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5 Tips For Selling Your Farmland At Auction

Tuesday, August 29th, 2017
property auctions

When harvest comes to a close, some landowners begin to consider whether or not the time has come to sell their farmland. Some go through a real estate professional while others attempt to sell their farmland on their own. Another effective process could be to auction off the land. Here are a few tips that can help during the process of auctioning your farmland.

Gathering information is critical

The first thing you need to know is who retains ownership of the farmland according to the deed. This may complicate the legalities of selling, as heirs sometimes attempt to sell land when the deed claims their parents as the owners. However, this is a situation that can be addressed with the aid of legal counsel. You will want to do ample research when contemplating auctioning or selling your land at auction.

Discuss the sale of your farmland with a CPA

You must fully understand the tax implications of selling your farmland and a CPA can help you walk through these. There are times when, due to tax complications, owners may exchange one piece of property for another so they can avoid the capital gains tax. This swap is known as a 1031 tax exchange. A CPA can help you understand any tax laws that you may have to follow when selling your farmland at auction.

Gain knowledge of recent comparable sales prices

When it comes time to settle on a selling price, you need some insight into the market and what other similar plots of farmland are selling for. This is one instance where working with a qualified real estate professional can help.

You may also consider getting an appraisal of your farmland from an Accredited Rural Appraiser. An appraiser can be found through the American Society of Farm Managers and Rural Appraisers (ASFMRA). However, you may have issues when setting the price at the appraisal value if the markets are rapidly fluctuating. When trying to auction your land, you must also decide on a starting bid, or if you want an absolute or reserve auction.

Understanding your land is important

There are several things you need to take stock of on the farmland you want to sell at auction. First, you must know the total acreage and how much of the land can be cultivated. Consider how many acres are dedicated to timber and how many to pasture. Look into the type of timber on the land and how much there is, and research its value. A professional forester can help you with this.

Also, see if you have any ponds on the property and consider how big they are. Irrigation is another important characteristic when assessing value. Many buyers, especially farmers, will ask if a well has been installed and when. They will want to know how deep it is, the size of the pump and casing, and what the pumping capacity is. Be prepared to receive these questions before the auction, or consider giving them to the auctioneers beforehand.

Other important issues to consider

There are several other factors you will want to be aware of when selling your farmland at auction. For example, what are the potential uses for the property and are there any usage restrictions? Consider if the farmland would make a good recreational area, instead of a farm. You should also look into whether or not you own mineral, air, or water rights on the property. Be prepared to explain the fertility of the farmland as a selling point, its yield history, and any environmental factors like drainage. Look into leases and property taxes and consider any improvements that have been made, like precision tiling or leveling.

If you do not have the experience or the time to fully research and understand your property, you will have a harder time making the sale. You can consider hiring someone in real estate that has specialized training in moving farmland. You can also ask the auction house you are interested in for information about auctioning your farmland.

Selling your farmland at auction with High Plains Auctioneers

If you would like more information about selling or auctioning your farmland, contact the experts at High Plains Auctioneers today. You can call us at (806) 244-6776 or Contact Us by email for more information about selling or bidding at auction. Don’t forget to check out our Upcoming Auctions to see what we have available!