Earlier this month I attended my first absolute auction of rural land which was held in Perry County, Alabama. Target Auction Company, of Birmingham, auctioned over 240 acres of hunting land that had 1/4 mile of frontage on the pristine Cahaba River.
Target Auctions did a great job advertising this property: posting signs, distributing fliers, running ads in the paper, and marketing it online. I had seen this property advertised for weeks before the big day. When the day did arrive, it was rainy and dreary; it was the type of day when you wonder if you will be the only person to show up at an auction.
When I arrived at the auction tent, some of the nice people from Target introduced themselves. The time came for the bidding to begin. Bids started slowly, and the auctioneers worked hard to drum up movement from the bidders. Within a few minutes the whole thing was over, and the land was sold to the highest bidder. The tract sold for within $50/acre of where I expected it to, so I was pleasantly surprised.
Dewey Jacobs, Executive Vice President at Target Auctions, and I agreed that they garnered a fair price for the property. We chatted a little more about auctions and how they benefit landowners who want to sell their land.
I asked Dewey to share with us a little about Target Auction Company, and how auctions offer a landowner a good alternative to a traditional marketing campaign.
1. What are you seeing in the realm of land auctions in 2010?
We are seeing more landowners going to auction this year than in 2009, because the land market is more stable. Recreational land is the most highly demanded property we can offer because there are buyers out in the marketplace that want to invest in a tract of land and play on it for a while and then sell it in a few years.
2. What types of landowners would benefit from working with Target Auction Company as opposed to a traditional listing company?
We know that every property or owner is not going to be a good candidate for an auction, but an auction is a good alternative to traditional sales because it forces buyers to a point of action. Sellers take control and tell buyers how, when, and where they will buy. The terms of the sale are set by the seller. Our method puts the seller in control and has a definite end date associated with it.
3. Who is buying at auctions right now: investors, end users, adjoining owners?
We are attracting several different types of buyers right now. Our program will bring buyers back to the table that have seen these tracts in the past. It will also make buyers that are considering the property act now, and buyers that are just thinking about getting into the market will get involved as well.
4. What are some misconceptions the public has about buying rural land at an auction?
One big misconception about our actions is that the landowners are in distress. Our sellers just want something to happen on their property, get a fair market price for it, and close this chapter in their lives.
5. As an auctioneer, how would you advise a landowner to decide between an auction with a reserve and an absolute auction?
Some auctions are “absolute” which means they sell regardless of price. Some auctions will sell at a minimum price or with a “reserve” in which the seller has the right to accept or reject the final price.
Every auction is designed around our seller’s plans and goals for their property. Typically absolute auctions generate more buyers and therefor a higher selling price. Some sellers need to set a reserve because their are certain restrictions on a property, such as a mortgage. We try to educate the seller on the advantages of each method, and the decision ultimately rests with the seller.
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