Land Auction and Land Sales Questions & Answers
1. Why should I consider the auction marketing method?
There are several advantages to both buyers and sellers that make the land auction method beneficial:
- Buyers come prepared to buy. Lookers are eliminated because bidders must pre-qualify themselves through a non-refundable deposit of 10% to 20% if they are successful bidders.
- The land auction creates a sense of urgency and brings interested parties to a point of decision.
- Auctions create maximum exposure for the property. Auctions are a concentrated effort, so the exposure and efforts are more intense and visible.
- The seller avoids high carrying and holding costs.
- Auctions create and increase buyer competition for property.
- The seller can set a specific date, time, and location for sale of the property.
- Seller controls all of the sale conditions and terms.
- Buyers know the seller is committed to sell.
- The buyer knows he is getting the property at a fair market price set by public bidding.
- The buyer has full control of what he wants to bid to own the property.
- Auctions reduce the potential negotiating time for the buyer.
2. Who will make the decisions on how my property is auctioned?
There are different auction formats and terms available to each seller. Iowa Land Sales will help you evaluate your property and allow you to select the most effective and comfortable options for you.
There are several different auction formats that can be utilized:
The real estate sells to the high bidder. The seller does not reserve the right to decline the final bid received by the auctioneer. Absolute auctions generate maximum buyer response. However, it is important to recognize the market risk potential for the seller.
Auction With Reserve
The seller reserves the right to accept or decline the final bid. Auctions with reservation may or may not have an advertised minimum bid. The advantage to the seller is that he or she is not obliged to accept any price other than what he or she and the auctioneer have established as a reserve price for the property. The drawback is that some buyers may not want to invest the money and time in researching a property sale that is subject to seller approval of the final bid.
Minimum Bid Auction
Bids are accepted at or above the disclosed advertised minimum. The advantage to the seller is that it does create a safety net that does not exist in the absolute auction. At the same time, if the minimum bid is set at the proper level, considerable buyer excitement can enter the marketplace. The disadvantage is that the seller may be limited to only those buyers interested at the disclosed minimum bid. The minimum bid auction format has been very successful in marketing of real estate previously listed through traditional sales methods.
Sealed Bid Auction
A sealed bid auction ensures that the property is only marketed to targeted potential buyers and gives the seller more options should sealed bids be unsuccessful. This option works well in thin markets with only a few buyers.
3. Does Iowa Land Sales specialize in real estate?
Yes. Land Sales are what we do.
4. What are the usual terms of an auction?
The seller also sets the terms and conditions of the auction with advice of Iowa Land Sales and the auctioneer. The terms must be in balance…keeping in mind that there are two parties in the transaction. There should be no contingency clauses on auction day. All possible concerns and questions of the buyers should have been addressed prior to the sale day. Usual terms are that the high bidder(s) deposits with the auctioneer an advertised earnest money deposit (% of the purchase price) and enters into a pre-approved contract immediately following the auction. The balance is paid in 30-60 days with delivery of good title from the seller. Items of consideration in sales terms:
- Percent down
- Reservation of minerals
- Property information to be provided
- Legal descriptions
- Cash vs contract sale
- Closing date to be advertised
- Abstract vs title insurance
- Real estate taxes
5. Can Iowa Land Sales conduct a multi-parcel auction, where a property is divided into multiple tracts to increase the number of bidders and sale price?
Yes, we do that on a regular basis, but only when it is an advantage to our clients.
6. How will Iowa Land Sales market my property and auction?
An aggressive marketing program is critical to an auction’s success. Iowa Land Sales uses direct mail, newspapers, trade journals, radio, property signs, telephone solicitation, property brochures, websites, and social media to promote your property. Depending on the location of the property, certain mediums may be used more than others.
The auction staff will also devote many days of prospecting the market to identify potential buyers and discuss their interest in the property to be offered.
7. Does Iowa Land Sales have the expertise to work with investors or institutions?
Yes. We have an extensive database of both investors and institutions we partner with to sell and acquire land.
8. If I decide I want to sell my land, how long will it take for the auction to be completed and the transaction to be closed?
The allowed time for a land auction varies depending on the type of property, but generally it is 60 to 90 days from the initial planning stage to closing. The auction itself may take from just a few minutes for single property to several hours for a multi-parcel auction.
9. What if a traditional land auction doesn’t fit my needs?
Iowa Land Sales is pleased to offer private sale solutions for you and your property. The use of private treaty sales is often dictated by current sales market conditions.
- Allows the property to remain on the market as long as needed
- Reduces pressure on buyers
- Lets you set the price you want
- Provides targeted advertising efforts in defined markets
- Promotes selling flexibility
10. Can Iowa Land Sales assist me with property acquisition?
Yes. We offer buyer agency and will be happy to represent you in locating and securing that special property. We can also help you lease, and/or manage the property you buy.