Appraisal of farms and rural properties

Why appraising a rural property is different

A farm is not a large plot of land. It is a productive system in which bare land, improvements, crops, livestock, water resources, agricultural suitability and environmental restrictions form distinct values that need to be identified separately — because each behaves in its own way and answers to different standards.

That is why ABNT NBR 14653-3 addresses rural properties in a dedicated part. A report that merely multiplies hectares by a regional average price ignores soil suitability, the degree of utilization, the environmental liabilities and the value of crops under development — and does not support a credit transaction, an M&A deal or a financial close.

When the report is necessary

• Rural credit and collateral — financing, CPR, CRA, agricultural pledges and fiduciary liens, with the report in the format required by financial institutions.
• Agribusiness accounting — measurement of biological assets and agricultural produce at fair value under CPC 29 / IAS 41, and of rural fixed assets under CPC 27.
• Purchase, sale and M&A — land due diligence, price formation, swaps and capital contributions.
• Succession and estate division — probate inventories, division of shares, dissolution of rural partnerships and shareholder buyout valuations.
• Expropriation and land regularization — compensation for public utility takings, administrative easements and engagements referencing INCRA valuation tables.
• Insurance and claims — value at risk of improvements, silos and crops.

What we do

• Bare land — appraisal by direct comparison with regional data, considering land-use capability classes, topography, hydrography, logistics and distance to shipping hubs.
• Improvements and infrastructure — homesteads, sheds, corrals, silos, warehouses, irrigation, power supply, reservoirs, internal roads and fencing, with technical depreciation.
• Crops and biological assets — permanent and temporary crops, crops under development, pastures, livestock and planted forests, including forest inventory.
• Natural resources and restricted areas — legal reserve, permanent preservation areas (APP), environmental easements and their influence on market value.
• Income studies — income capitalization method for properties whose value derives from operating results.

Methodology

1. Document review — title deed, CAR, CCIR, ITR, georeferencing (INCRA/SIGEF), environmental licenses and lease agreements.
2. On-site inspection and characterization — traversal of the property, verification of the field layout, condition of improvements, agricultural suitability and degree of land utilization.
3. Regional market research — collection of data on transactions of similar land, homogenized by soil class, topography and location.
4. Appraisal by component — bare land, productive and non-productive improvements, crops and biological assets appraised separately and then consolidated.
5. Standards classification — degree of substantiation and precision according to the tables of NBR 14653-3.
6. Report — calculation memorandum, maps, photographic record and ART filed with CREA.

Deliverables