Horse Farms

Real Estate Broker/Owner with Real Estate Training Academy - Real Estate Education

Looking for comments on problems when appraising horse farms.


Here is an addendum I just wrote for a horse farm I am appraising.  Any comments or suggestions are welcomed.

 Comments regarding location, land values and market factors for horse farms:

The subject is located in an area popular to horse enthusiasts. Signs throughout the area state "horse country" and many good quality horse farms populate the area. The market for horse farms is somewhat similar to that of lake properties in that prices exceed the norm for raw land. Market participants place high value on improvements such as large, good quality horse barns, pastures, arenas and feed stations. These amenities are not considered over improvements; in fact they carry as much weight in the buying decision as the quality of the living quarters for the purchasers.

The appraiser has over fifteen years experience with horse farm appraisals and understands what drives value with these type of properties. To understand why certain amenities require adjustments that are different than when appraising other types of properties you must first understand the typical buyer. The typical buyers are usually relatively affluent and less price sensitive when the property meets their needs. They are buying in horse country because that life style is essential to them and they are very selective. When a property meets their needs they pay prices that seem high compared to properties with similar square footage or lot sizes in other areas. To not recognize and understand the market and market participants would be equivalent to appraising property on a popular all sports lake and using comparable sales with non lake front sites. Lake front sites often constitute 50% or more of the value where non lake front sites range from 20-25% of total value. This is the case with horse farms, and with this particular appraisal, where the site and improvements represent approximately 50% of the value.

Appraising properties of this nature creates a problem at times because of the reluctance of Lenders to place value on the two things that are critical to this type of property; excess land and superadequate improvements. The terms excess land and superadequate are stated because they are often imposed by the underwriters and review committees when reviewing these types of appraisals. To refer to the subject site as containing excess land or the horse facilities as superadequate would be misnomers in this report. The definitions below are from the Dictionary of Real Estate Appraisal, 4'th Edition. Following the definition is an explanation.

Excess Land:

"In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land not needed to accommodate the site's primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land."

As the definition states excess land is that land "not needed to serve or support the existing not needed to accommodate the sites primary highest and best use..." The highest and best use of the subject property is the present use as a horse farm; therefore there is no excess land. The 22.5 acres +/- is in the appraisers opinion an optimal lot size for the intended use of the property.

Active listing, Real Comp MLS # 28046069 on Hosner Road within one mile of the subject is a 25.19 acre vacant parcel that is listed for $575,000. This is the most similar parcel found of all sales and listings. The MLS remarks state "Just over 25 acres of wooded property in Metamora hunt area. Terrific building site. Small pond to the front of property...".


An excess in the capacity or quality of a structure or structural component; determined by market standards.

The extensive good quality fencing, 8 stall horse barn and the improvements to the pastures are not superadequate by market standards for horse enthusiasts. If the value of these improvements is not properly recognized the appraisal will fall short in analyzing the significant charachteristics of the property and not produce a credible result. Underwriters typically are adverse to large adjustments for these type of improvements, and in most appraisal assignments rightly so. This appraisal however is of a horse farm in horse country, therefore appropriate adjustments based on cost and market data were applied.


Comments (5)

Jeff Thornton
Jeff Thornton ABR CRB CRS CSP e-Pro GRI - Lansing, MI


There are 2 kinds of horse farm buyers.  hobbyists where the house does matter and the enthusiast where only the horse ameneties count(they would live in a tent if the arena and facilities are good). 

Jul 12, 2008 06:35 AM
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

Hi Joe - Being a REALTOR who specialized in horse properties and having been a professional in the horse industry for over 30 years, I understand what the typical buyer of a horse property wants and expects.  Not only having the horse amenities , but the quality of those amenities is key.  Its hard for people who are not familiar with the industry to understand the importance of double fenced paddocks over single fenced or the type of footing in the ring.  All things that bring value to the farm.  I'm sure that your job as an appraiser of such properties is not easy.

Jul 12, 2008 06:39 AM
Dave Towne - Certified RE Appraiser


The explanation of Excess & Surplus land needs to be expanded a bit, as these terms are not well understood:

Excess land, as noted, can have a separate H&BU, which can be the same as the primary developed parcel.  (It can also be different.)  That's due to the underlying zoning on the land.  For example, if the horse property presently encompasses 10 acres, but the underlying zoning allows for 5 acre parcels, the 'excess' 5 acres probably can be legally subdivided out of the 10 acres, leaving two 5 acre parcels.  The report should show the add'l 5 acres as 'excess' land.

Surplus land generally is too small to allow it's own separate H&BU, again due to underlying zoning regulations.  This occurs often in residential subdivisions where a lot is somewhat bigger than the rest of the subdivision lots, but the surplus land is too small to allow another residence.  It can also happen in outlying large acreage areas.  Using the above example, if the horse property is in an area zoned for 10 acres, but only the first 5 acres have the home, arena, paddocks, etc., the remaining 5 acres may not be subdividable to produce its own separate site.  Therefore, this is properly termed 'surplus' land in a report.

So both Appraisers and Real Estate Agents should look at area zoning maps, and governmental zoning regulations (if they exist!) early in the valuation process.  Then the proper term for the additional land can be used.

Jul 12, 2008 08:49 AM
Timothy Miller

24 acres fenced, different parcells fenced, 10 stalls (heated).

4 outbuildings, 4 story house and mobile home with add-ons - rentable.

Have been here since 1995.  

How many appraisers should I have look at it.

Mar 29, 2013 04:55 AM
Dave Towne

If you are selling the property, and the buyer will mortgage it via mortgage lender, the lender will select one or more appraiser.  You don't have to do anything.

If you are just curious about present value, 1 appraiser is adequate, although two might be preferred, but that will double your cost.

Mar 29, 2013 05:42 AM