Zillow for farmers? New websites size up Iowa farmland values

Iowa farmland is the state's biggest asset, worth an estimated $215 billion.

But getting information on buying, selling or renting farmland is a lot harder than the handful of clicks that let you get a wealth of home values on the internet.

Now, new websites are popping up to provide information about Iowa ag land values, based on data such as recent sales, soil composition and productivity.

Among those with Iowa ties: What's My Farm Worth? by Peoples Co., California-based AcreValue and Terva, a startup created by an Iowa State University student.

All three started with a discussion about how to make it easier for farmers to get a handle on land values.

It's an important issue in Iowa and the nation. About 40 percent of the nation’s farmland is likely to change hands in the next two decades.

That's particularly true in Iowa, where seniors 65 and older own 56 percent of the farmland, with 30 percent of the land owned by those 75 years and older, ISU reports.

Iowa farmland values have climbed dramatically over the past decade or so, posting the strongest increases as corn and soybean prices spiked. Values hit a record high in 2013 at $8,716 an acre, ISU surveys show.

Last year marked the third year in a row farmland values had fallen, the first time since the 1980s farm crisis. Values dropped to $7,183 an acre.

Steven Brockshus, an ISU senior, began thinking about land values after visiting Japan and learning that 1 million acres lie fallow — or not used to grow food — because landowners struggled to make the right connections with growers or buyers.

Brockshus came back to the issue when he went to a land sale with his father, a dairy farmer in northwest Iowa.

Growing up with the internet, Brockshus expected a lot of data to be easily available, especially at a time when companies such as Zillow, Trulia and others provide urban homeowners and buyers with residential values with a few simple clicks.

He found it wasn't easy at all.

"It really was a surprise," said Brockshus, who, with a small staff, is now combining public data, including coming land auctions and sales, with mapping software.

"Imagine a marriage of Google maps and public records," said the 23-year-old, who discovered that data online is often uneven, with big differences in what's collected. And that's just in Iowa, where Terva is targeting its first efforts.

Brockshus expects to launch a fully developed site for Iowa within a couple of months. Terva will add other Midwestern states before pushing nationwide.

Unlike other sites, Brockshus said his company isn't estimating a land value but instead is giving farmers, investors and landowners the data they need to determine their own value.

"We want to create an online marketplace for farmers, so they can get a fair value when they sell or rent their land," said Brockshus, who graduates in May.

Now free, the company eventually will charge based on how many services users need.

Steve Bruere, president of Peoples Co., a Clive farmland broker and management business, wanted to look at how the company could use technology to better help Iowa farmers value their land.

It launched What's My Farm Worth? more than a year ago, building on profitability data developed by partner AgSolver. The Ames company helps farmers use detailed data to determine their most and least profitable acres to make better management decisions.

"If you want to buy a house, you call up your residential broker, get a list of 45 houses for sale in Clive, and go look at them," Bruere said. "If someone wants to buy a farm in Iowa, there's no central MLS (multiple-listing service)," to tap into.

"A lot of farmland is traded privately; it's sold at auctions," he said. "Getting access to farmland data is really challenging."

Now, most farmland value data is based on surveys, such as reports from Iowa State University and the Iowa Chapter Realtors Land Institute.

What's My Farm Worth?, a free service, calculates a value based on a five-year corn price, average yield by county and soil type, rental value and other factors.

Bruere sees the sites as a tool that can better help his brokers, appraisers and other professionals connect farmers, landowners and investors.

"It's both exciting and a little intimidating at the same time," he said. "In some ways, we're allowing technology to replace some of the functions our industry provides."

"You can fight it or embrace it. We want to get out in front of this," said Bruere, who is talking with Terva and AcreValue leader Tamar Tashjian, AcreValue's general manager, about using their sites as well.

Tashjian said the idea for AcreValue came when co-founder Chris Seifert's family started discussing the value of their farm in Pocahontas County.

"There was a debate about whether they should hold onto the land or sell it. Chris is a Ph.D scientist from Stanford, and he thought 'I'm going to help my family make this decision based on data,'" Tashjian said.

"He tried to find information about land values, and couldn't find much online, like you could from Zillow," she said.

Seifert developed an automated valuation program.

"It existed in residential and commercial real estate for a long time, probably 10 years now," Tashjian said. "This is a similar concept," about 20 property data points combined with economic data.

"We include all kinds of detail about a property — from who owns it to detailed soil maps, expected productivity, the crops grown on the fields," she said, adding that the service is free but premium options will be added. "We recently added actual sales."

Complicating the valuation process is a lack of turnover in farmland ownership, Tashjian said.

"In the residential real estate market, something like 5 to 6 percent of homes change hands every year," she said. "In the farmland real estate, it’s about 1 percent. Families hold onto property for decades.

"In certain areas, you might not have substantial enough sales to estimate the value," said Tashjian, whose company gets the public data from a private vendor. "We're able to supplement that with things like survey data to help drive the model. But it's a challenge when land is more thinly traded."

The farmland values can be used for sales, but it also can be helpful for farmers and landowners negotiating farmland rents.

Tashjian and Bruere said the models are imperfect. AcreValue plans to evaluate its accuracy after it becomes better established.

"There are things that are impossible to predict," Tashjian said. "If a property goes to auction, for example, who are the actors at the auction? What is the demand? Is there a neighbor bidding on the property or an outside investor? Is it a fire sale?

"We're trying to measure the intrinsic value of the land … but we can't measure the emotional factors."