Can I Have a Reserve When I Sell My Farm?
Top 50 Questions about Farmland
Hey, it's the Iowa Land guy, and here's the top 50 questions that I get asked about farmland. One of the main questions I get asked is, can I have a reserve on my farm wholeheartedly? Yes you can, but let's talk about it. Reserve. What is a reserve? A reserve is a bottom dollar price. Either seller. Reserve the right not to sell the farm unless it brings X amount of dollars.
Now with that being said, two types of auctions, those with reserve and those that are absolute. If you've never heard that term before, what is an absolute. It means it's absolutely going to sell today regardless of the price that it brings. How do we set a reserve? Uh, you, the seller, and us the brokerage, come up with a price of what we think your farm is going to sell for in a farm valuation or an appraisal.
Now, once we get that, I oftentimes set that reserve price 10% less than what we think it's going to bring. Remember this though, reserves are meant to prevent disaster not to set a price.
David Whitaker | Iowa Land Guy