With COVID-19 regulations and recommendations affecting the way the agriculture industry runs its operations, businesses and events, many common processes within the farmland market have been adjusted. One may have expected to see a lowering in the number of properties liquidated, however, that is far from the truth. By utilizing tools such as online auction sites, farmland owners and investors have continued to buy and sell land during this worldwide pandemic.
Looking at land sales pre-COVID, auctions have always been a popular choice amongst landowners. One of our customers, People's Company, released an article featuring The Dirt Dealer, Jeff Obrecht, where he explained that, “for many real estate companies, 70 to 80 percent of the properties were being sold at auction, with the other small percentage listed private treaty².” When looking at options to liquidate land, one may find holding an auction to be the better fit. “Let’s define ‘better’,” says Peter Jaques, Head of Real Estate at FarmlandFinder. “If by better you mean the quickest way to a sale, then yes an auction could be ‘better’. If ‘better’ to you means selling at the highest possible price then you’ll find folks on both sides of that coin.”
“The reality is an absolute auction represents exactly what that farm is worth at that time with those buyers present.” - Peter Jaques
Transition to Online Auctions
The transition from in-person to online auctions has been a prevalent trend throughout 2020. Many states, including the high-producing states of the midwest, have put restrictions in place on public gatherings¹. Stay-at-home orders, travel restrictions, limitations of 10 people or less, social distancing regulations and quarantine orders have made it almost impossible to hold any traditional in-person auctions. To avoid the large numbers and congested areas, many have turned to online auction sites to hold their events while still complying with government regulations.
Joe Wilson, Data & Research Team Lead at FarmlandFinder says, “There has been an ‘adapt or die’ mindset. If you didn’t switch to online auctions, you were going to be left behind and COVID-19 restrictions exemplified that. Although that’s where the market was going, with a growing base of absentee owned land, along with the current environment, the advent of online-only auctions was really spring-boarded by the craziness of 2020.”
Online Format Creates an Added Layer of Privacy
One of the reasons a landowner may steer away from public auctions is because of the lack of privacy. When attending in-person, one is able to see who is bidding, what price they back out at, and other personal details one may not want to be publicized. “When talking with brokers, I’ve heard that one of the biggest positives of an online auction can be for the neighbors and local farmers,” explains Wilson. “One broker shared that the nearby farmer ‘didn’t feel any uneasiness when bidding online, because you don’t have to look your neighbor or friend in the eye as you’re trying to outbid them.’ Hosting auctions online can help to remove some of the uncomfortable personal aspects of an auction and shift the focus to making the best business decisions for an operation.”
Are Online Auctions the Way of the Future?
While online auctions may be the “new normal” for the foreseeable future, could we see them lasting longer than COVID-19 regulations? The farmland industry needs to answer this question. With efficiency and liquidity being major drivers across the farmland market - the online format poses a unique opportunity, but also presents unique challenges. If buying and selling land in-person still provides the path of least resistance for landowners, then there are more chapters yet to be written to the story of how farmland will change hands in the future..
Either way, FarmlandFinder is here to build towards a future where farmland transactions are more headache-free than they are today. By building practical solutions and using information to create value, our team is diligently working to be the tide that raises all ships for the farmland industry.
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