That Pesky Auctioneer Ruined His Plan

Jan 14, 2017 | Land Auctions, Land Seller Resources

Jason Smith

Jason Smith

CAI Auctioneer, Land Broker

Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from the World Wide College of Auctioneering, and has achieved the PRI designation from the Professional Ringmen Institute. Jason and his wife founded DreamDirt in 2005, and the company continues to be a leader in the farm auction space and prides itself in offering extensive land seller and buyer information.

Email: jason@dreamdirt.com | Phone: (515) 537-6633

I travel to farmland auctions conducted by other auctioneers all across Iowa and Nebraska.  Sometimes I am there to bid for a client and sometimes I am there to learn about the market or to meet somebody.  I enjoy the opportunity to see how other auctioneers conduct their auctions and it gives me an opportunity to continually refine our auction approach as well as see the auctions from the bidders perspective.  Those things are invaluable in serving our clients and providing the best service we can.

Recently I attended an auction to bid on a farm that one of my investor clients wanted to purchase.  He’d given me his numbers prior to the auction and I’d reviewed the auction sale method forward and backward to create my own bidding strategy.   I had a good feeling about this auction, my buyer had a pretty aggressive top bid.  As the auction crowd formed I started to rethink that, it was an impressive crowd.

After breakfast at the local diner I made it to the auction 20 minutes early and had a chance to mill around and talk to some of the other folks at the auction.  I always enjoy listening to them and picking up little bits and pieces of information you couldn’t otherwise know without the local knowledge.  I chose my chair and was soon joined by a rather talkative fella that told me all about the days sale.  Soon one of his friends joined us at our table and they began to talk and forgot all about me.  They had no idea I was a land broker and an auctioneer, they never asked and I never volunteered it.

While they chit chatted my phone rang and I took a quick phone call.  It was the buyer making sure I’d made the location and he wanted to one last time go over how things would go.  As I hung up my phone I heard my neighbor say “you know I had that farm bought for $3000 and they called the damned auctioneer in and I lost the deal.  Once he got ahold of it I didn’t have a chance it ended up selling for $7200 at the auction”  Wow, all of a sudden he had my attention!  I smiled and quickly straightened my face out hoping he didn’t notice the huge grin on my face when he said that.  He’d said enough that I already understood the story and a sense of pride overwhelmed me for a second because thats one of the greatest things we do for people, we ensure they don’t get taken advantage of and that they get fair market value for their assets.  Maybe to most people that doesn’t seem that noble but to us its a great sense of pride.

The story didn’t stop there and I was now afraid that the auctioneer was about to start and the discussion would end when I really wanted to hear more.  The other fella countered with another story saying “well you remember when so and so auctioneer sold that farm of so and so’s, I had been farming that farm for 10 years and he wanted me to have first shot at that farm.  The son was ok with what I was going to give but that daughter of his thought she was in charge and she ended up calling in the auctioneer to come in and sell that one and hell they got more for that 40 out front than I was going to give on the whole farm”   Now its really unbelievable that these guys are even telling these stories and more unbelievable that I get to sit and listen to them talk freely about times that pesky auctioneer has stood in their way of getting a good deal.  The thought crossed my mind “I wish I could have this on video, I would make it a TV commercial for DreamDirt”  These guys in a matter of about 90 seconds said everything that needs to be said about hiring an auctioneer and especially as it relates to estate farms.

It was already 2 minutes past 10AM and the auctioneer was now fiddling with the microphone, I had to turn my attention back to my job of representing my client.  The auctioneer began the auction and the crowd fell silent listening as he described the farm but my mind kept jumping back to that conversation and partly because even though I understand those things happen I’d finally heard a person actually say it out loud.   There have been many times I have been called in and one of the first things I’ve heard from a family is “the farmer wants to pay us $X for the farm” and my response has been “Oh my thats really low” From there we work through a valuation and they decide what they can do.  About 1/2 of the time the farmer still ends up buying, sometimes for more money sometimes it doesn’t change things but the other 1/2 of the time it ends up going to auction.

I have a lot of farmer friends and I know some of them will read this and frown a little, some will fully understand why our job is important.  We all have a job and their job is to grow and supply the world with a safe, affordable and abundant food supply and they do a darn good job of that.  My job is to protect people from being taken advantage of and making sure they get a fair market value for the assets their family worked very hard for.  I can’t stop every family from selling direct to the farmer.  Sometimes the farmer will win.  Sometimes there is a special relationship, sometimes there were special favors before the transaction and sometimes its just somebody putting pressure on the family and using their leverage to force the situation.  We will always try and when we are successful we will always push very hard to get the best result we can for every client we represent.

I recently had a conversation with a farmer that asked me the question “what have you done for us lately”  He was upset at the price of a farm that sold at auction feeling like it was too much money.  I understood his frustration and I explained to him why I feel that auctioneers are a benefit to the buyers for many different reasons even if they don’t feel we are.  The last figure I saw was that 54% of farms in Iowa sell at auction and I guarantee you every one of them had an opportunity to sell to somebody before the auction.  Without auctions those farms would have just sold to the first person in line and nobody would get a chance at them except the person with the inside track.  In a world that has seen many farm consolidations and the emergence of mega farms over the last 2 decades the auctioneer ensures that everybody gets a fair opportunity to buy farms.  If it was more prevalent for the farmer to just get the farm when the owner passes then smaller farms would never get the opportunity to buy and larger farms would buy at lower prices further accelerating the decline of smaller farms.  We work hard to get farms to the open market where everybody gets an opportunity to buy them rather than just waking up one morning and learning a farm sold and you didn’t even get a shot at it.  Can you think of any more fair way to sell a farm than one where every potential buyer gets a chance to bid and make offers and the seller gets the best money available for the farm?  I sure can’t think of a better way and to me it beats off market sales where only one person gets a chance to buy the farm.  For families trapped in the awkward position of having 1, 2 or 3 neighbors courting them for the right to buy the farm it also gives them an out so that nobody can walk away mad that they did not get the opportunity.  An auction gives everybody an equal opportunity where we all understand the person willing to pay the most will own the farm.

If you are considering selling a farm but you are in that tricky spot where the farmer wants to buy the farm but you don’t feel like the price is right you should contact us and at least visit and get a valuation of the farm.  Sometimes you might feel like a discount to the farmer is ok but until you know the potential value of the farm you don’t know how much of a discount you are giving.  Its always wise to work from some sort of foundation in your negotiations to be sure you are not being taken advantage of.

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