March 26, 2012 Author: Murray Wise
When there’s a lot of demand for an asset -- like there is currently for farmland -- it’s easy to get the idea that selling it is a cinch. So it’s tempting for a seller to assume he can do it himself, or hire the lowest-cost broker around to handle the transaction.
This can especially be the case when there is a neighbor or some other local farmer or investor who wants to buy the land. Why spend money marketing the land if you already have a buyer?
In short, because you may end up with more money after the property is sold and closed. This is more true than ever in a dynamic farmland market like we’re currently seeing. Prices throughout the Midwest have been rising rapidly, but the turnover has actually been quite low. As a result, there are often few “comparables” on which to base the price of farmland within a local area. That makes it easy to either accept too low a price (leaving money on the table) or ask too much (resulting in a lack of offers).
That’s why I favor auctions in a market like this one. An effectively promoted auction expands the universe of potential buyers, often bringing in investors who might never notice the farm was for sale otherwise. It’s also worth noting that not all auctions are created equal. If all you’re going to do is put up a sign and maybe print up some fliers, you’re not likely to get the bidders that will bid up the price to the best possible level.
Murray Wise Associates LLC has a major advantage in selling farms, whether by auction or private treaty, because we’ve been selling and managing farmland nationwide for decades. At any given time, we have hundreds of millions of dollars available from investors looking for land to buy, but many of these are prospects that won’t even know about a sale that isn’t well promoted.
Sure, a real campaign may cost a little more. But it’ll probably get you a higher price, leaving more money in your pocket when all is said and done.
Murray Wise founded the Westchester Group in 1986 after acquiring the Champaign, IL division of the Sandage Companies, a traditional farm management and brokerage firm…
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