By: Shane Terrel – Northwest OK – Alfalfa County – (August 11, 2023)
When Mark Twain said “Buy Land, They’re Not Making Anymore” the farmers in northwest Oklahoma took it to heart. Wednesday evening shortly after 5 p.m. the auctioneer dropped the hammer on 780 acres of cropland offered for sale in an online auction event. The sale consisted of six separate tracts of land located between the small towns of Ingersoll and Dacoma, Oklahoma. All six of the farms had been in the same family for decades, the majority of which were class-1 soil “blue ribbon farms”.
Farmers in northwest Oklahoma have seen their share of obstacles this past year. Most of the wheat crops in the area failed due to widespread drought over the previous crop cycle; followed by excessive rains over the past few months, restricting most of our conventional farming efforts. The lack of wheat pasture in the area eliminated winter grazing opportunities that many farmers depend on for cashflow. Interest rates have more than doubled over the past year, and almost all input costs of farming have increased drastically in the past 24 months. Yet there is still significant demand for quality cropland, regardless of the existing obstacles faced by farmers. Free advice at the coffee shop may be the only constant economic factor – it’s still free and still costs all it’s worth.
The metrics from this auction event included registered bidders from 12 states placing over 700 bids. Online views totaled over 6000 from visitors watching the event. Tract sizes ranging from 80 to 160 acres produced total contract prices just above $2 Million. Successful bids were confirmed on all six tracts to five different buyers rounding out a well-executed auction. In a venue where nearly every variable recognized and affecting the local bidders put them at a disadvantage, the farms in this sale managed to achieve prices ranging from 12% to 24% above estimated market value (based on an average of recent market comps); Notably, all six farms were purchased by local farmers, who managed to outbid the competition leveraged via registered bidders in 11 other states.
COMMENTS FROM THE AUCTIONEERS: A successful auction doesn’t just happen – it’s planned that way. The tough part is defining the term “successful”, and that requires establishing and understanding the seller’s goals. With more than 25 years’ experience in the real estate & auction business we know better than to assume what the seller’s goals are without first asking. Making sure the seller has realistic goals prior to committing to an auction is vital for success. A common difference between a successful auction and a failed one is a well-informed seller, and it’s the auctioneer’s job to inform them.
As the habits of buyers and sellers change, the industry evolves to accommodate those changes. We receive many questions and comments about our decisions to recommend online auctions. Some bidders tell us they would rather attend a live event where they can “look everyone in the eye” while bidding. We agree that a live auction event has always been our favorite choice, but that’s due to our own selfish reasons. When my brother and I entered the auction industry over 25 years ago, we developed a passion for live auction events. Being on the microphone and calling bids to a crowded room of competing bidders is one of the most exciting things for us. Gathering with the local farmers and having those endless conversations about the past is absolutely one of the best parts of this business.
Times may have changed, but maximizing the value of a farm continues to take precedence over our selfish desires. Another auctioneer recently asked me why we didn’t have what he referred to as “a normal auction” where everyone showed up at the same place at the same time. My response to him was “the same reason I farm with a tractor and not a mule”. We recognize the efficiencies and value created through technology often come at the cost of things we enjoy, but change is inevitable. Our sellers benefit as we are inclined to be the first movers on new strategies that are anticipated to become the norm in future years.
We remember years ago, when farms were sold on site, along a dirt road, regardless of the weather conditions. Over 20 years ago professional land auctions started to move indoors to air-conditioned buildings with big screen projection pictures, chairs & tables, and coffee & donuts. That move was for convenience, comfort, and accessibility to the buyers, as well as offsetting unfavorable weather conditions; and most importantly it added value to the sale, because it catered more professionally to a larger group of buyers that otherwise may not have participated in the auction.
Today’s professional auctioneers are utilizing technology that adds value to the auction much in the same way that moving indoors did 20 years ago. Online auctions can be perceived as a high-end concierge service accommodating professional buyers that are too busy to attend a live event. The online auction method offers more convenience, comfort, and accessibility to the buyers, which increases the number of buyers that are allowed to participate in the auction. The general theory is (more buyers + more bids = more money). I still miss the coffee & donuts from the live auction events but will admit it’s an acceptable trade for the innovations in technology.
I think most of us will agree that NONE OF US WANT TO PAY MORE THAN WE HAVE TO FOR ANYTHING. Regardless of how proud we are of our efforts and the results of our auctions; we cannot expect any reasonable person to thank us for costing them additional expenses. If you’re trying to buy a farm, we understand your struggle. We’ve bought our share of farms too and hold no ill will toward you for trying to shorten-up your expenses. We respect your position as a buyer and realize that you are as much a factor in the market as the seller. Please don’t forget to ask yourself who you would call if you wanted to maximize the value of your land, and what type of services you would expect to receive when selling your most valuable assets.
Emotions and psychology play a large role in the decisions of auction participants. Sellers have their own set of personalities and family dynamics. The same can be said for the emotions and personalities of the bidders, especially when they are neighboring farmers in a rural farm & ranch community. Understanding this psychology allows the auctioneer to add value to the sale and mitigate the risk of a failed auction.
The psychological effects and how they equate to the outcome of an auction cannot be measured down to an exact dollar amount; However, had we chosen to perform this auction as a live event, it is a common belief that the results would have produced noticeably less value and prevented all these farms from selling. Consequently, some of the most valuable benefits to our culture are often the same aspects that limit value in a live event auction.
Our area is fortunate to have many farmers that have earned the respect of their neighbors through thankless actions and years of assisting one another. We are grateful for these impressive individuals and think their efforts are a testament to the quality of our rural farm & ranch culture. Now, imagine the obstacles faced by the auctioneer when charged with the task of convincing these folks to openly compete at a live auction event. Many of them tell us they want to bid, but they don’t want to expose themselves to potential disparagement from other onlookers for bidding against the young farmer next door; or a family member of the seller; or the neighbor that called asking them not to bid.
I’m not sure if bidders realize when they ask their neighbors NOT to bid, it adversely affects their relationship with that neighbor and with the seller. I know this because that neighbor usually calls me shortly after being asked not to bid. The seller expects the auctioneer to offset this risk, which is often accomplished by inviting non-resident investment buyers to complete in the auction. Keep in mind that it’s tough to get bidders from multiple states to attend a live event auction, and in many cases, bidders are more likely to compete when given the opportunity to bid online.
In closing I’d like to thank our neighboring farmers – We understand that your farm is more than land and crops. It’s your family’s heritage. It takes a special kind of individual to partake in a lifestyle and occupation where Mother Nature and the markets often have more control over your business than your own efforts. To those that work in acres, not in hours, we thank you for what you do. Thank you to the Leamon/Mitchel Family for placing your trust in our company to market your family farms. Congratulations on your successful auction!
This auction event was performed as a co-marketing effort by Hunting Country Real Estate and United Country/Heritage Brokers & Auctioneers. The brokerages are led respectively by Shane & Mitchell Terrel at Hunting Country and Shawn & Lucinda Terrel at UC-Heritage Brokers & Auctioneers. The Terrel Family has collectively performed over 4,000 successful auctions, including live events, simulcast, and online-only events driven by the most up-to-date technology. The Terrels are also the founders and co-owners of the #1 Google ranked website MineralMarketing.Com, a national marketing platform for American oil & gas assets.
Respectfully,
Michael Shane Terrel – President/CEO
Hunting Country Real Estate LLC
