Eight Common Farm Valuation Mistakes

Here are eight Common Farm Valuation Mistakes

Many farmers and landowners believe they have a good sense of what their property is worth — after all, they live on the land, know what nearby farms sold for, and may have years of industry experience. But agricultural property is one of the most complex asset types to value, and even experienced owners often misjudge its true market value.

As a professional valuer based in George and serving the Garden Route, I’ve seen how inaccurate estimates can lead to tax issues, sale delays, family disputes, or lost income. In this article, I’ll share some of the most Common Farm Valuation Mistakes.

1. Assuming All Land in the Area Is Equal

One of the most common farm valuation mistakes is relying too heavily on what neighbouring farms sold for. While proximity does matter, no two farms are identical. Factors such as:

Soil type
Water access
Infrastructure
Crop history
Zoning and subdivision potential

…can cause values to vary widely — even between adjacent properties.

Market value is not just about location. It’s about what the land can do and what the buyer can legally and practically achieve with it.

2. Overvaluing Based on Sentimental or Historical Factors

Many farms have been in the same family for generations. It’s completely understandable that owners attach personal significance to the land, homes, or historic features. But potential buyers or legal bodies don’t see sentimental value — they look at economic potential, infrastructure, and risk.

A professional valuation helps prevent farm valuation mistakes by separating emotional attachment from objective worth.

3. Ignoring Water Rights and Legal Constraints

A borehole on your land doesn’t automatically make it valuable. What matters is whether the water source is legally allocated, registered, and sustainable for long-term use.

Similarly, many landowners overlook:

Conservation overlays
Environmental servitudes
Land claims
Zoning restrictions

All of these can significantly affect value — either by reducing income potential or limiting development options. Incorrectly assessing the foundations of the property use is one of the common mistakes farmers make when valuing their property.

4. Forgetting to Include or Properly Assess Improvements

Farms typically include various fixed improvements, such as:

Fencing and access roads
Worker accommodation
Dams and irrigation systems
Cold rooms, sheds, or workshops

These structures often go unaccounted for, or their condition and relevance are not correctly factored in. A registered valuer will inspect, measure, and depreciate each improvement appropriately based on current market expectations.

5. Assuming the Farm’s Income Automatically Equals Its Value

Some owners believe that if a farm produces good income, its market value must be equally strong. While income is one valuation method, it must be weighed alongside comparable sales and land use potential.

Also, buyers may not always be in the same line of agriculture — meaning your current use doesn’t always define its future value.

For example, the timing of crops is cyclical and some crops may be nearing the end of that cycle. Common mistakes farmers make when valuing their property is failing to fully assess the impact of the income and potential changes such a change of operator or crop stage.

6. Using Municipal Valuation as a Price Benchmark

Your municipal valuation is calculated for rates purposes and often does not reflect true market value. In rural areas especially, municipal data may be outdated, based on incorrect land use, or missing key improvements altogether. This is one of the most common mistakes farmers make when valuing their property.

7. Relying on Estate Agents for Valuation Advice

Estate agents have a valuable role in the sale process, but they aren’t trained or regulated to provide formal valuations — especially not for agricultural properties. Their market opinions can vary widely, and they may not take into account zoning restrictions, water rights, or technical infrastructure that requires professional assessment.

8. Forgetting the Aspect of the Lifestyle Premium of a Farm in a Desirable Location

One of the common farm valuation mistakes, is when lifestyle farm often commands a premium because its value is influenced by more than just the balance of income and expenses. While commercial farms are typically assessed based on productivity and profitability, lifestyle farms appeal to buyers seeking location, views, recreational opportunities, privacy, charm, personal enjoyment or quality of life. As a result, their market value can shift in a different direction from purely financial calculations.

The Cost of Common Farm Valuation Mistakes

Whether you’re:

Selling your farm
Planning for retirement
Preparing an estate
Involved in a dispute

…an incorrect valuation can lead to poor decisions, delays, and financial consequences. It’s always worth getting a professional report before making major decisions about your land. It’s not worth guessing and landing up with the common farm valuation mistakes.

Independent Agricultural Valuations in the Garden Route

As a registered professional valuer, I provide independent, evidence-based reports for farms, smallholdings, and agricultural investments across George, Mossel Bay, Knysna, Oudtshoorn, and the surrounding regions.

Every valuation is:

Compliant with legal and regulatory standards
Tailored to your specific land and situation
Supported by market research and local knowledge

If you’re unsure what your farm is worth — or you’ve been relying on informal estimates — let’s start with a proper assessment and help you avoid common farm valuation mistakes.

Get in touch to book your agricultural valuation or request a quote.

Also have a look at the following related articles:

Eight Common Mistakes Farmers Make When Valuing their Property

Seven Crucial Factors that Affect Farm Value

Agricultural Valuations for Estate Planning and Inheritance

Selling Your Agricultural Property? Start with a Registered Valuation

Agricultural Property Valuations in George – a complex challenge for Valuers

Interested in Farm Valuations? Check out more at the SAIV website.