Farmland Auctions VS Listings

One of the most common questions that we are asked when meeting with clients is, “Should we sell our farm using the auction or traditional listing method?” The answer to that question is more complex than one may think. I will highlight the benefits and differences of each, but it’s up to you, as the seller, to make the final decision. Note, in this post, I will not be able to cover everything there is to cover on this topic. It’s very important that you consult with an experienced land agent that can help provide you with professional and expert input on your specific farm. Each farm and situation is different and we understand that!  

Auctions

Auctions are very popular in the agricultural farmland space. Over the past half decade, the Iowa farmland auction process has been the leading option with how farmland trades in Iowa. Sources have shown that around 79% of Iowa farmland trades have been made using the auction method of sale on the open market. The auction method provides a level of competition that a traditional listing simply cannot offer. Auction friendly farms generally are made up of 85-100% tillable/productive acres, well drained, strong in soil, located in a strong farming community, and are very farmable to operators. 

Benefits

• • Marketing Plan Tailored for Your Property (Both Locally and Nationally)
  • Process Allows Price to Exceed Seller’s Expectations
  • Provides A Competitive Atmosphere
  • Sold “As-Is, Where-Is”
  • Typically No Contingencies (No Financing Contingencies) 
  • 10% Earnest Money Down on Auction Day
  • True Market Value (No need for an appraisal) 
  • Predetermined Sale Date; Meets Seller’s Timeline and Builds Momentum for the Property
  • Predetermined Closing Date; Meets Seller’s Timeline
  • Provides opportunities to split the property into multiple “tracts”, making the farm more attractive to multiple buyer types

Traditional Listings

Twenty one percent of the farmland trades over the past half decade have been made via the traditional listing process. Traditional listings certainly have their place in farmland real estate. One example of a great time to take advantage of the traditional listing method would be if we are in a downturn market and there is uncertainty in the future. It allows sellers to work with the real estate broker and choose a price to list the farm at with little to no risk in determining the sale price (These prices are generally higher than they would expect to see on auction). Farmland listings are also attractive to buyers that are dealing with 1031 Exchanges because they give the buyer more flexibility and help create a more formal schedule. Lastly, some farms are just better suited for listings. These farms could be in a saturated area where the supply of farms for sale is high, the farm has draining issues, soils are below average or the farm has other best-use attributes like development or recreation opportunities. 

 Benefits

• • You, The Seller, Establish The Listing Price 
  • The Marketing Plan Is Strategic and Targeted
  • Attractive To 1031 Exchange Buyers
  • You And The Buyer Agree To Terms 
    • Price, Earnest Money, Closing Date, Contingencies, etc….
  • Broker Or Real Estate Agent Negotiates Terms
  • Ability To Take Backup Offers 

Ultimately, you, the seller, should decide the end goal in selling your farm. If you are looking to sell your farm in today’s market, it’s important to seek advice from a professional that works on selling farmland every day. Our brokers at Iowa Land Company will provide you with educated advice that can help you decide if a farmland auction or farmland listing is the best route for selling your farm. Our goal is to make the process as simple as possible for you while gaining you the most money that your property is worth. You can call our main office to get in touch with your local Iowa land broker today @ (515) 962-5048 or send us an email at info@iowalandcompany.com. We would be happy to answer any questions you might have!

Frequently Asked Questions

What is a farmland auction? 

A farmland auction is a sales process where land buyers exchange bids in a steady pace on land available. Ultimately, this allows multiple land buyers to bid on the asset until one final buyer reaches the “high bid” or what someone is willing to pay for the farm. This process has been used in selling Iowa farmland for decades and still holds credibility in true price discovery.   

What is a farmland listing? 

A farmland listing is a sale method used in Iowa to sell farmland. The percentage of farmland sold per listing or land auction varys in Iowa based on the region and quality of the farmland sale. A land broker can advise you the best method for farmland listing or land auction to best maximize the farmland value for the landowners.  

What are the differences between farmland auctions & listings? 

The negotiations between farmland listings and farmland auctions are the biggest of the differences. Both methods have positives. Depending on the quality of the farmland and the location of the farmland a land broker can help you determine the best way to market the farmland. 

Iowa Land Company is a full-service farmland auction company that services in all 99 counties of Iowa. We transact all types of land in Iowa. Want to know what your land in Iowa is worth ? Get a | Free Farmland Evaluation (Click) | from one of the trusted agents at Iowa Land Company.