Selling land at auction is a great option for many sellers. It provides a fair market value through competitive bidding and a firm date of sale.
Using a land auction company can save time and energy by expediting the sales process. Here are some benefits of working with a land auction company for your farm sale.
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Double Vetting of Buyers
A land auction company connects sellers with a pool of eligible buyers. These buyers know the company they’re working with, and the auction process eliminates the potential for misunderstandings between seller and buyer regarding terms of sale, closing dates or other issues that can complicate private sales.
Similar tracts of land are grouped in auctions with traditional bidding, and potential buyers compete to select the lot they want to buy by offering bids in sequence. Once a buyer claims the property of their choice, contracts are exchanged, and the transaction is finalized within 30 days. Choosing farms for sale in Iowa at an auction also helps ensure a fair price for the property. The seller is committed to selling the property on a specific date, and the terms of the sale are clear and concise, eliminating back-and-forth negotiations or deals falling through due to appraisals or financing. This allows buyers to act quickly and confidently, assuming they have the funds for an on-time closing.
Fair Market Value
The term “fair market value” (FMV) can be challenging to comprehend and define. In an arm’s length transaction, the price at which a property would be sold between a willing and knowledgeable buyer and seller is what this expression means.
FMV is based on information known as a valuation date, and a reasonable hypothetical willing investor and seller might consider as pertinent in making a purchase decision. Many factors impact an appraisal of a property, from its location and size to its use and condition.
Auctions eliminate many of the uncertainties of a traditional sale and can lead to quicker and less contentious sales negotiations. Additionally, contracts are exchanged on the day of purchase, avoiding the delay and expense associated with a brokered private deal. This speedy process can also help reduce carrying costs incurred on the property like taxes, interest and insurance. This can result in a higher bottom-line dollar for the seller.
Multiple Parcel Auctions
A land auction company will often offer the option of a multi-parcel auction. This is a way to reach buyers that wouldn’t normally be able or willing to purchase a farm.
With a multi-parcel sale, the farm is sold in smaller tracts and then auctioned off individually. A buyer would then bid on the lots of their choosing, and if they were the successful high bidder, they would have the option to purchase all or part of the parcels of land.
This method allows multiple bidders to compete for each piece of the property, often selling for higher than a traditional farm sale. Also, the auction process eliminates much of the sales negotiating, which can take up valuable time and resources for both parties. It is a quick and efficient way to make a farm sale. It also reduces the carrying costs incurred with continued ownership, such as taxes, interest, insurance and maintenance.
A land auction company with unique land experience can connect you to a pool of eligible prospective buyers. This gives you the benefit of a double vetting system that works for both parties. This helps to ensure that the buyer knows that the land he is bidding on is legitimate and you know that he is honest because the reputation of the auction company backs his bid.
The accelerated timeline of an auction allows for quick closings. You can have a contract on your land sold in as little as 30 days, which is particularly helpful if you need to sell fast. Additionally, buyers know that the sale is on a specific date, so they are not left with the uncertainty of long negotiations and back-and-forths. This can save you time and money. Also, since the auction is a contingency-free process, the sale will be final when it closes.