When an appraisal splits land and trees, most ag lenders will only advance against the dirt
Take a 70 acre parcel in a cheap rural county, 46 acres in an old navel citrus block, the rest pasture and a shed. Say the contract price is 392k, or 5,600 an acre, rich for bare ground when bare pasture in that county trades 2,800 to 3,400. The seller's case for the premium usually rests on the producing block: mature trees, a packer relationship that has held for years, and packout history showing something like 415 bins a year netting 27k on 46 acres after farming cost, a 6.9 percent yield on the asking price if the numbers hold up. Where buyers often get stuck is the appraisal. An appraiser can report the value as split, say 214k of land and 147k of permanent plantings and improvements, and most ag lending programs advance against the real property value while treating the plantings as a depreciating improvement with a limited remaining productive life. That pushes loan to value calculations toward the smaller land figure, and at 65 percent of 214k a buyer is looking at roughly 139k of debt against a 392k purchase, a much larger equity gap than the headline price suggests. That split treatment is standard underwriting at most conventional ag lenders, not something worth arguing. The more productive path is a lender that specializes in orchard and permanent planting collateral, or negotiating seller carry on the gap the bank will not cover. A 24 year old navel block still has meaningful productive life left, but a buyer should get a straight answer on remaining years from an agronomist or extension office before leaning on that yield to justify the price.
