Price Per Acre
Most of the United States is surveyed into townships that comprise 36 sections of land and measure six miles by six miles. Each section contains 640 acres of land. There are 23,040 acres of land in a township. The overwhelming majority of townships are located in rural areas, and when buying and selling such properties, the monetary unit most generally used is the price per acre.
Conversely, commercial and residential properties in urban areas are generally sold on a square foot basis. If a real estate broker were selling a one-acre commercial property in a large city, he would most likely quote the price as being $10 per square foot—instead of $435,600 per acre (there are 43,560 square feet in an acre, times $10 per square foot).
However, when dealing with rural properties it isn’t practical to quote land prices on the basis of square footage. Imagine the burden of a rancher trying to sell his 3,000 acres to another rancher by quoting a price of one penny per square foot (one penny per square foot translates into a price of $435/acre). Wouldn’t the rancher find it much easier and less confusing to simply state that his ranch is for sale at a price per acre of $435?
Rural banks, country real estate brokers, ranchers, farm credit bureaus, escrow companies, and sellers and buyers all use the acre as the monetary unit for rural acreage prices. Unfortunately, there still can be some subtle deception involved when some real estate brokers insist on listing a sales price and then quoting total acres involved (without separating leased land from deeded land). In other words, a sales price of $1 million might be shown along with a total of 2,500 acres. It would therefore be reasonable to assume that the price per acre was $400 ($1 million divided by 2,500 acres). But upon further investigation, it is revealed that the 2,500 acres includes 2,000 acres leased from the BLM, leaving only 500 deeded acres—drastically changing the price per acre to $2,000!