Why sell farmland by auction?
Selling farmland at auction is straightforward and clean. You will experience much less frustration and time commitment and you can control every aspect of the sale. When you compare the auction method with private sales consider that with an auction a seller offers the property to buyers under a set of terms and conditions that are the same for all buyers. With a listing a buyer makes an offer to the seller and the seller can receive different offers with different terms and conditions. Auctions are contingency free and private sales are often controlled by 1 or more contingencies that requires sellers to meet certain conditions or take certain actions. For example with a private sale of farmland a buyer may offer a price but make the offer contingent on the ability to borrow the money from the bank. Sometimes those contingencies have a contingency. For example a buyer may make the offer contingent on the ability to borrow the money from a bank at or below a certain interest rate. With an auction buyers come prepared to bid based on the terms and conditions you have set for bidding and will bid contingency free. At an auction a buyer is offer cash and guarantee's a closing by placing an earnest deposit which will be forfeited to the seller if the buyer fails to close.
Auctions are simple and much more efficient. As an auction seller you will enjoy the fact you will only have to negotiate one contract and just one time. At an auction the only negotiation is the price, all other terms are set in stone.
The efficiency of an auction means you save a lot of money. I can think of many examples where a seller was required to perform certain tasks to conform to a buyers offer. In one situation that was a $19,000 survey of the property and prior to closing the buyer backed out of the transaction only to later sell to another party that did not require a survey. With an auction you know the date you will sell and the date you will close so your holding costs can be calculated. With a listing you have no idea what day you will sell and if you get your price too high you can permanently harm the value of your farm.
Pricing your farm with an auction is advantageous to the seller as buyers always feel better when they can sit among their peers and "crowd price" the farm. In other words, when they see another person bid an amount they know the farm is worth at least that. As buyers walk a farm up at auction to the top price they do so with much more confidence than they do in a private sale where they only have their own information to rely on.
Why should I sell my farm by private listing?
Each farm has a type of marketing method that fits it best. Farms with low CSR and productivity ratings, low income ratio per acre, access issues, over market listing prices or where the seller is not comfortable and can not commit to the auction process often do best by private sales because it can take longer to find the right buyer. Moving to an auction at some point in that process is always possible but we always recommend those farms be initially exposed to the market as a listing. This can help you agent and yourself determine the market acceptance and gather information. If the listing process is unsuccessful you can now move to an auction armed with important information about the farm.
Do you complete farmland appraisals?
Our staff of land brokers are experts in determining the value of farmland in Iowa and can help you determine the potential value, or justify a value of farmland tracts for non federally related transaction. We often provide valuation services for estates, retirements, tax basis. We can help you determine the value of the land itself or the lease value of a particular farm. With fluctuations in cash rent from year to year its important to the performance of your investment to understand its value as time progresses. In 2012 DreamDirt launched the first of its kind "self appraisal" website in Iowa at DollarsAndDirt.com to help give you an "at a glance" view of farmland values and leasehold values. Want to start the process? Visit this page Farmland Appraisal
Who should I talk to about selling my farm first?
We see to many situations where a seller has put themselves at a disadvantage prior to calling us by talking to people about the sale of the farm, sometimes giving away valuable or inaccurate information. We recommend that when you are considering selling your farm that you contact us first no matter what your plan is. A phone call and a conversation can give you valuable advice that will help you achieve the maximum potential and helps you avoid making a mistake in the sales process. In many cases we have head statements such as "The tenant talked to me at Mom's funeral about buying the farm and I told him $X but he is offering me $2000 less than that" Pricing the farm is always almost always a mistake that can have consequences later in the sales process. Making promises or making a person feel as if they have a priority position in line to purchase your farm often gives them leverage and puts you at a disadvantage, one that some people get stuck in and have to give in. We want you to achieve the full market value of your farm, you or your family worked hard for many years and selling it at a discount probably was not in the plans. Always call us first to at least get advice on moving forward. There is no obligation to book a sale or listing with us but we can at least help get you on the right path forward if a broker or auctioneer is not in your plans.
Can I set a reserve price for my auction?
The majority of farms sold in Iowa are sold with a reserve or subject to sellers confirmation. We have very successfully guided many sellers through the process of setting a reserve amount on their property at a level that brings them the best success. A reserve is not an asking price. Its important to understand the a high reserve almost seals your failure. A low reserve has always served our sellers very well because it makes the auction process fair for buyer and seller. A reserve is a protection point, its less than what you want to receive for the property but it protects you from a financial disaster. Reserves are typically around 65%-75% of the estimated value of the farm.
Do we need to have a survey done before selling our farm?
Every situation is different and survey's are needed sometimes. This is especially true if a homestead needs to be separated from the farmland tract or you intend to split a farm against current tax boundaries. Sometimes a family may wish to keep a portion of the farm which is like a smaller part of a larger parcel in which case no survey is needed. If you intend to sell the farm as it is today there is very little likely hood of having to have a survey completed.
What is your commission for farmland auctions?
This is not a question that really can be answered that easily. We quote commission based on the amount of work required to complete the project and create a successful sale for you. Some people own an 80 acre farm and some people own a 1000 acre farm. Some farms are more tillable and some are more timber. We do strive to be very fair with you in selling your asset and bring you value beyond what we charge you in commission. If you were to compare apples to apples you would find that DreamDirt's commission are very seller friendly. You can't go anywhere else and get the full gambit of marketing services for less money. We do more so you get more!