5 Benefits to Having an Online Land Auction

November 22, 2020

Yes! Land is sold online and is safe, powerful, and real! Online land auctions have many benefits when compared to a traditional live (in-person) auction for both bidders and sellers!

I’m an online auctioneer and land broker with DreamDirt Farm and Ranch Real Estate, LLC. We have been doing online land auctions for about 10 years now! DreamDirt was the pioneer of moving land auctions online. Unlike other real estate and auction companies who are just now adding online bidding to their services. 

Yes! We still conduct traditional live auctions; however, there are so many benefits for you as a seller if you decide to sell online only. Here’s why:

1. Place bids and view the auction from anywhere!

Instead of showing up to a community building, church, or office on auction day, bidders and sellers can view the auction from their phone, laptop, tablet. Anywhere at any time!

A live auction is set for a particular day and time. With an online auction, the bidding is open for roughly 30-45 days and bidding can happen at any time up until the time runs out. 

Imagine bidding on a farm while watching your kids’ sports game, or sitting at home from the comfort of your couch. This is so helpful to bidders and in the end benefits you as a seller since it doesn’t limit a buyer to taking time out of their day to show up on auction day in-person to raise their hand and bid.

Online auctions are the safest way for people to bid and sellers to watch auctions. This keeps everyone healthy, and off the roads during winter weather when farmland in Iowa is commonly sold. If you are an absentee landowner this is a great way for you to still be a part of your auction. I enjoy being on the phone or video call with my sellers the last half hour of their online auction to answer any questions they have and seeing their reaction when the bids come in online!

2. Mitigate Social Pressures

Picture this – you are a farmer walking in to the live bidding location, you see other neighboring farmers, your banker, the family members of the farm, tenant, and other people you are around every day. The friction and stress you would feel I would imagine would be very uncomfortable. Would you be nervous bidding against a tenant or family member? Would you bid to your full potential? Probably not. 

As an online auctioneer, I work for you as the seller. When you decide to use an online auction, you take away those social pressures’ bidders would face in a room full of people. Instead, your online land auction can help you achieve top dollar because bidders often say they can’t quit hitting the bid button since names remain anonymous and they feel more comfortable bidding from their home by themselves without the pressure of others watching.

3. Reduced Fees and Commission

Online land auctions can help sellers save money on commission compared to traditional live auctions. You will be able to save money by not paying for a venue, refreshments, printed material, ring man labor, and/or travel expenses for the auction company. When comparing land auction companies, ask what they charge for both live or online auctions. Be aware of any hidden fees for traditional live auctions some companies might hide!

4. Speed and Urgency

Some might claim a live auction creates an up-beat atmosphere that bidders actually enjoy more. I disagree with this especially due to the social pressures they feel which I covered in benefit #2. 

With an online land auction, you can watch the bidding increase as the time ticks down. The online auctions I help conduct are typically are set up so bidding happens over a span of 30-45 days up till auction day, which ends at 2pm during a week day. Many times, bidders want to beat the clock on an online auction and get their high bid in ahead of time which creates the sense of speed and urgency. If a bidder tries to bid the last second, our bidding software extends for 2 more minutes to give everyone a fair chance to bid one more time until the time runs out and no more bids have been placed.

5. Are online bidders real?

You might be wondering if the bidders online are real and the answer is yes! With our online bidding software, I call them as soon as they register to make sure they are approved to bid on your farm! I also still help bidders who don’t use technology, bid over the phone and keep them up to date with the online bids coming in. 

As an online land auctioneer, I understand how bidders react to the time ticking down and when to reduce bidding increments to mimic a live auction. As bidding increase, the bidding increments get smaller to encourage bidders to keep placing bids resulting in powerful sold results. 

Go to bid.dreamdirt.com to see all of our current and past online land auctions. It’s very rare we have a live auction because of the benefits online land auctions provide. Past sellers have really enjoyed the process of having the convince of an online land auction. 

If you’d like to see what your online land auction would like, message or call me today! I can send you a preview link which is private and we can discuss if an online auction is the right option for selling your farm. 

