Farmland Update: Week of April 19th – 25th, 2021

April 21, 2021

RECENT FARMLAND MARKET NEWS

In Iowa, there are currently 754 active farmland listings with and average listing price of farmland is $7,546/acre. This week there are two farmland auctions both in Southeast, Iowa. Here are the results from the auctions:

Wednesday April 21st, 2021: 194 acres in Van Buren County, Iowa

  • City: Birmingham, IA
  • Live and Online Public Auction Held at American Legion in Stockport, IA
  • Tract 1 – 102 acres of Farmland
    • Sold for $12,600/acre
    • 98.3% tillable
    • 81.2 CSR2
    • $155.17/CSR2
  • Tract 2 – 92 acres Mixed Used Land
    • Sold for $5,600/acre
    • 60.6% tillable
    • 63.3 CSR2
    • $88.47/CSR2

Wednesday April 21st, 2021: 59.88 acres in Wapello County, Iowa

  • City: Ottumwa, IA
  • On-site Auction
  • Sold for $8,950/acre
  • 91.9% tillable
  • 73.3 CSR2
  • $91.39/CSR2

Farmland Market Survey

The Realtors Land Institute and National Association of REALTORS Research Group released results of their Land Market Survey recently. The survey is done by land realtors from 2020 showing price and sales changes in land.

Results from the survey showed strongest sales and price increases in residential and recreational land:

  • Residential land sales price rose average of 6.8%
  • Recreational land sales price rose average of 3.6%
  • Ranch land sales price rose average of 3.1%

Overall, 3% increase in land sales and land prices rose an average of 2%.

Read more of their article here

Thoughts from Iowa Land Auctioneer, Rachel

With planting season upon us in Iowa, farmers are staying busy in the fields. Good quality farmland is still in high demand and prices are holding strong. Typically, there are fewer auctions as summer months approach and crop is in the ground, but I’m curious what Summer of 2021 will show for the land market.

Can I sell my farmland during the crop season?

Yes, you can still sell farmland during the crop season. I can help you set terms and conditions for your land auction to accommodate selling during the crop season especially if you have a tenant on the farm. I’m already noticing a few land auctions pop up for June and July and we are adding some at DreamDirt! Now is a great time to sell if you’ve inherited land or have thought about selling for the last few years! Get a free quote on what your farm is worth by filling out my form and I will get back to you!

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Farmland Auction That Was So Quiet You Could Hear Crickets!

April 9, 2021

Awkward Silence During Auction

Have you ever heard an auctioneer chant before? My guess is you have and think it’s amazing to listen too! If you haven’t here’s a video of one of my favorite auctioneers – Iowa native auctioneer, Emily Wears Kroul. Have you ever been to an auction where it was so quiet you could hear crickets though? Probably not, but I have and I was the auctioneer conducting it!

This story gets even better though! One of the sellers of the farm was playing the cricket noises from his phone – talk about awkward silence!

Online Auctioneer

On April 7th, we gathered at the community shelter house in Kiron, IA to sell 115.60 acres of farmland in Crawford County, IA. This wasn’t your typical land auction you might be picturing though. It was an online only auction, but we offered a bidding location to help bidders register to bid on their phone or device. Unlike a live more traditional auction where you would expect a big crowd and auctioneers chanting, the room stayed silent and the bidders watched the auction on their phone and hit the bid button on their own.

Kiron, IA Farmland Auction Results – Rachel Hoy Iowa Land Auctioneer

In a previous blog, I wrote about how I’m an auctioneer but I don’t know how to chant. During the auction, I called out each time a bid was placed and announced the current bid, asking bid price, bidding increment, and the $/CSR2 amount without actually chanting. As the time ticked down, I announced the amount of time left to place one more bid. Our timed online auctions are set to close at 2pm. and are open for about 30 days. Bids could be placed anytime up till April 7th at 2pm.

The seller’s confirmed the sale of the auction and lifted the reserve around 1pm that day. This encouraged bidders to bid even more since they know knew the farm would absolutely sell to the highest bidder. Even though it was set to close at 2pm, extended bidding happened till 2:06pm. This is because when someone bids in the last 2 minutes it extends out for another 2 additional minutes. Giving everyone a fair chance to bid until no more bids have been placed.

