How to Run a Farm Land Auction
Selling a farm at auction is an emotional process. Researching the right auction firm is the first step to a successful auction. Find an auctioneer who knows your market and who has achieved a winning reputation. Access your interaction with your auction firm. Your initial opinion is a good prediction of the probable positive experience of the bidders. Auctions are quickly becoming the first, best and only choice in many of today's real estate markets. More than a quarter-trillion dollars' worth of farmland is sold at auction every year in the United States.
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Instructions
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Seek out a reputable auction firm for selling farm land. Solicit local farm land professionals to recommend a firm with good standards and experienced knowledge of farm land. The auctioneer should know about the area's production and market, and the productivity of the actual ground. In most states, in addition to rigid auction licensing requirements, the auction firm is required to be licensed real estate broker.
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Do your homework before your initial meeting with the auctioneer. Be aware of outstanding loans or liens that would require final payment to convey good title. Have information regarding and active land or land-use leases. Presentation of a recent appraisal, land surveys, tax records, and production and yield records can get the auctioneer's attention. She instantly becomes aware you are prepared to sell and have a realistic expectation.
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Develop a clear understanding of the marketing plan for your farm auction. The auction firm should present you with a detailed plan, including an estimate of advertising and labor expenses. Farm land auctions benefit greatly from a good arial photo that has the property boundaries well marked. The land should be photographed depicting all of its best advantages, including any natural water source. Newspaper advertising is essential. Although a classified ad is the bulk of the expense, serious auction buyers read the auction listings in the classifieds. List the property on an online auction marketing website. This is often a free listing and is researched by potential buyers internationally. Prepare auction brochures with pertinent facts and colorful photographs. The brochures should be available two weeks before to the sale. A worthy auctioneer will have a mailing list available to mail brochures to adjoining property owners as well as buyers who have expressed interest in properties of this type. When the stories of remarkable sales are retold, effective marketing is second only to preparation.
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Discuss with your auctioneer whether the property should be sold as a whole or in parcels. He will be aware of the property's potential, either sold as a working farm land or marketed for development. Know what commission percentage you are responsible for paying at closing. Request past advertising media and examine previous auction results. Decide if you will sell the property absolute or with owner confirmation. Absolute auctions typically draw a larger more prepared crowd. If you and the auction firm agree you are in a position to offer the property absolute, this means you will sell the property regardless of the amount of the final bid.
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Tips & Warnings
If your property has a substantial mortgage or lien, a confidential reserve price should be established between you and the auction firm. This means you have the right to accept or reject any offer that falls below the pre-determined amount.
When researching a perspective list of auctioneers check with local legal, county extension, real estate and farm financial professionals. Validate these recommendations by searching the auctioneers' membership in state and national professional organizations, such as the National Auctioneer's Association.
Other than your auctioneer, don't discuss property value with anyone.
Estate and probate laws vary from state to state. Make an effort to acquire as much documentation as possible regarding inheritance, and any lifetime or leasehold estates attached to the farm land.
References
Resources
- Photo Credit aviation image by Albert Lozano from Fotolia.com
