This last month we began to see some auctions that ended up as no- sales and/or delayed – sales. Yet, last week we also saw some strong sales that brought 18k and 22K/acre. What does this mean?
It means just because one farm brings $20,000/ acre does not mean that all farms will bring that price. There are still many factors that affect farmland value: location, farm ability, shape, size, CSR2, soil type, slope, drainage, water sources, hunting/ fishing ability, ability to build, development potential and much more. One of the largest factors however is the competitiveness of the neighbor farmers. Most farm buyers come within 50 miles of the farm location. Even if there are investor buyers bidding, an auction relies on the competitive bidding aspect. If the locals are not bidding as aggressively as they have been recently we will see lower prices. When the backup bidders do not bid as aggressive … I believe we will see real estate/auction companies shift to offering the farmland as a one chance bid option (sealed bid scenario) as a measure to gain the highest and best price. We may also see no-sales at auction with negotiations for the seller’s desired price after the auction.
For us, as land sales specialist, we will have to sharpen the pencil to manage sellers’ expectations.
We are not saying the market is crashing … we believe the market is flattening due to buyers exercising caution from talk of recession. We are still seeing outstanding prices and significantly more acres coming to the market. Results from the 92 Auctions (10,770 acres) this last month have the average for the state at $11,795 high quality ground at $14,675/ acre, and medium quality ground averaging $9,211/ acre. Low quality ground has remained steady at an average of $5,110/ acre.
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Our obligation; is to market your farmland to the largest audience yielding you the most successful outcome!
David & Ann Whitaker | Iowa Land Guy When you think of Farmland Think of US!