For the first time in quite a while, there was a real estate auction in our neighborhood last week.
Nearly 260 acres went up for sale in four tracts. Three tracts were in town, with marginal soils, some recreational land, limited development potential, and less than ideal farm access. The fourth tract (51 acres) was several miles away on a state road and had better soils.
Before the sale, dad and I had done a drive by on all the tracts. We farm less than a mile from all of them. We had no idea what the tracts in town would bring, and only had a slight interest. By sale time, we had a guesstimate of what we thought the 51 acres would bring.
With seven bordering landowners to the that tract, I was interested but didn't think I would have a chance. Even so, I went to the auction with an 'undervalue' range in my mind and a check for earnest money in pocket.
The sale was slow. I estimate out of the 40 or so attendees, there were 12-15 registered bidders. Many of the spectators reside in one of the houses adjoining the properties in town. There were only about six or eight who actually bid. I found myself bidding on the 51 acres. In the end, I was not successful.
As I stated, the land in town wasn't as desirable. It is split by the railroad tracks. Drainage is also a problem. It's just not the ideal farming farm. During the sale, I briefly considered the town tracts. However, town isn't growing that much right now, and you would have to wait for the next boom to develop it.
I recalled an article I saw recently about the Farm Service Agency plan to enroll more acres into wildlife reserve programs. Enrollment in that plan may have worked and been a vehicle for ROI. However, I never bid on these tracts.
If future sales follow suit, we may be looking at a 15-30% value reduction since the sales last fall and winter. Here are the sale results:
Tract 1- 51 acres / 48 tillable on state road: $370,000
Tracts 2&3 179 acres / 144 tillable in town: $540,000
Tract 4- 28 acres all tillable in town: $140,000
The opinions of Kyle Stackhouse are not necessarily those of Farm Futures or the Penton Farm Progress Group.