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Land Parcel Sales

June 12, 2022
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WRITTEN BY Dr. Elena Bickell and Dr. Tomotaroh Granzier-Nakajima

Executive Summary 

A land parcel is a plot of land that can be located in either an urban or rural area. Small parcels can range from a few acres to several hundred acres in size. Land parcel sales are part of real property (the land including any growing crops and permanent fixtures) or real estate sales and subject to all applicable state and local taxes, zoning ordinances, and regulations. Agricultural land parcel sales may be regulated by additional statutes that address corporate and foreign investor acquisitions.  

Highlights 

  • The price per acre of agricultural land is inversely related to parcel size; the smaller the land parcel, the larger the premium buyers are willing to pay, especially for lands located close to urban areas. The boundary of a land parcel during sale is determined by the seller.
    • As a parcel's size increases, the likelihood that the parcel will be used for agricultural production also increases.
  • Research on small parcels of land finds that densely populated areas, areas close to cities, quality roads, and greenery all raise sale prices. Small parcel premiums have been observed to decrease as the distance from urban areas and the distance from quality roads increase. 
  • States vary in their regulation of agricultural land sales.
    • Iowa and Missouri both have restrictions on the ability of foreign investors to acquire agricultural land. They also restrict the ability of corporations to purchase agricultural land.

Limitations 

  • Very little research exists that investigates the effect of different policies on agricultural land sales.
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