AUCTION OR PRIVATE TREATY?

If you’re thinking of selling a farm and you talk to one of the full time auctioneers they’ll tell you, flat out, no question about it: Auctions are the best way to market land.

I’ve been in this business for 30 years now and I’ll tell you flat out maybe yes, maybe not necessarily.

Which is the best way to sell a farm, public auction or private treaty? It’s the eternal question: Record commodity prices and low interest rates have produced lots of buyers for land and that’s what you need for a good auction; lots of buyers. Many owners are thinking this way too and as a result, I’ve seen more land sell at public auction this year than I’ve ever seen before. I attend as many auctions as I can to keep abreast of what’s going on in the marketplace and yes, I’ve seen a few “bell ringer” sales this year; sales that brought more than anyone would have guessed and that’s a good thing for the sellers. BUT, I’ve seen just as many farms sell at auction this year for less than they should have. Why did Farm A sell for $1,000 per acre more than anyone thought it would bring and Farm B sell for $1,000 per acre less than it should have sold for? (this isn’t a hypothetical question either. This year I watched one farm sell for about a $1,000 per acre more than I thought it would bring and less than two weeks later I saw another one sell for $1,000 per acre less than I though it would bring (It would have sold for even less than that if I hadn’t started bidding and purchased it myself ). What was the difference? There are many individual reasons, but the short answer is summed up in one word CONTROL. If you’ve been to many auctions you’ve heard the auctioneer tell the audience” its your sale, bid your judgment”. And that’s generally the truth; the buyers are in control. That’s okay as long as there are at least two buyers who are willing to bid against each other to buy the farm. Unfortunately it doesn’t always work like that; maybe the two buyers get their heads together before the sale and decide not to bid against each other; maybe one buyer is in some type of sales business and doesn’t want to bid against a good customer; maybe the bidding starts low and all of a sudden a ‘gloom and doom mentality’ takes over and an intended bidder in the audience won’t bid, even though the farm is selling for less money than he was prepared to bid when the sale began; maybe the auction presentation was flawed or confusing; maybe; maybe. I’ve seen all these and many more maybes happen at auctions.

To top it off both the buyer and the seller end up being forced to make possibly the biggest financial decision of their lifetime in a matter of a few minutes either during the sale or during short breaks. Things can happen awful fast at auctions.

On the other hand, if you list your farm with Barnes Realty and sell by private sale method you avoid that loss of control. You’ve only got to have one buyer and there is time to find him. He’s dealing directly with your agent and no one except the buyer and the seller need to know anything about the deal. Furthermore, nobody has to make a spur of the moment decision about anything. Time is of the essence but you have all the time you need and generally nobody is pushing.

Barnes Realty sells primarily via private treaty, but we do auction sales, too. The choice depends on many variables like the quality and desirability of the farm and the lease situation. Talk to us before you commit to auction. Let us give you our opinion. Barnes Realty has been in this business a long time and we’ll try to give you an objective evaluation of which way is best for your particular property. Remember, as a seller, you only get to sell your farm one time and you want to make sure it’s the best way possible.