Social Pressure During Live Auction

Little did we know, the winning bidder was in the room with us. If it was a live auction, we all would have known the whole time who was bidding and winning. If you put yourself in the shoes of a bidder though, imagine the stress and social pressures you would feel bidding in front of your peers, the seller, banker, etc. This is why our online only auctions work so incredibly well. It takes all the social pressures away allowing the bidder to bid to his/her maximum potential without feeling judged. Their name stays anonymous online and that is why we didn’t know the winning bidder was in the room!

Our team of auction professionals call each person who registers and bids on our land auctions. They all have to accept the terms and conditions that the seller sets in order to participate in the auction. Even though it was surprising the winning bidder was in the room, we had talked to him earlier in the week to make sure he was set-up to bid online. Each bidder had their own account and participated from their own device.

We simply had a bidding location set-up to ensure extra help in-case someone struggled with using the internet. It may surprise you, but we only get a few people that call and ask if they can bid over the phone. Now a days, farmers use technology every day and we have been selling land online for the past 10 years! Online only auctions are the most powerful way to sell your land now and the most cost-efficient!

farmland in Crawford County, IA auction results

Online Only Land Auction Boone County, Iowa

We sold a farm the next day, April 8th in Boone County, IA without having a bidding location or live auction. It was completely online only! The sellers of the 75.99-acre farm near Boxholm, IA also confirmed the sale of the auction prior to 2pm. The auction extended all the way till 2:57pm!

Sold farmland in Boone county, Iowa price

Auctions Create Competition!

Auctions create competition! You can definitely see it when two bidders go back and forth bidding against each other for almost and hour! The seller’s confirmed the farm would sell and trade hands prior to the auction closing. This encouraged the bidders to keep bidding knowing they had a chance of owning the farm.

Are you curious how our online auctions work and what they look like? View the recording of this past auction here.

Free Auction Consultation

If you are thinking about selling land in Iowa, now is a good time! I offer free consultations! Let me help you get started on the right path to selling your most valuable asset. Contact me at 515-954-8063 or email Rachel@DreamDirt.com to request your free consultation.  

Auctioneer Rachel contact at 515-954-8063
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Farmland Auctioneer

March 30, 2021

When I first meet someone and introduce myself as an auctioneer I get some strange looks. My family and friends also have troubles grasping the fact that I’m an Iowa farmland auctioneer. Why is this? When most people hear the word auctioneer, they picture someone chanting. I don’t have the talent to do so or know what words to say in a chant. However, I am an Iowa farmland auctioneer and here’s why.

Definition of an Auctioneer

According to the National Association of Realtors, an auctioneer is,“The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or cry the auction.”

There are several auctioneer schools around the country that offer different types of classes and designations. World Wide College of Auctioneering in Mason City, IA helps those who are interested in learning how to chant. I know many auctioneers that have been to this school. However, I knew it wouldn’t be the right fit for me. I wanted to learn more about the business side of the auction industry and strategies to best serve my clients.

Jason Smith and Tom Bradley, (brokers, and auctioneers of DreamDirt), both suggested I attend Certified Auctioneers Institute (CAI) School. CAI is hosted by the National Auctioneers Association. It is a three-year program and covers auction methods, improving business skills, staying up-to-date with technology, networking, and becoming a leader.

I couldn’t wait to sign-up and get started on my CAI journey after hearing what all it has to offer!

Certified Auctioneer Institute School

Even though CAI was going to look different this year due to COVID, I still wanted to attend. Typically, the class is held in Bloomington, Indiana at the University of Indiana. With COVID gathering limitations, the NAA decided to host the class virtually. I’ve used Zoom before when meeting with clients. Yet, I didn’t know what to expect from taking this class over a period of 5 days all online. CAI starts on a Sunday and goes through Thursday. By the time Thursday came, I was familiar with everyone in my class! I was able to network even from my own home office!

Using Zoom for Online Class
CAI Class of 2023 meet over Zoom our first year! Here’s a few of my classmates!

During our introductions on Sunday, I quickly realized the majority of my classmates come from an auction family. Which made me sit back and think, do I know anyone in my family that was/is an auctioneer? The answer: no. Wow! I am a first-generation Iowa farmland auctioneer and the only one in my class from Iowa! What also surprised me was out of the 40 auctioneers in my class, there are only 8 of us females! We also represent 17 different states and specialize in selling all different types of assets. My class consist of a wide range of benefit, personal property, commercial real estate, farm machinery, and land auctioneers. We all specialize in selling different assets, but are still helping each other!

