National Auctioneers Association: 10 keys that affect land market strength

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handful Thankfully,of indicators there in are each more area that than can a help auction professionals gauge overall land market strength. We have 10 of them here, including a major one listed at the end. 1) Soil types – “Probably the fir st question they ask when [prospective buyers] call, unless they read it online, at least in my area, is ‘ What is the soil type on that farm?’” says Kristine FladeboeDuininck, BAS, of Spicer, Minnesota. “They’re all excited about that crop production index.” (The Crop Index is the number that expresses the relative yield of crops on a particular area with the average yield over an entire region being taken as 100.) 2) Interest rates – Typically, when interest rates are low, this can help make properties more attractive to buyers. Be sure to keep informed on current rates. 3) Commodity Prices – Being able to show what kind of return on investment a buyer can expect from the commodities produced on a piece of land is key. Commodity prices fluctuate, of course, which is why keeping tabs on them and using your pricing knowledge is an excellent way to identify and communicate the right time for a seller to act. 4) Tile /drainage – “A well- drained farm is worth $500-$1,000 more per acre if it is well drained. Sometimes a little less, and sometimes a lot more. Tile is so, so important in drainage,” FladeboeDuininck says. “One of the top three or four questions I get from a farmer or an investor: ‘ What’s the tile situation? What’s the drainage like?’ If you can improve that farm with pattern tile or as best as possible, it is sure going to show in your selling numbers.” 5) Location and shape of the farm – Where is that farm located – not only by state, but within in your state? Is it located by other big farms? Is it located by other large farmers? Where it is located is a big part of the equation. “Before a land auction, I can just about tell myself how well that sale is going to go if I look at the platform,” Fladeboe-Duininck says. “Who is that farm located around, and what is the strength and quality of the farms next to it and the pocketbooks.” 6) Neighbors – Just like in residential areas, neighbors can play a huge role in the attractiveness of a property and how much a buyer is willing to pay to own it.

What respected?are the“It sure neighbors means like?a lot to Are have they a good neighbor,” Fladeboe-Duininck says. have7) strong Strength communities,of the Communitylarge and small,”– “We Fladeboe-Duininckcommunities that struggle.”says, “and The we strength have of the surrounding or nearby community can often times help influence or dictate the price of a farm. 8) Taxes – Taxes attached to a farm can keep someone from making a buying decision. “Some of the taxes in my county are $50, $60, $70 per acre,” FladeboeDuininck says. Communicating as much tax information as possible, and doing so early in the process, might give an auction professional time to ease concerns or determine a way to move a prospective buyer past that obstacle. 9) Practices of the tenant /current owner – If you’re unsure how to obtain a third-party, objective into a farm’s history when it come stoup keep, the local neighbors (be sure to vet the information you’re given) who have been driving past the land for years may be able to provide some insight. “They know how much care that farm has had,” Fladeboe-Duininck says. 10) Weather – According to FladeboeDuininck, the biggest factor driving land market strength isn’t distance, emotional attachment, buying emotion, family or anything manmade or controlled. It is good ol’ Mother Nature.

“We can have precision farming. We can tile all we want. We can do this and that, and this and that. We can buy more farms and sell online and live. We can go wild and crazy,” she says. “but aside from irrigation, it all comes back to weather.

“A farm I’m going to sell this fall has been hailed on twice this year,” she says. “The seller is very nervous about how that will affect the farm.” She says she won’t make any promises, but that she has discussed with the seller that farmers and investors, in her mind, are futuristic and won’t take one year of a hard crop into too much consideration.

World weather, too, can also affect local land value. If, for example, a huge drought affects the grain market in another part of the world, U.S. grain producers suddenly may see a rise in their land value as demand rises. Of course, the opposite can be true also.