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Pros and Cons to 5 Different Ways to Sell Farmland

November 22, 2020

Are you feeling confused on how you should sell your farmland? Here’s a quick checklist of the pros and cons to common methods of selling land. Choose one which best fits you and your farm, or reach out today to have a free professional consultation!

Sell by Live Bidding Auction

This is where people show up to a common place and the auctioneer calls for bids in-person on a certain day. Sellers typically come to live auctions and talk with their auctioneer during a “break” in bidding to discuss the price of where bidding is at. With a reserve auction, which is most popular, you as a seller have the right to accept the highest bid, reject it, or confirm the sale at your reserve price and sell to the highest bidder.

Pros

  1. As a seller, you set your own terms and conditions bidders have to agree to.
  2. Live auctions are widely recognized as the traditional way of selling land. 
  3. In this method, an auctioneer will chant out-loud and take bids. Creating a unique atmosphere that the public enjoys listening to.
  4. Some live auctions also include online bidding depending on the auction company. 

Cons

  1. Venue expenses to hold the auction can be an extra cost.
  2. Bidders experience social pressures and often become nervous bidding against friends, the farm tenant, and the public. Resulting in lower prices when compared to online only auctions.
  3. Live auctions are often stressful to you as a seller because you have very little time typically during the 10-minute break between bidding to decide if the price is high enough for you to sell your land or not with your auctioneer.

Sell by Timed Online Auction

In this method, all bidding is online and timed. Bidding is typically open for 30-45 days and the auction has a set date and time where bidding will end. I recommend online land auctions to all of my clients as the preferred method of selling land because of the benefits they provide compared to live in-person auctions.

Pros

  1. Bidding online greatly reduces bidder friction by taking away social pressures that are experienced at a live auction. The bidders remain anonymous online and can sit in the comfort of their home and bid!
  2. Bid from anywhere! 
  3. Unlike a live auction, there are bids already placed before auction day!
  4. Setting a date for the auction to end creates momentum and competitions for people to bid. Unlike a listing which could take several months!

Cons

  1. In this case the auctioneer does not chant out loud, but the time ticks down and flashes when someone bids. Still creating an exhilarating experience for bidders to keep placing bids!
  2. Tip – research auction companies and choose one who owns their bidding software and has multiple sold results of online land auctions over several years!

Sell by Listing

The biggest difference between auctions and listings is a for sale price instead of an auction date. Your real estate agent helps you understand offers submitted by buyers and markets the property for you.

Pros

  1. You set the price as a seller.
  2. Buyers who are investors can calculate return rate since the price is established. 

Cons

  1. Buyer’s will present offers with contingencies and terms which you either have to accept, counter-offer, or decline.
  2. Typically, listings are a longer process than auctions since there is no set date.
  3. You can easily over-price your farm or acreage and have to work down on price instead of up.
  4. Listings require a higher commission fee to cover paying both seller and buyer brokerages when compared to auctions.
  5. If there are multiple owners, all sellers will have to agree on the terms presented by buyer which can be challenging to achieve.
  6. Multiple open houses dates which are time consuming!

Sell by For Sale by Owner

Have land to sell? You can try selling on your own!

Pros

  1. You could get the job accomplished yourself as a seller. 
  2. Since you are the primary contact you will deal directly with potential buyers and receive all inquiries!

Cons

  1. Marketing/Advertising is all on your and cost money!
  2. You have to be comfortable accepting offers with contingencies and having conversations with potential buyers. 
  3. There is no sense of urgency for buyers to present an offer when compared to timed online auctions which have a time frame laid out. 
  4. If selling land with a house, you will need to have multiple open house dates. Visits from potential buyers can be very inconvenient.
  5. You will be responsible for making sure the closing process is moving correctly and on time.
  6. Selling land is complex, and sometimes paying an attorney for legal advice is necessary!

Private Direct Offer

I offer this method to sellers looking to keep their name private and not listed on their land auction or listing. This method is only advertised to select list of buyers who are required to accept the terms and conditions and place an offer within a few days.