Auction Proposal

Besides listening to our speakers, we also worked in groups to present an auction proposal. My group’s assignment was to compose a professional proposal to present to the seller’s of a brewery. Since we were all working over Zoom, we built communication skills and showed our strengths through group work. This group proposal was practice for our individual work which includes submitting an auction proposal by August 1st. A proposal is required in order to advance to CAI Class II next year.

CAI 2022 Benefit Auction

While working on our proposals, we will also be planning to host the CAI 2022 Benefit Auction. I’m the administrator of the executive team and will be handling communications between our committees for the coming year. I’m excited to help coordinate the best benefit auction for next year!

Licensing Requirements of Real Estate Salesperson versus Auctioneer in Iowa

After become a licensed salesperson in Iowa, I found it odd auctioneers in Iowa don’t need a license.

I’ve been in the auction industry since late 2018 and have seen a lack of professional and educated auctioneers. Yes, I’m an auctioneer in Iowa because there is no licensing requirements in this state. Even so, I wanted to become educated and more knowledgeable about auction business. This is where CAI school comes into play.

Taking Action!

I decided to enroll in CAI school to help set myself apart from the rest of the industry. Less than 850 professionals currently hold the CAI designation and I want to become one of the elites. I will stay up to date with the best practices in the auction industry, laws, regulations, and conducting business. I’m taking it upon myself to invest into furthering my education in order to protect and best serve my clients

I’m here to help!

Selling farm assets is a very complex process. I suggest hiring a professional who is willing to dedicate their time into becoming the best Iowa farmland auctioneer. I can explain the auction process and guide you along every step of the way. Not just calling for bids and chanting.

Contact me at 515-954-8063 or rachel@dreamdirt.com to get started with a free consultation. Get to know me more my watching this video!

Selling land by online auction
Photo was taken of me after our Live and Online Auction for the Larry Schenkelberg Estate Land Auction consisting of 813 acres in Carroll and Greene County, IA
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Land Auctions vs. Listings

December 15, 2020

So, you’re thinking about selling your land, but not sure if you should have an auction or list the farm.

Selling land is a huge process and you only really get one chance at it. Should I start with an auction first or listing? This decision is important to make sure you get the most money for your land and done correctly the first time. 

From my experience of helping landowners, I would recommend an auction first. Does the word auction scare you? Do you feel that it is a last resort option and your land will sell for cheap? What price should I list my farm at?

I’m going to lay out the key differences between auctions and listings to give you a better idea of why you should not feel nervous about having an auction, and why I think they produce the best results for you. 

How Land Auctions Work

When I was younger, I would picture the word auction as people gathering in a room and eating donuts and drinking coffee while getting ready to raise their hand and bid when the auctioneer started chanting. Today though, I picture auctions differently.

Online Land Auctions

I think of bidders competing against each other bidding to their maximum potential and producing incredible sale results. Not necessarily done in-person. Online land auctions are becoming more popular than ever before! When done correctly they are the most powerful way to sell land. 

Be careful! When deciding what auction company to use, make sure you are choosing someone who has done online auctions for several years. With the world pandemic and the chaos of 2020, several auction companies have switched to online only auctions. Which is totally okay, as long as they understand how to properly conduct online land auctions.

Land Auction Company

Tip – look for a company that has several past sale results from online land auctions, own their own software (don’t use a third-party bidding platform), and have testimonials from previous sellers who have decided to sell their land by online only auction.

I have helped sell thousands of acres online and work with a team of auction professionals who are truly the pioneers of online land auctions. If you are curious how online land auctions work, I can send you a video of what your land auction would look like on our online bidding website!

Whether you decide to have a live in-person auction, or online only auction, these key features apply to both. 

1. Auctions have a set date

Unlike a listing, auctions have a set date and time where bidding will either begin for a live auction or when bidding will end for an online timed auction. This can give you and the bidders an idea of when the farm will sell and create momentum to get bids in. 

I know if I were a seller, I would prefer to know what day my land was going to sell instead of waiting around for an offer to come in for a listing which can take up to several months depending on buyer’s urgency. We all live busy lives, and by setting a certain date and time for your auction you know exactly when you need to be available to watch your auction and accept the bids. Offers for listings are not planned and can create stress if you are planner like me!

