That’s because of true price discovery, which is the true market value of a piece of land or any item up for sale. Bidders all have the same opportunity to preview the property, review the literature and make an informed decision prior to the auction.
“They compete on a level playing field because the terms are always the same,” says Gehres. “Everyone’s equal.”
Purchasing and closing dates for regular real estate transactions can stretch for months at time, delayed for a variety of reasons. Auctions eliminate that part of the process and essentially create fair competition for a known item for a specific amount of time.
“Farmland and real estate auctions are ideal for sellers who want the sale to happen on their own terms and schedule,” says Johnny Klemme, a salutatorian from the Reppert Auction School (the top auctioneer school in the country) and NAA member. “We set the sale date, we set the terms and select the type of auction that provides the most value to the seller.”
There is also a level of transparency since purchase prices are negotiated during the event and once it is agreed upon by all parties – as in the highest bidder has won – that purchase is completed the same day, providing real-time response to bids. There are no extras that must occur after the sale like inspections or contingencies.
“The terms of sale are known upfront,” says Klemme. “And you close on the deal within 30 days or less.” Buyers have the opportunity to do inspections or visit open houses on their own terms ahead of the sale and know what they are buying beforehand. This both speeds up the process and gives more transparency, clarity and confidence.
So, what makes an auctioneer, well, good?
Experience, says Gehres, who points out that anyone can learn the auctioneer’s chant; however, knowing how to use that chant to actually move the merchandise at the prices the seller wants can take several years to learn – even if you complete the auctioneer coursework at one of the many reputable schools and pass the certificate test. Many states even require auctioneers to complete an apprenticeship before going off on their own.
Understanding how to read a crowd not only benefits the sellers (and buyers!), but also showcases an auctioneer’s abilities and helps to establish the credibility necessary to build trust and clientele.
There’s also an unspoken rule that you typically don’t sell the best item or asset first.
“Everything that you’re going to sell, you want to lay out like a bell curve,” says Gehres. “You’re going to build up to a crescendo of value and then go down the backside.”
Time is also something to keep in mind – a switch from the olden days of an auction being a day-long affair.
“In the 80s and 90s, it was very common to be there for breakfast, lunch and maybe even dinner,” says Gehres.
An experienced auctioneer also understands how certain auction items may be paired together even if that’s not how they’re originally advertised. For example, if someone is bidding on the farmhouse, often, they’ll also want the appliances and other miscellaneous items that could otherwise be sold separately.
For those who are driven to become auctioneers, a lot of that has to do with an overall enjoyment of what auctions are and the benefit to local communities.
“I’ve been around farm auctions my entire life and enjoy the process, energy and results (whether that’s selling or buying),” says Klemme. “Most importantly, for our clients, is that the auction method – whether it’s sealed bid, live auctions or online auctions – helps us provide a better level of service and client satisfaction for buyers and sellers.
“For our clients, selling land is often a once-in-a-lifetime transaction, selling farmland or real estate at auction is the best way to have certainty, transparency and truly maximize the value.”
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