in the typology of 'land' would be possible, and it could be developed in the future and notably modify the 'future value' of the property. It is an issue that, together with the choice of valuing a rustic property according to the potential income, or the real income, constitutes the basis of the appraisal work, the final objective being to have a realistic appraisal, and consistent with market prices. . There are several methods of valuation of rustic properties, as can be found in the technical manuals or literature on the matter. Some of them are listed below: - Analytical or income capitalization method. - Comparative or synthetic method. - Statistical methods. - Valuation methods for ornamental trees. - Environmental assessment methods. - Agricultural infrastructure valuation methods. Here is a brief explanation of each of them: – Income or analytical capitalization method: it consists of capitalizing income less expenses of the rural property at the appropriate capitalization rate. It is the most common method of application. – Comparative or synthetic method: similar to that applied in the valuation of urban real estate. It is based on the price of other nearby farms with similar characteristics, for which the amount of recent transactions is known. The main drawbacks are that real estate investors interested in knowing the value of a property should know the area or travel to it to collect the data and the low availability of existing information on the country property market. It usually prevents knowing the real value since it is complex to obtain data on operations on similar farms. – Statistical methods: look for correlations and probability distributions of the farm value curves, linking them with variables such as location, distance from the provincial capital, land yields... It has the same difficulty as the synthetic method: the low availability of information accessible in the market. Therefore, the fact of working with specialized professionals is a fundamental factor when developing this kind of work. – Methods of appraisal of ornamental trees: Thanks to the 'Norma Granada', whose author is the Spanish Association of Public Parks and Gardens, an objective and concrete solution is obtained for these appraisals, with very different purposes (expropriation, property damage, insurance , mortgage guarantees….). The fundamental basis of said Standard is to take precise parameters and project them over time based on size and price, suitably updated. Its price is not determined because there is no market for this type of goods and it is also not possible to determine its value based on your income. What will be obtained will be a value of affection taking into account aspects such as aesthetics, symbolism, landscaping or sensation of well-being. – Environmental assessment methods: this method takes into account the environmental values ​​that the land has, assigning them a specific value. – Agricultural infrastructure valuation methods: this method takes into account the existing agricultural infrastructure on the land, such as water wells, irrigation systems, etc. Aspects to consider when choosing an appraisal/valuation method Currently, in certain cases, although it may be certainly contradictory, the choice of a certain method of valuation of a rustic property does not depend on the technician/company in charge. In Spain, for certain cases, the valuation method is not freely chosen and/or based on a technical perspective, but rather will be imposed by the different applicable laws. For example, for a valuation whose objective is to determine the fair value of a forced expropriation, the laws do not contemplate the possibility of using the valuation method called “comparison”. Neither can this method be used to determine the patrimonial responsibility of the Administration, nor in the operations carried out by the Administration for the execution of territorial and urban planning. What professional skills should the person carrying out an appraisal/valuation have? In the case of the appraisal or valuation of residential and commercial real estate, it is necessary to have the title of architect or technical architect (surveyor), although, in the case of rural properties, the team in charge must have the qualifications of agricultural engineer or technical agronomist engineer, while in other cases, such as industrial constructions, valuations must be carried out by industrial engineers or industrial technical engineers. At CROPS CAPITAL we have a multidisciplinary team specialized in the valuation of rustic properties, and we know that all the virtues of a property must be visible to obtain the best result. Let yourself be advised by experience! Offices | Av. del Pilar, 28 ground floor 22500 Binéfar (Huesca) Spain Phone | +34 974 09 40 90 Email | info@cropscapital.com