2. Let bidders’ price your farm

How much is your farm really worth? What if your listing price was lower than what a bidder would actually pay for it? When you put a price on your farm you are creating a cap of what you are wanting for your land. With an auction, bidders can go beyond the price and can produce results you wouldn’t have even dreamt about! How do you know what others think your land is worth? Maybe they have had an eye on your farm for several years and would pay 2x as much as what you think it’s worth. This is why auctions are the best at determining what your land is really worth and letting bidders determine how much they are willing to give. 

Prime example – I witnessed an acreage consisting of 19 acres and a house sell for $70,000 more than what the sellers thought it was worth and what they would have listed it at. They had no idea bidders were willing to go that high. Iif they did a listing, they would have shorted themselves $70,000! I don’t know about you but that’s a lot of money! The sellers were extremely happy with this online land auction that I helped coordinate. 

Auction Ladder

They way auctions work is similar to climbing a ladder. You start low and work your way up. Every time someone bids the next person has to be higher – next step on the ladder. Bidders can only work up and never back down to $0 which can happen with listings. Listings, a buyer can offer a price anywhere on the ladder and other buyers have no idea if they have to be higher or if they can submit a lower offer. If you as a seller decided to reject an offer on your listing – you start back at $0 until someone comes in with another offer. 

You also have the right to accept or reject the last bid on your land auction and to confirm the sale. This is another hefty topic though, and I wrote a separate blog dedicated to this topic, “5 Secrets to Setting an Auction Reserve”.  

3. Terms and Conditions of Auctions

One of my favorite parts of auction is – sellers get to set the terms and conditions.  You decide everything from how much earnest money is due, the closing date, auction date, selling as-is where-is, possession of the farm, and more! With a listing, buyers can present all of the terms and conditions and often have contingencies attached that you either have to accept, reject, or counter offer as a seller. An auction lays it all out on the table of what you are willing to accept from a bidder. You make the rules. 

Terms and conditions are extremely important and protect you as a seller. Experienced auctioneers like myself, understand what needs to be included, and how to tailor set terms and conditions to your land. 

4. What if no one bids on your auction?

It’s highly unlikely no one will bid. If for some reason you don’t agree to the highest bid on auction day, I ask my sellers to move into a 60-day listing to achieve the price you are looking for. This is why having an auction before a listing is critical. Remember how I said auction dates create bidder momentum? We now have a better understanding of how the rest of the world sees your land and who is interested.

Negotiating with Bidders

Even if no one bids, or the last bid is too low for you to accept, I now have a list of people who have expressed interest and have called with questions. It’s my job to work for you, and reach out to those who had sparked interest. I will continue to negotiate with potential buyers to reach a sold price. 

The majority of farmland I have helped sell doesn’t reach this point. Sellers often confirm the sale of their auction even before bidding ends. The farm trades hands to the highest bidder on auction day. There are secrets to how this works in your favor to achieve top prices. You can read more in my blog, “5 Secretes to Setting and Auction Reserve”. 

How Land Listings Work

What do you picture when you hear the word listing? Is it different than the word auction?

I bet you are imaging driving by a For Sale sign in the yard with a number to call or seeing a piece of land on a website with a price listed. 

1. Choose a Licensed Real Estate Land Agent

If you read, How Land Auctions Work, you should have an idea of why I recommend choosing to have an auction versus a listing. I do want to mention some of my past sellers have used a listing. I’m licensed to do so in Iowa. Be careful – some auctioneers are not licensed real estate agents and don’t have the ability to sell your land by listing! 

2. Who Buys Listings?

The buyer pool who most likely is interested in seeing listings, is investors and 1031 exchange buyers. Now this doesn’t mean they don’t bid on farmland auctions. Some investors calculate their return and cap rates based on the listing price and what they are willing to offer. 

3. Record Breaking Results!

Something to look at is what land has been selling for in the county your farm is located in. Are auctions producing the best results or listings? It’s rare you will see record breaking results from listings – they are simply set by auctions. 

4. Why it’s not a good idea to have a listing first 

Many sellers believe they can list the farm on the market for a few months to see how it does. Then switch to an auction. By listing land first, you price the farm and people will bid with that figure in mind creating undesirable results for your auction. By selling at auction first, bidders are allowed to truly discover the fair market value of your land with no preconceived notions. 

Choosing a land auctioneer or farm real estate agent 

Once you have decided the route you want to take, reach out to several auctioneers or real estate agents and get to know them. Still not sure if you should have an auction or listing? Schedule a free consultation with me! Being a land auctioneer and land real estate agent in Iowa, I can help answer any questions you have about either method. 

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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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