If you are selling a large Iowa farm at auction, deciding how to divide it into tracts can be one of the most important parts of preparing for the sale. The goal is usually to create logical tracts that appeal to different buyers while still allowing buyers to compete for combinations or the entire farm.
However, simply creating more tracts does not automatically create more value.
Good tract design should consider tillable acres, soil quality, access, drainage, buildings, recreational land, development potential, existing field boundaries, and how local farmers would actually use the property.
Before drawing lines on a map, start by asking a more important question:
Who is most likely to buy this farm, and how would they want to own it?
Why Split a Large Farm Into Multiple Tracts?
One reason to divide a large farm is to increase the number of buyers who can participate.
For example, consider a 640-acre Iowa farm offered only as one tract.
A buyer must have the desire and financial ability to purchase all 640 acres.
Now suppose the property can logically be divided into four tracts. That may allow additional farmers, neighbors, investors, and other buyers to participate.
One buyer may want 80 acres. Another may want 160 acres. Meanwhile, another buyer may want the entire 640 acres.
A well-structured auction can give those buyers opportunities to compete.
Does Splitting a Farm Into More Tracts Make It Worth More?
Not necessarily.
More tracts can expand the buyer pool, but poorly designed tracts may actually make a property less attractive.
For example, creating a tract without good road access could cause problems. The same could happen if tract lines divide drainage systems, separate buildings from the acres they serve, or create awkward field shapes.
Therefore, the goal should not be to create the most tracts.
The goal should be to create the right tracts.
Start With Road Access
Access is one of the first things to consider when dividing farmland.
Ideally, each tract should have practical and legal access.
Ask:
- Does the tract have road frontage?
- Is there an existing field entrance?
- Can farm equipment easily enter the property?
- Would an easement be needed?
- Is access usable year-round?
- Does the proposed boundary create an awkward entrance?
A tract may look good on a map but become much less desirable if accessing it is difficult.
For that reason, access should be considered before final tract lines are established.
Look at Existing Field Boundaries
Existing field boundaries can provide a natural starting point.
Creeks, roads, fence lines, waterways, timber, terraces, and other physical features may already divide the farm into logical areas.
Whenever possible, consider how the property is currently farmed.
For example, splitting through the middle of a productive field may create an unnecessary boundary between two owners.
On the other hand, a road or creek may already create a natural division.
Good tract design often works with the land rather than forcing arbitrary lines onto it.
Consider Tillable Acres
Tillable acres are another major factor.
Suppose a 400-acre farm contains 360 tillable acres and 40 acres of timber and waterways.
How those acres are distributed among the tracts can affect buyer interest.
One tract might contain almost entirely productive cropland. Another might include a combination of cropland and recreational acres.
Those tracts may attract different buyers.
The goal is not necessarily to make every tract identical. Instead, each tract should have a clear reason why a buyer may want to own it.
Pay Attention to CSR2 and Soil Quality
In Iowa, soil quality and CSR2 can play an important role in farmland value.
When dividing a large farm, review how soil quality varies across the property.
One portion of the farm may have stronger soils than another. That is not necessarily a problem.
However, understanding those differences can help determine logical tract boundaries and how each tract should be marketed.
Buyers should receive clear information about the soils and CSR2 associated with each tract.
Do Not Ignore Drainage and Tile
Drainage can become complicated when one farm becomes several separately owned tracts.
Before dividing the property, determine what you know about:
- Drainage tile
- Tile mains
- Outlets
- Drainage districts
- Surface drainage
- Waterways
- Easements
- Shared drainage systems
For example, a tile main may cross one proposed tract to serve another.
If different buyers purchase those tracts, access and maintenance may need to be addressed.
Drainage questions are much easier to handle before the auction than after several buyers own different portions of the farm.
What Should I Do With the Farmstead?
Large farms sometimes include a house, grain bins, machine sheds, livestock buildings, or other improvements.
You will need to decide whether those improvements should stay with surrounding farmland or be offered separately.
There is no universal answer.
A farmstead with a house and several acres may attract an acreage buyer. Grain storage may be more valuable to an operating farmer. Livestock facilities may need enough surrounding land for access, manure management, or other practical considerations.
Consider who is most likely to value the improvements.
Then design the tract accordingly.
Should Timber and Recreational Ground Be Separate?
Sometimes.
A large farm may contain productive cropland along with timber, creek bottoms, ponds, CRP, or hunting ground.
Those acres may attract a different buyer than the cropland.
For example, a recreational buyer may be interested in 80 acres of timber and CRP but have little interest in purchasing an additional 300 acres of row-crop ground.
Separating recreational land can open the auction to another category of buyer.
However, the recreational acres need appropriate access and should make sense as a stand-alone property.
Consider the Neighbors
Neighboring landowners can be important potential buyers at a farmland auction.
Before creating tract lines, look at who owns the surrounding land.
A proposed 80-acre tract may directly adjoin one farmer. Another tract may fit naturally with a different neighboring operation.
Understanding neighboring ownership can help identify configurations that may be attractive to local buyers.
However, do not design the entire auction around one expected buyer.
The neighbor may be interested, but the auction should still be marketed to the broader buyer pool.
Should Every Tract Be the Same Size?
No.
There is no rule that says a large farm should be divided into equal pieces.
A 500-acre farm does not automatically need five 100-acre tracts.
The property itself should help determine the tract sizes.
