Selling farmland is typically a once-in-a-lifetime decision and choosing to auction your property can be an effective way to achieve top of market value. If you’re considering this route, it’s essential to understand the auction process and what to expect at each stage. Here’s a detailed breakdown of how farmland auctions work:
Step 1: Stakeholder Agreement
Before moving forward, confirm that all stakeholders or sellers have agreed to sell the property and are aligned on the decision to sell publicly and pursue an auction. This is a critical first step to ensure a smooth process.
Step 2: Initial Consultation with a Farmland Real Estate Broker
Meet with a qualified farmland real estate broker to discuss your goals, objectives, and reasons for selling the land. This conversation helps the broker understand your expectations, address concerns, and identify items that may need to be addressed. A good broker will provide clarity while guiding you forward. It’s important that you and your broker align before you move ahead.
Step 3: Farm Review and Reserve Price Setting
The broker will conduct an initial review of the farm to provide guidance on price expectations. During this stage, you will establish a “reserve”; price—a private minimum price that you’re willing to accept for the property. While the goal is to achieve a higher price at auction, the reserve ensures your interests are protected.
Step 4: Signing the Listing Agreement
Once you’ve decided to work with the broker, a listing agreement will be signed. This document outlines the terms of the sale and includes the private reserve number.
Step 5: Data Compilation and Farm Research
The broker will gather all necessary information about the property. Sellers who are prepared with documents such as property abstracts, ownership records, lease agreements, and tile drainage documents (if applicable) can significantly speed up this process. Research typically takes two to five days and ensures the farm is fairly and accurately represented to potential buyers.
Step 6: Marketing and Promotion
Once all information has been compiled, the broker will create a robust marketing campaign. This includes:
- Property information brochures.
- Marketing flyers and postcards.
- News and radio advertisements.
- Social media posts.
- Listings on land specific online platforms.
An auction location near the farm will also be selected during this stage. Preparing the property information and marketing materials generally takes about one week.
Step 7: Marketing Period
After the materials are ready, there is typically a four- to five-week marketing period. This allows potential buyers enough time to evaluate the property while maintaining a sense of urgency to act. During this time, a good broker will leverage their professional and buyer network to ensure maximum exposure.
Step 8: Auction Day
The big day has arrived! Registered bidders will attend the live auction and compete to purchase the farm. The energy and competition of a live auction often help drive the price upward. At the end of the auction, the winning bidder will sign a purchase agreement, officially securing the sale.
Step 9: Closing
Following the auction, the sale proceeds to closing. The broker will work with you and the buyer to navigate any remaining steps, ensuring a seamless transition.
If you’re considering auctioning your farmland, Wingert Land Services is here to provide expert guidance and execute a plan that meets your family’s desired outcome. Give us a call at 5087-248-LAND (5263) to discuss the next steps.