All farmers understand supply and demand. A drought reduces the supply of corn, for example, and prices go up. It’s natural, because we sell our farm products every year, in all kinds of markets. Commodity markets create the competition that establishes a fair market value.
The average farmer sells land far less often, and it’s not traded daily in public. So it’s easy to forget that the laws of supply and demand apply to it as well. Right now, as you know, there is growing demand for farmland. But to get the full benefit, you have to tap into that demand. And that’s what a Murray Wise auction does: It creates more demand for your land, so that you get the best possible price.
With the increase in farmland prices over the last couple of years, even a small farm may be worth quite a bit of money. You owe it to yourself and your heirs to ensure that you get the best price you can, and we’re focusing on farms of all sizes — large and small. Here’s a press release we issued about how auctions benefit small farms as well as large ones.
Redefining local: Even smaller farms benefit by selling at auction
For years, a lot of small farms were bought and sold locally, often as not to a neighbor who said, “When you’re ready to retire, I want to buy your land.” But with farmland prices rising rapidly to $10,000 an acre or more in many cases, that may no longer be the best strategy for selling small farms, according to Murray Wise, who has been buying, selling and managing farmland for more than three decades.
“Two things have changed in the last few years. First, the stakes are higher, and selling to a neighbor without any competition may not get the best market price. Second, the growing popularity of farmland as an asset class has made it more beneficial to reach out beyond the local community to other buyers who are seeking to invest. So even if the owner still sells to a neighbor, he’ll get a higher price if he’s also received competing offers from other potential buyers, and that’s why we’re now recommending auctions in more cases for small farms,” he said.
In the past year, he noted, Murray Wise Associates has auctioned a number of smaller properties, including Illinois farms of 143 acres ($1,565,000) and 52 acres ($468,000); and Iowa farms of 35 acres ($276,500) and 230 acres ($2,495,000). But in auctions of larger farms, many of the tracts sell individually in small tracts of 100 acres or less, often to farmers and local investors who had no interest in larger amounts of land.
“Right now, three-quarters of the land being sold at auction is going to farmers and local investors, and the average tract size we sell is about 80 acres. An auction ensures that bidders compete in a way that gives the seller the best possible price,” said Wise.
Individuals interested in additional information may visit murraywiseassociates.com or call 800-607-6888.