Last week, I met a local land owner and enjoyed a UTV tour of his farm. He and his family have decided it’s time to sell, so they asked for my opinion regarding the farm’s value and how to best proceed. Recent sales comps value the farm at $6,250 per acre but the seller has already received an offer exceeding $8,000 per acre. Knowing there is a standing offer and knowing the farms outstanding location, the amenities it offers, and it’s potential for multiple offers, I suggested we scrap the traditional listing idea, and instead, auction the farm to the highest bidder. I shared with him details on a recent office auction that achieved “BIG RESULTS” — a sale price 60% higher than expectations.
I love land auctions, land buyers love auctions, and we all appreciate the excitement they generate. Potential bidders enjoy speculating during the days and weeks leading up to sale day. My phone buzzes with questions, “what do you think it’ll bring? has there been a lot of interest? do you think somebody local will buy it?” Land auctions are closely monitored by neighbors, investors, appraisers, lenders, farmers, and land owners in general. Sale results establish land values for similar properties in the area. When the auction concludes the phone calls continue, “what did it bring? can you say who bought it? is it true that two neighbors got in a fight over it, LOL?” All this buzz is an excitement that can only be generated by an auction. This ‘buzz’ can be difficult to match with a traditional listing.
Is every property a good auction candidate? Diehard auctioneers will answer yes, and many Realtors will discourage the thought. I offer both services, so my opinion falls somewhere in the middle. It depends on seller motivation, property type, location, and anticipated buyer demand. Many of my recent traditional listings received multiple, simultaneous, offers making them good candidates. However this wasn’t something the sellers wanted to pursue, and I respect that. It’s important to discuss all the pros & cons. Bottom line is an auction is only successful if there are multiple buyers interested. However, the current land market is heavy with buyers and light on sellers. This supply & demand scenario presents a good opportunity for sellers to consider an auction.
Here are a few auction advantages:
- You don’t establish an asking price, therefore, you don’t establish a ceiling price.
- Condensed Timeline & Intense Targeted Marketing: We identify the potential prospects, create an atmosphere with a now or never psychology that causes bidders to take action. This approach maximizes the property’s potential.
- Timing: By having a predetermined sale date and closing date the auction can be structured to fit your timeline.
- 30-day Confident Closings: Selling your property with a significant earnest money binder, “as-is” and with a no contingency contract helps to ensures your closing is a success.
If you’re considering selling, I’d appreciate the opportunity to discuss all the pros and cons so we can customize the best plan to maximize your properties potential.