Market Valuation vs. Appraisal
Why they differ on farmland and why it matters when you sell
Sellers often ask why a market valuation from their farm real estate agent comes in higher than a bank appraisal on the same land. Both are legitimate they answer different questions, use different evidence, and look in different directions in time. On farmland in particular, the gap between them is structural, and this guide explains where it comes from.
1. What Each One Is
Appraisal • Formal opinion of value by an accredited appraiser (AACI / CRA), prepared to CUSPAP standards • Purpose: lending, estates, tax, litigation, expropriation, matrimonial the client is usually the bank • Method: direct comparison using closed, registered sales; may add income and cost approaches • Backward-looking by design it must rest on verifiable, completed transactions | Current Market Valuation (CMV) • Opinion of the price a property is likely to achieve if marketed today, prepared by a farm real estate professional • Purpose: listing, pricing strategy, tender guide price, seller decisions the client is the seller • Method: registered sales plus pending and conditional sales, current competing listings, buyer demand, and market movement since the comparables sold • Forward-looking it anticipates what a buyer will pay in the coming marketing period |
2. Why They Diverge on Farmland
a | Land Titles lag In Alberta, registration at Land Titles currently runs three to four months behind. A sale that closed in May may not appear as a registered transfer until August or September. Appraisers generally cannot use a sale until it is registered and verifiable so in a rising market the most recent, and highest, sales are left out. |
b | Offer date vs. registration date The price on a farm sale is set the day the offer is written, not the day title transfers. Farm deals routinely close three to nine months later possession after harvest, leasebacks, financing, subdivision, spring possession. Add the registration lag and a "recent" registered comparable often reflects a deal negotiated 9 to 15 months earlier. |
c | Thin comparables force appraisers to reach back Good irrigated or high-quality dryland quarters trade rarely. To find three to five comparables in the same district, an appraiser is often reaching back 18 to 24 months, or into different soil classes, irrigation districts or dryland. Each requires adjustments, and older sales are usually adjusted for time conservatively or not at all. |
d | Scarcity is not captured An appraisal measures what sold; it does not measure how few quality farms are for sale. When there are two irrigated quarters listed in a whole district and a dozen expanding operators, that competition sets the price and it only shows up in the sales record after the fact. |
e | Market movement compounds Farmland in the region has been appreciating at roughly 6–7% per year. A comparable that sold 18 months ago on an offer written 24 months ago is, in today's dollars, about 12–15% behind the market. Three or four such comparables averaged together anchor the appraisal well below what a buyer will actually pay for the land. |
3. A Worked Example
Three registered comparables for an irrigated quarter, with the market appreciating at roughly 6.5% per year. Figures are illustrative.
| Offer written | Registered at Land Titles | Age at offer date | Time-adjusted to today @ 6.5%/yr |
Comparable A — $10,000/ac | 24 months ago | 15 months ago | 2.0 years | ≈ $11,340/ac |
Comparable B — $10,400/ac | 18 months ago | 9 months ago | 1.5 years | ≈ $11,430/ac |
Comparable C — $10,800/ac | 12 months ago | 4 months ago | 1.0 year | ≈ $11,500/ac |
Unadjusted average (appraisal-style) |
|
|
| ≈ $10,400/ac |
Time-adjusted average (CMV-style) |
|
|
| ≈ $11,420/ac |
The same three sales, read by offer date and brought forward to today, support a price roughly 10% higher than the unadjusted average. That is the typical size of the gap the annual appreciation rate multiplied by the age of the comparables.
4. How a CMV Brings Value to Present Day
1. Start with the same registered sales the appraiser would use same district, soil class, water rights and improvements.
2. Date each comparable by offer date, not registration date. That is when the price was set.
3. Apply a time adjustment from offer date to today at the observed appreciation rate (e.g., 6–7% per year, or the district-specific trend from FCC and Land Titles data).
4. Layer in unregistered evidence pending and conditional sales, tender results, private sales with appropriate weight.
5. Read the competing inventory: how many comparable properties are for sale right now, at what price, and how long have they sat? Few listings plus active demand supports the top of the range.
6. Cross-check against the income side rental rates, surface lease revenue, and the returns investors are accepting.
7. Arrive at a marketing range, not a single number: a list or guide price and a realistic floor.
5. Side by Side
| Appraisal | Current Market Valuation |
Who it is for | Lender, court, CRA, estate | Seller (and buyer strategy) |
Legal standing | Formal, regulated, insurable | Professional opinion — not an appraisal |
Evidence used | Registered sales only | Registered + pending sales + current listings + buyer demand |
Time frame | Effective date; backward-looking | Today, forward through the marketing period |
In a rising market | Tends to lag the market | Tracks the market |
In a falling market | Also lags — can be too high | Should lead down as well |
Typical use | Financing the purchase | Setting the price to sell |
6. What This Means for You as a Seller
• An appraisal tells the bank what it can safely lend against. A CMV tells you what a buyer will likely pay. Both are right for their purpose.
• In a rising, thin market with slow title registration, expect the appraisal to come in below the CMV often by roughly the annual appreciation rate multiplied by the age of the comparables.
• That gap matters for the buyer's financing, not for your price. A well-marketed farm sells on competition, and the buyer's lender works from the purchase agreement together with its appraisal.
• A CMV is a professional opinion, not an appraisal, and does not replace one where a lender, court or the CRA requires it.
Article written by Ben Van Dyk I Farm Real Estate powered by Real Estate Centre
This guide is general information only. A market valuation or price estimate prepared by a real estate professional is not a real estate appraisal, was not prepared by an authorized appraiser, does not comply with the standards of professional appraisal practice, and should not be used in lieu of an appraisal performed by an authorized appraiser. Appreciation rates and registration timelines are approximate and vary by district and over time.
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