Quick answer: A farmland appraisal is a certified estimate of your agricultural land's market value, done by a licensed appraiser for buying, selling, borrowing, or estate purposes. In the Texas Panhandle, dryland farmland typically runs $2,000–$4,500/acre; irrigated ground with water rights can exceed $5,000–$6,500/acre depending on Ogallala aquifer depth and well capacity.
When You Need a Farmland Appraisal
Appraisals are required for agricultural loans through Farm Credit, USDA FSA, or commercial banks. They're also needed for estate settlement when land must be valued for probate or equitable distribution among heirs, for conservation easements (to establish the "before" value), and for any sale where the price needs independent documentation. Even if you're not buying or selling, a periodic appraisal helps with estate planning — knowing your land's current value is essential for structuring trusts, gifting programs, and insurance coverage correctly.
How Appraisers Value Farmland
Agricultural appraisers primarily use the sales comparison approach: finding recent comparable sales of similar land in the same area and adjusting for differences in size, soil quality, water access, improvements, and location. For income-producing farmland, the income capitalization approach is also used — taking the land's expected net rental income and dividing by a market cap rate to arrive at value. In West Texas, cap rates for dryland crop ground often run 3–5%, while grass ground used for grazing may show lower income per acre and value differently.
Key factors that affect Texas farmland value: soil class (sandy loam vs. clay vs. caliche), dryland vs. irrigated, water rights (depth to the Ogallala, well capacity in gallons per minute), proximity to roads, existing improvements (pivots, barns, bins), and mineral rights — whether they're included or severed.
Ag Appraisal vs. County CAD Appraisal
Don't confuse a certified market appraisal with your county appraisal district's assessed value. The CAD value (used for property tax purposes under ag use appraisal) is typically a fraction of true market value. A certified appraisal for a loan or sale reflects actual market conditions. If you're disputing your CAD assessment or applying for a bank loan, make sure you understand which type of value is needed for your purpose. Always hire a Certified General Appraiser (CGA) with experience in agricultural properties — a residential appraiser is not qualified for this work.
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Kyle Ellison is a fourth-generation Texas Panhandle rancher and licensed financial professional in TX, CA, NV, MT, UT, NM.