By Mike Wilken
Online Estimates Often Overlook Unique Factors of Value
Many homeowners have searched their property online and seen an instant value estimate on popular real estate websites. These tools are convenient and easy to access, but when it comes to farm and ranch land, the numbers shown online are often far from accurate. The reason comes down to how those estimates are created.
How Online Estimates Work
Most real estate websites use what’s called an Automated Valuation Model (AVM). These computer programs estimate value by analyzing past sales of a property along with recent sales nearby.
This approach can work reasonably well in residential neighborhoods where homes are similar, and sales happen more frequently. Agricultural real estate is very different.
Farms Are Not “Comparable” Like Houses
No two ag properties are exactly alike. Even neighboring properties can vary significantly based on:
- Soil productivity
- Irrigation capability
- Improvements and infrastructure
- Water availability
- Farm layout and efficiency
- Local governing authorities
Agricultural properties also sell far less often than residential homes, meaning there are fewer reliable sales for automated systems to analyze.
What’s Included in the Sale Matters
In residential sales, whether a refrigerator stays with the house has little impact on value. In agriculture, however, the included assets can dramatically change the price.
For example:
- Was the pivot irrigation system included?
- Were grain bins or livestock facilities part of the sale?
- Did the transaction include leases or operational improvements?
These details can represent substantial value differences, yet automated systems often cannot interpret them correctly.
Limited Data in Agricultural Markets
Many agricultural states are non-disclosure states, meaning sale prices and transaction details are not publicly available. Without verified information, online estimates rely on assumptions rather than confirmed market data.
Important factors often remain unknown:
- Was the property publicly marketed or privately sold?
- Were there restrictions, such as conservation easements?
- Were improvements or infrastructure excluded?
Each of these can significantly affect value.
Even Zillow Learned the Limits of Algorithms
The limitations of automated valuation aren’t just theoretical; the evidence is well documented.
In 2021, Zillow made a high-profile push into directly buying and selling homes through its “Zillow Offers” program, relying heavily on its own valuation algorithms to guide purchasing decisions. The strategy was simple: buy homes identified by the algorithm, make light improvements, and resell them for a profit.
Instead, the results were costly.
After writing down hundreds of millions of dollars in losses between February and November 2021, the company laid off roughly 2,000 employees and shut down the program entirely. Reports at the time indicated the company had internal concerns that its algorithms were overpaying for homes, highlighting a critical issue: even in highly active, data-rich residential markets, automated models can struggle to accurately predict real-world value.
Reports at the time indicated the company had internal concerns that its algorithms were overpaying for homes, highlighting a critical issue: even in highly active, data-rich residential markets, automated models can struggle to accurately predict real-world value.
While algorithms had difficulty in that environment, the challenges are far greater in the more complex and less transparent agricultural land market.
The Bottom Line
Online estimates can provide general directional value, but they should not be relied upon for important financial decisions involving agricultural land.
Accurate ag land valuation requires local market knowledge, verified sales analysis, and a strong understanding of how agricultural properties operate.
Agricultural real estate is a specialized asset class, and determining its value still requires experienced professionals, not just algorithms. Get a clear, accurate understanding of your land’s value with appraisal and market analysis services from Agri Affiliates, delivered by professionals who know your local market and understand area agricultural operations. When it comes to ag land, experience and local insight make all the difference.
Sources:
Langone, Alix. “What Happened at Zillow? How a Prized Real Estate Site Lost at iBuying.” CNET, CNET Media Group. https://www.cnet.com/personal-finance/mortgages/what-happened-at-zillow-how-a-prized-real-estate-site-lost-at-ibuying/ (accessed March 31, 2026).
Bagott, Jeremy. “Dazzled by Wizardry, Federal Mortgage Regulators Ignore Zillow Debacle.” Appraisers Blogs, published June 12, 2023; updated January 2, 2025. https://appraisersblogs.com/dazzled-by-wizardry-federal-mortgage-regulators-ignore-zillow-debacle/
Parker, Will & Putzier, Konrad. What Went Wrong With Zillow? A Real‑Estate Algorithm Derailed Its Big Bet, The Wall Street Journal (Nov. 17, 2021), about Zillow’s algorithm‑driven iBuyer business — Zillow Offers — and its challenges in accurately predicting home prices and sustaining its home‑flipping model.
