Farmland Auction Frequently Asked Questions
Questions About Selling Farmland
Myself, along with all of our agents and staff, get a number of questions every day from interested sellers. Over the past decade, we have noticed the same questions pop up from nearly every seller we work with! We took to Facebook Live last week as an Admin Team and did our best to answer these questions, and take questions from our live crowd watching.
Watch our Facebook Live session! The majority of the questions and answers are included below, but each answer is discussed in greater detail on this video. We hope you learn something!
Midwest Land Market During The Coronavirus Pandemic
We don’t have a crystal ball. But as auction professionals, there are certain ways we can see this health crisis affecting land. This will all obviously depend on how badly the economy gets hit, and depends on the types of stimulus packages that come out of it. Trade and commodity prices will obviously play into the market outcome. But we don’t know anyone better suited for adversity than farmers. We don’t think land buyers are adverse to future investments, and we still see them bidding on land.
Last week we sold a great tillable farm! See the results here.
Land values are really hanging in there. We’ve been watching farms across the Midwest and buyers are still eager and strong. Farmland is a safer long-term investment – especially compared to what we are seeing in the stock market today. A real scenario we possibly see playing out is people taking their money out of the stock market and investing in land.
Is The Coronavirus Pandemic A Good Time To Sell Farmland?
There is no bad time to sell a farm. We say this all the time, and we truly mean it. As long as your transaction is set up properly, and it is fair to the buyer, you will always get fair market value. During this health crisis, like we mentioned above, we are still seeing great results in the market. Here’s one thing we know about the real estate market – things change slowly. You know what the market looks like today. If today’s prices are acceptable to you, they are not going to change hardly at all within the next 60 to 90 days. You don’t know what the land market looks like 3 months from now or a year from now. Why wait to take on that risk?
Are Large Corporate Farms Buying Farmland?
A corporation is merely a tax structure that has to be used for farms to be able to benefit from certain tax breaks or other considerations. The vast majority of family farms out there today are classified as corporations! Even corporate investment groups largely have mom-and-pop farms physically running their land. We see our fair share of investor bidders, but we also see many family farms doing their best to grow their acres for their next generation.
As a seller, if you are uninterested in selling your land to an investment or large corporate operation, we find the best place to sell a farm is through auction. These business primarily purchase land through private negotiations. At an auction, these buyers have much less power to purchase at a discount.
What Types Of Properties Are Best To Flip?
There’s money to be made on hobby, recreational, and hunting-type farms. If you’re willing to invest in land like this, build up the experience, and add value to the property, then there are lots of ways to make money on properties like these! We see lots of people purchasing this type of land for 2-5 years, taking the annual income from CRP or other programs, and selling for a profit after giving the land more value.
What Should A Seller Do First Before Selling Land?
Gather information! Selling land is a huge process and transaction. Find the most reputable auctioneer or real estate company that can stand by the experience and value they promise. What are their customer testimonials? What is their result history? Are they willing to answer every question you have BEFORE you hire them? DreamDirt is! Talk to us and get as much information as you need before you make your decision. (Psst! We have FREE ebooks that you can download and read!)
Many sellers share valuable information at coffee shops or with friends/neighbors before talking to a professional. Don’t price your farm or negotiate with others! This can actually be detrimental! Information given out before you are educated on the process can come back to be used as leverage during the sale. Even if you’re just pondering the idea – we can’t urge you enough to talk to a professional FIRST! This will guarantee you the smoothest sale process.
Is It Better To Privately List Land Or Hold An Auction First?
We run into many people who want to list their land before trying an auction. After talking to 98% of our sellers who feel this way, we see them change their minds and decide to hold an auction first. With a listing, your land is priced. Buyers will only offer you less than what you price your land for. With an auction, there is no cap price! Buyers must compete against one another to deliver the highest price. An auction is the best, first, choice. You have more control over the price, and more control over the end result.
Many sellers also believe that they can list the farm on the market for a few months to see how it does, and then switch it to an auction. We have seen this time and time again deliver less than desirable results. By listing the land first, you price the farm and by the time it comes to auction, people will still bid with that figure in mind. By selling at auction first, bidders are allowed to truly discover the fair market value of the land with no preconceived notions.
What Is The Difference Between Online Land Auctions And Live Land Auctions?
We truly believe our online land auctions are the way to go. The biggest benefits our clients experience from online land auctions are the reduced stresses, lower fees, and lower commissions. An online land auction is a very smooth process for our sellers! All of the advertising is the same between an online land auction and a live land auction.
We also see many benefits for our buyers as well! For such a large purchase and decision, the 30 or so days of online bidding gives them plenty of time to discuss with their financial institutions, lenders, and family. Instead of sweating through the decision in 30 minutes on live auction day, our online bidders experience much less social friction and stress. They can wake up in the morning and decide that they don’t want to lose the bid based on a few dollars per acre, and continue pressing the “Bid” button higher than they might at a live auction.
We are very grateful to have our highly efficient and effective online auction platform in place during this health crisis we are seeing.
Auctioneer, Land Broker, Appraiser
Jason is an Auctioneer and Land Broker in northwest Iowa at Storm Lake and Mason City. Jason and his Iowa farmland team specialize in farmland sales primarily serving the heirs to family farms. Today's report details the current land market in Iowa for land being sold at auctions.
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Tom Bradley is a Partner, Agricultural Auctioneer, and Land Broker. Additionally, he is the Lead Auctioneer at DreamDirt. He is responsible for auction operations and ensuring our live and online auction teams are performing at their best. He is also a CAI designated...
Jason is an Auctioneer and Land Broker in northwest Iowa at Storm Lake and Mason City. Jason and his Iowa farmland team specialize in farmland sales primarily serving the heirs to family farms. Today's report details the current land market in Iowa for land being...
Rachel is a licensed real estate salesperson specializing in the sale of farm, land, and rural residential real estate. Rachel is a graduate of Iowa State University with a major in Animal Science and minor in Agricultural Business. Rachel has a strong interest in...