For example, a farm might logically divide into:
- 75 acres of mostly tillable land
- 155 acres of productive cropland
- 190 acres with improvements
- 80 acres of recreational ground
That may make more sense than forcing the farm into four equal 125-acre tracts.
Think about usability first and acreage second.
Should I Create Smaller Tracts So More Buyers Can Afford Them?
That can be part of the strategy.
Smaller tracts generally require less total capital to purchase. As a result, more buyers may be financially capable of participating.
For example, someone who cannot purchase a $5 million farm may still be able to purchase an 80-acre tract.
However, smaller is not always better.
Creating too many small tracts can produce awkward boundaries, access problems, additional survey work, and properties that are less efficient to farm.
Again, the objective is to create logical buying opportunities.
What Is a Multi-Parcel Farmland Auction?
A multi-parcel auction can allow buyers to bid on individual tracts, combinations of tracts, or potentially the entire property, depending on the auction format and terms.
This can be useful for a large farm because different buyers may want different configurations.
For example, imagine a farm offered in four tracts.
One buyer may want Tract 1.
Another may want Tracts 2 and 3.
A third buyer may want all four tracts.
A multi-parcel process can allow those different interests to compete within the auction structure.
The exact bidding procedures should be clearly explained before bidding begins.
Can the Entire Farm Still Sell to One Buyer?
Potentially, yes.
Dividing a farm into auction tracts does not necessarily mean several people must ultimately own it.
Depending on the auction format, buyers may be able to bid on combinations or the entire property.
That means someone interested in the whole farm can potentially compete against buyers interested in individual pieces.
This is one of the reasons tract configuration matters.
The auction can be designed to accommodate both types of buyers.
Should I Survey the Tracts Before the Auction?
That depends on the property and proposed divisions.
Existing parcels may already have established legal descriptions. New tract divisions, however, may require surveying or other work.
Local subdivision rules, access requirements, zoning, and other regulations may also apply.
Before advertising exact acreages or boundaries, discuss the proposed division with the appropriate surveyor, attorney, county officials, and other professionals.
Do not assume that a line drawn on an aerial map automatically creates a legal parcel that can be conveyed.
What About Easements?
Easements should be considered early.
Creating new tracts may require agreements for:
- Access
- Drainage
- Utilities
- Shared driveways
- Wells
- Water lines
- Septic systems
- Other shared improvements
Existing easements also need to be identified.
Buyers should understand how easements affect each tract before bidding.
What About FSA Acres and Farm Programs?
Dividing ownership does not necessarily mean USDA farm and tract records automatically divide in exactly the same way.
If the property participates in farm programs, CRP, or other USDA programs, review the situation before the auction.
Buyers may also want information about cropland acres, base acres, program yields, and existing contracts.
The appropriate USDA office and professional advisors can explain what happens after ownership changes.
What Information Should Buyers Get for Each Tract?
Each tract should be easy for a buyer to evaluate.
Depending on the property, information may include:
- Gross acres
- Estimated tillable acres
- CSR2
- Soil maps
- FSA information
- Property taxes
- Lease information
- Possession
- Drainage information
- Tile maps
- CRP information
- Easements
- Improvements
- Survey information
- Aerial maps
- Legal descriptions
Clear information reduces uncertainty and helps buyers decide how much they are willing to bid.
How Many Tracts Should My Farm Have?
There is no perfect number.
A 300-acre farm might make sense as one tract. Another 300-acre farm might work better as three or four tracts.
Likewise, a 1,000-acre farm may have several logical divisions.
Instead of starting with a target number, start with the property.
Ask:
Where are the natural boundaries?
Where is the access?
How is the farm currently operated?
Where are the improvements?
How does drainage work?
Who are the likely buyers?
What combinations might buyers want?
The answers can help determine the appropriate number of tracts.
What Are Common Mistakes When Splitting Up a Farm?
One common mistake is creating tracts based only on acreage.
Other potential problems include:
- Poor road access
- Awkward boundaries
- Splitting buildings from necessary land
- Ignoring drainage
- Overlooking easements
- Creating too many small tracts
- Ignoring recreational value
- Assuming every tract needs to be equal
- Designing the auction around one expected buyer
- Failing to consider combinations
- Advertising boundaries before confirming they can legally be created
These issues can often be addressed during the planning process.
How Should I Split Up My Big Farm for an Auction?
Divide a large farm into tracts that make sense independently while still allowing buyers to pursue logical combinations.
Start with access, existing field boundaries, tillable acres, soil quality, drainage, improvements, recreational land, and surrounding ownership.
Then consider the likely buyer pool.
The best tract configuration should make it easy for a farmer, investor, neighbor, recreational buyer, or other qualified buyer to identify the portion—or combination—that fits their goals.
Most importantly, do not split a farm simply to create more tracts.
Create tracts that make sense.
Start Planning the Tracts Before Marketing the Auction
Tract design should happen early in the auction process.
At Whitaker Marketing Group, we work with Iowa farmland owners to evaluate the property before determining how it should be offered.
That process may include reviewing aerial maps, soil information, CSR2, FSA information, access, drainage, improvements, neighboring ownership, and potential buyer demand.
Some farms may be best offered as one tract. Others may benefit from multiple tracts and a multi-parcel auction.
The goal is to create an auction structure that allows the market to compete for the property in ways that make sense for the land.
Have a large Iowa farm you are considering selling at auction? Contact Whitaker Marketing Group to discuss potential tract configurations and auction options before deciding how to divide the property.
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