Pros

  1. Completely private – you don’t have to display your name or who owns the farm.
  2. You will set your terms and conditions similar to an auction.
  3. Your property will only be marketed to a select few individuals and investors to make offers. 
  4. Typically, a fast process and can be used for lease back options.

Cons

  1. Since it is not advertised to the public, this creates a smaller buyer pool and may not achieve as high of a price like an auction would.
  2. Not as common when compared to auctions and listings. 
  3. Only select auctioneers and land agents provide this method.

Most landowners only sell land once in their life, and only get one shot at it to make it right. My advice – reach out to a professional who has sold multiple properties and can offer advice on what method best fits your land. If you have any questions or would like a free consultation, fill out this form and I will reach out to you!  

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5 Secrets to Setting an Auction Reserve

November 22, 2020

I understand you don’t want to give your land away, and I have a solution! A reserve land auction is where you as a seller set a minimum price where you feel comfortable selling your land to the highest bidder. You also have the right to reject or accept the highest bid unlike an absolute auction where you would have to sell regardless of the price. Reserve auctions are more traditional, and protect you as a seller! Here are a few secrets you should know when it comes to setting your auction reserve price. 

1. Talk to an Auction Professional First

“What do you think my land is worth?” Is one of the most common questions I receive when landowners call me. When you first start thinking about having a land auction, this is a great question to ask a land agent or auctioneer. I look at what the land market is doing daily, and can educate you on what I think your land is worth. If you don’t have a price already in mind, this will guide you on setting a reserve price. 

2. Reserve price = Expected Value x 75%

So, you have a good idea of what your land is worth now. The best advice I can give you next is to take 75% of the value to calculate your reserve price. 

Why not 100%? Here’s the secret. You might be feeling uneasy about your reserve price from my calculation, but this is key for bidder momentum and achieving maximum results.   

3. Announcing, “Farm will Trade Hands”

Have you ever bid on an item and wondered if you were actually going to get it? This is how bidders often feel during a reserve land auction. Farmers, investors, and other buyers understand majority of farmland is sold with a reserve. 

Your reserve price should really stay between you and your auctioneer – no one else (especially neighbors, friends, and family members) until the bids have reached your reserve price during the auction. It’s at this point I like to confirm with you as a seller that you are willing to confirm the sale of the auction and the farm will trade hands to the highest bidder. 

This creates bidder momentum. Typically, bidders will feel more relieved and react by placing more bids after you make the announcement since they know if they are the high bidder, they will get the farm which creates competition. The next few bids that are placed are how we achieve the expected value or more!

The lump in your throat feeling will slowly start to go away as you watch the next few bids be placed and continue to climb. 

4. Accepting or Rejecting the Last Bid

I want to make it clear – you have total control of your auction. Don’t worry. With a reserve auction, you have time to accept or reject the highest bid and confirm the sale even after the auction is complete. I’ve had sellers include in the terms and conditions of their auction that they have up to 4 hours or even 24 hours after the auction to accept or reject the highest bid. Although not as common as secret #3, it’s still a safe way for you to sell land stress-free. 

5. Absolute vs. Reserve

There are two different ways to sell your land by auction – absolute or reserve. I’ve talked a lot about setting an auction reserve, but I want you to be aware of how absolute auctions work. 

No matter what, if you have an absolute auction your farm will sell to the highest bidder regardless of price which can come with risks. This could be dangerous if only one bidder shows up to your land auction and there’s no competition to raise the price. 

I’m thinking worst case scenario though, and it would be very unlikely for a bidder to walk away owning farmland for $1. Remember how I said bidders appreciate knowing they can own the land if they are the high bidder in secret #3? The word absolute is powerful and similar to announcing confirming the sale of your auction. 

I would recommend having an absolute auction only in very unique situations. For example, I helped conduct an auction where all proceeds were being donated regardless of price. It was an absolute auction in October with 10 tracts of farmland that reached $11,400/acre on multiple tracts! 

Having a land auction shouldn’t be a scary or a stressful situation. I protect my sellers by letting you determine what price you are willing to sell your land for. I’m here to give you guidance and advice but at the end of the day you have to make the decision what price you are comfortable with. Let’s get started today with a free market analysis of your farm!

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