For many years I have said, “Farmland record prices are set at auction never private sales” – and that is the truth.  You simply cannot have this happen in a private negotiation with just one person.  Nobody could have known this farm would sell for this much money before it happened.  The only way to know if there is an upside to your property is to have it marketed by auction.  Selling privately ensures you will never know.

This farm was your average good farm.  It was 115 acres in Saline County, Missouri just Northeast of Malta Bend.  There is absolutely nothing special about this farm.  It’s not a special location.  It’s not the highest quality farm.  It is close to town for grain markets served by rail, that’s positive but all farms in the area benefit from that.  It has no development potential that would drive its price up.  It’s bordered by the railroad on the south side.  It is just your average farm.  So why did it bring so much money?  There must be a reason, right?  There just isn’t.  Two people wanted it and had the means to buy it at that price.  It’s that simple, but there is a lesson in it.  Most farms selling at auction bring more money than anybody guessed.  I know this from years and years of selling land and hearing people guess before the auction.  Rarely is anybody high, almost all are low when they guess what it will sell for.

We track farmland prices and pay attention to farmland sales all across the Midwest.  Iowa is the center of the bullseye and farmland sales data is readily available in Iowa.  Over the last year, we’ve seen some weakness creep into farmland prices.  We can look at the data and see slight declines.  We can see it in participation in farmland auctions.  We can see it in our buyers’ attitudes toward farmland.  There is an instinct you develop as an auctioneer that measures the temperature of the farmland market that is likely sensed in the aggression of bidders and buyers.  Don’t get me wrong, the farmland market is strong right now, but it’s not as strong as it was a year ago.  Commodity prices are lower.  Interest rates are higher.  The mood of farmers to buy follows corn prices, and farmland prices follow the mood.  Exactly 11 months ago our company set the record farmland price on 116 acres of farmland in Richardson County Nebraska and shocked the Midwest with a farmland auction that sold for $27,400 per acre.  When it happened it was big news, and everybody reported on it.  It completely obliterated any previous farmland sale price in Nebraska and was higher than any other previous farmland sale in the Midwest.  The record previous to that has been set in Plymouth County, Iowa at $26,250 per acre in October 2022.  But hold on, there is more!  While our record price in Nebraska still stands today as the highest sale of farmland in Nebraska ever, 2 weeks later the Midwestern record was again broken in Iowa at $30,000 per acre in Sioux County!  This new farmland sale is the highest sale of farmland in Missouri and the Midwest at $34,800 and it’s really hard in this market to see that being broken.  I think it’s at least an interesting turn of events that other surrounding states are occasionally beating Iowa land prices and the highest land price has almost become a traveling trophy.

Farmland auctions are the ONLY way you will ever truly know the value of your farm and if there is a potential upside.  These stories of record farmland prices are always dramatic but not every farm will set a record price obviously.  Our goal as auctioneers is always to maximize the value of a client’s farm.  The degree to which that is possible is a result of our ability to expose the farm, present it properly, manage the bidding process, and finally the wildcard, bidders’ actions.  Maximizing the value of a farm means we sell it for the highest price available.  No price is ever set, but instead competitive bidding is used so that bidders are drawn to the top bid.  There will always be mystery in farmland prices and auctions are how you discover what true value is.  While not every farm will sell for a record price, in most cases each farm sells for more than was expected.  What was “expected” is the prices that would have been offered privately.  The difference between that point and the actual auction result is the “maximized value”.  Most farms have an upside, a maximized value that can only be discovered by auction.  Is it $500 an acre more?  Is it $2,000 an acre more or is it like one of these sensational records and $10,000-$15,000 per acre more than what was expected?  If you sell privately, you will never know what the upside is.  It guarantees you can’t find out.  If you are selling farmland, I highly recommend using the auction method and allowing competitive bidding to set the price for you. Not only does it take you out of the uncomfortable spot of negotiating the price, it ensures you maximize the value and you don’t leave money on the table.