I've covered a handful of land auctions over my career to get a feel for what land prices were doing or a sense of what people looked for when buying land. Sometimes I went because the auction company was using what was once a new-fangled method- offering different tracts and letting potential buyers combine them as they wished until the highest possible sales price for the seller was reached. That's become the norm rather than a novelty, mainly because it's based upon one principle- good, old-fashioned American capitalism-style competition. It works every time.
Last week two high-profile land auctions were held. I intended to go to the one offering 506 acres of well-maintained, well-drained 'black dirt' in Clinton County, offered by Schrader Realty Company, Columbia City, one of the pioneers in breaking a farm into tracts. I even knew one member of the estate offering the land. In the end, I went to one held at Benton Central High School the night before instead.
The deciding factor? Weather, pure and simple. In my younger days, I would brave almost any type of weather, especially if it meant winding up near Ft. Wayne where my then girlfriend, now wife, Carla, lived. Today, hey, if there's a chance of icy roads, I figure there will always be another day to find a story. The weather forecast for Wednesday was awful.
Apparently the cold brutal weather wasn't cold enough to stop buyers from finding the Clinton County fairgrounds however. If you visit the Schrader Auction website, you'll find that the farm sold for more than $6,500 per acre, winding up going to several buyers, not just one. Sounds like a pretty strong land market to me.
There was a good crowd assembled the night before at Benton Central to bid on 198 acres offered by a Trust through Farm First Realty, LLC, Otterbein. The reason behind this sale is worth a blog later - the heirs needed to sell enough land to pay inheritance taxes so they could hang on to the rest of the farm.
It was bare land, maybe not the best in Benton County, but still a productive farm, judging by soil types - mostly prairie soils.
Dan Baker, for Farm First LLC, an accomplished auctioneer, Lafayette, called for bids. More than 60 people were gathered. Probably half had bid numbers. They offered me one. I politely said, 'No thanks.' What I was thinking was, "You've got to be kidding- in your dreams!"
This farm was offered in two tracts. Bidding started out slow as serious buyers gauged the competition. Once Baker offered the whole farm, it finally heated up. It passed the million dollar mark. Then it was time for a cookie break.
Giving people time to talk and team up if is part of the modern land sale. About that time I heard a half dozen cell phones ring. Likely a partner was on the other end of the phone, helping discuss if it was time to play their cards, or fold. Most folded.
But the two parties who bid on individual tracts huddled together. Soon they offered collectively $1,000 more than the leading bidder for the whole farm. Then the whole farm guys took off again. The price shot up near a Million and sixty thousand. It looked like it was going that way. Baker was calling out the bid at a million and 62 thousand, asking for a million 63 thousand. Then one of the individual tract bidders raised his own bid, and the two-tract bidders took the lead.
Baker called for a million 64 thousand for the whole farm, but one contending bidder had already packed up his briefcase. The other simply shook his head sideways. So Baker sold the farm in two tracts, to two buyers. The final price was about $5,370 per acre, on the high range of what the management company expected it to bring.
Two people went home happy. The rest who had bid numbers left disappointed, at least for the time being. And many on-lookers left with the knowledge they wanted. They were either bankers, would-be sellers someday, or young farmers who would love to buy land in the future And then there was this journalist. Just to earn my stripes, before Baker got close to 'sold,', I leaned over and asked a young man, sitting close by with his calculator and cell phone, if the farm was bringing about what it should.
"Yep, it's right on track" he said. By the way, he didn't buy it. Apparently right on track was more than he wanted to pay.
Attending a land auction is an interesting way to spend an evening. Just be careful when they start offering bid numbers!