Auction or Listing?

Deciding how to sell your Iowa Farmland can be a difficult decision for some people.  There are two options that I am going to talk about.  There are differences between Private Treaty (listing) and Auction sales so I'll lay out the differences between the two.

Private Treaty Advantages

With a private treaty sale there are advantages to both the seller and the buyer.  A seller can find safety in setting a price for the property and gets to say yes or no to a sale.  For a buyer the advantage comes in the ability to negotiate with the seller.  The process is at a much slower pace and options can be considered by both the buyer and seller.

Auction Sales Advantages to Sellers

I think there are more advantages to the auction method of marketing and selling your property.  Most people think of an auction as a fast paced event that happens all in one day.  There actually is a lot of work that goes into an auction prior to it actually happening.  A good auctioneer will prepare a very targeted and intense marketing campaign for each auction.  This will include ads in many different newspapers and shoppers, auction flyers in high traffic areas in stores and on bulletins boards in surrounding towns, uploading the auction to different websites, making phone calls to potential buyers to invite them to the auction, blogging about the auction, mailing flyers to the auctioneers client list, and emailing online flyers to the auctioneers online client list.

Sense of Urgency- With an auction a seller creates a sense of urgency.  With all of the buyers in the same place where they can see each other each buyer knows and can see what the others are bidding.  They realize that if they want to buy the property the must do it now.  With a private treaty sale the buyer can sit and wait for the buyer to come down on price.  In cases of multiple offer private treaty sales the buyer may not believe there really is another buyer and will have no way of knowing how much to bid to outbid the other buyer.

Marketing-Marketing for private treaty and auctions could not be more different.  With an auction there is a frenzy of marketing using all resources available immediately before the sale.  The advertising is very timely compared to when the sale will occur and when the buyers will be prepared to purchase.  With a private treaty sale marketing levels vary from real estate agent to agent but generally advertising is not as intense and may not be timely.  If the agent does a lot of advertising at first, but a misses buyers that were not going to be buying for 60 days they will be missed.  Often if you list your land it will be placed in the MLS and lumped in with houses and commercial listings and is not likely to get the attention necessary.

Negotiations- With an auction negotiations are completely gone.  With an auction the seller sets the terms and conditions of an auction rather than having them dictated by the buyer.  In this case the seller remains in control.  There are no counter offers, no back and forth.  When the sale is complete and sale price has been determined it really is done.  With a private treaty sale every part of the contract and terms of sale are negotiated. 

Sale price- The auction method will tell you exactly what the market value of your farmland is.  Assuming the auction was advertised property and you have attracted every buyer you could have then the bidding will only go as high as the value of the property.  With a private treaty sale there will be work involved upfront to determine the value of the property so you can set the price.  With a private treaty sale you risk pricing the farmland to high and missing buyers that may have been interested at a lower price, and if you list the farmland to low then you are leaving money on the table.  With an auction bidding stops when nobody is willing to pay more.  That could be the definition of market value. 

Todays Iowa land values are raising and more people are investing in Iowa land during these economic worrisome times.  With an increase of 22% last year you can see that land values are increasing quickly in Iowa.  An auction helps you take advantage of raising values and getting every bit of it in your sale.  If you can imagine values raising 22% in one year, thats just about 2% each month.  If you have had your land listed private treaty for 3 months before a buyer notices it you price is already off by 6%.  Thats $6000 for every $100,000 value.  If you were selling $500,000 worth of land you are potentially leaving $30,000 on the table.

Sale date-With an auction you choose the sale date and the closing date.  You make it convenient for yourself.  With a private treaty sale the buyer chooses the closing date or you negotiate it.  Since you are choosing you know exactly when the property will sell, you will not be sitting on the market for months on end wondering if or when the land will sell.

Auction Sales Advantages to Buyers

With an auction sale buyers know the seller is willing and motivated to sell and they will not have to endure counteroffers or long negotiations.  Buyers can feel comfortable knowing what others are bidding.  They will know they are not being duped into a higher price because they just saw the other person bid.  As a buyer you remain in control of what you are willing to pay.  As a buyer you can stop bidding when the price reaches a point where it is to high for you to continue.

Watch for our nationwide marketing on TV airing 15 times per week to over 80,000,000 homes.  Our recreational properties TV program airs on the M.A.N. Channel, The Sportsmans Channel, Fox Sports South, and The Pursuit Channel. 

CONTACT JASON     Cell Phone: 402.250.1006  Email: Jason@gowithjason.com  

Jason's Websites:  Loess Hills Land For Sale 

Whitetail Trophy Properties

Smith Auction Marketing - Iowa Auctioneer

ABOUT THE AUTHOR Jason Smith is a Land Specialist and Real Estate Auctioneer with Whitetail Trophy Properties.   Jason offers property listings as well as land auctions in Iowa.  As a sportsman himself Jason enjoys archery and muzzleloader hunting for whitetail deer.  In college Jason studied Fish and Wildlife Biology and specializes in rural properties only including Iowa hunting land, recreational land, farms and rural building lots.  Jason also manages over 260 acres of hunting land using QDM.  As a member of the (QDMA)   Quality Deer Management Association  he has joined ranks with whitetail enthusiasts across the United States in controlling and growing a healthy whitetail population for all to enjoy.   Jason is a member of the Iowa Auctioneers Association, National Auctioneers Association.