Provided by Mossy Oak Properties
No two land owners are exactly the same, so it only makes sense that every sales technique will not work for everybody. Different goals and circumstances will influence how best to sell your land, and one option you'll come across is auctioning.
According to Tom Rayburn of Mossy Oak Properties AgriRec Land in Elk Grove Village, Illinois, auctions tend to work best for properties that will generate high demand.
"For example, tillable land is in extremely high demand," he said. "The auction process allows us to have multiple buyers competitively bidding at the same time, which will generally maximize the sales price the seller receives. When property needs to be liquidated in a certain time frame, auctions will also work well. However, if it is not a high-demand property, there is the potential for erosion of the sale price."
Weighing the pros and cons
As Rayburn pointed out, auctions are typically a faster and more efficient way to sell when compared to listing. Additionally, the competitive environment can end up fetching the seller a higher price.
Rayburn went on to say that auctions also give sellers more control, allowing them to decide the date, time, place and terms of the sale.
"[An auction also] eliminates overhead and long, drawn out negotiations," he said. "[They have] a higher closing ratio than brokerage sales."
However, there are potential disadvantages associated with selling land through auction.
"If not marketed properly, [land] may not have adequate interest or demand," Rayburn said. "If the property is distressed, it may sell at a significant discount from full market value."
Additionally, while selling through auction can speed up the process, it still takes time.
Rayburn said it takes six to eight weeks to prepare, advertise and hold an auction. Closing takes place within 30 days of the auction date. However, if you're the owner of property that will inspire fierce bidding or needs to be sold by a certain date, an auction may truly be the best way to sell land.
Auction best practices
One factor you may overlook concerns the auctioneer. However, choosing the right auctioneer is key, according to Rayburn.
"Select an auctioneer that will market not only locally, but also nationally, since they will bring in more buyers," he said. "One additional buyer can make a significant difference in the final sale price of the property."
Also, since marketing is such an essential part of a successful auction, Rayburn recommended working with a company that can offer serious advertising reach.
"If you're selling land, it is best to use someone that can sell by both auction and brokerage," he said. "Use a company that has a national and local presence as far as marketing."
Don't forget to invest in a land specialist who has experience in land auctions, as he or she will be able to walk you through the process and point out things you may miss. Even land sellers who have gone through the auction process previously can benefit from the wisdom that only comes from time spent as a rural land broker.