Fake Bids, Hidden Fees & Shady Auctioneers: Land Auctions Exposed (Ep. 362)

if they're pushing you and you feel that,
you need to step away.
You need to step back, right?
And think about that.
And to your point on pipelines,
it's the same concept to where
if somebody comes in
and they give me an offer on a pipeline,
I'm going to take that offer
and I'm going to think about it, right?
Right.
And then I'm going to go to my neighbors
who have also received the pipeline info.
That's what you should be doing.
And ask what they're getting offers for, right?
So you need to step back.
Do not just sign up
for the first thing that comes along.
Do not just, you know,
get enamored with the flyers
and the mailing lists and things like that.
You have got to figure out
who's going to be marketing your land,
how they're going to do that,
and what's the best strategy for you.
Hello, hello, hello,
and welcome back to the podcast.
Thank you very much for being here.
Today, we are going to talk about auctions,
land auctions in particular.
I have Amber Haugland here with me today,
and she works with me doing infinite banking,
and she has a company here in North Dakota
called Haugland Insurance
and Haugland Action Auction.
I know, I know.
I can't believe I got that right.
Anyway, so I have been bidding on land
and watching land sales and all this stuff,
and I got mad at the last one,
and I called Amber,
and I'm like,
these auctioneers!
And I just lost it.
And so Amber has some really good insight
for buyers and sellers
that are going to be using auction companies.
And so we're going to talk about it today,
the ins and outs,
and instead of just getting mad at auctioneers
or not liking the way they auction,
trying to understand why they do it that way
and all the good stuff.
So thanks for coming.
Yeah, thanks for having me.
We've been trying to get together for a long time now.
And you're a busy lady
between two businesses and rodeo.
Yeah, and we just got heifers out to the pasture.
So yeah, we wear a lot of hats.
Yeah, you do.
You do.
Okay, so let's start with,
I want to kind of break it between sellers and buyers.
So let's start with sellers.
This is what I'm seeing,
and I want to kind of set the stage for everybody
so that they kind of know why I'm frustrated.
So we have a local auction company,
I guess you could call them.
And like, you get the sense that some shady stuff is going on.
And they are maybe,
and I've heard from people that have rented ground
and then these guys come in and say,
oh, we can get you more money or whatever, right?
And then it goes to auction and they don't get more money.
And so as a seller,
how do I know that I am using the right company?
What are the things that I need to look for
so that I know I'm going to make the most amount of money?
We were talking ahead of time
and you had a very good comment
that it's not about how much stuff sells for per acre,
but it's about profit, right?
It's kind of like saying,
how many bushels did I get per acre
or how much profit did I make?
At the end of the day,
how much profit did I make is what's going to make sense.
So if you have a few things that just,
what can sellers really do
to make sure that they're getting the best price,
they're protecting themselves
and protecting neighbors
and really that are going to be buying that land?
Right, right.
So I think first thing you have to do
is kind of step back and say,
hey, I've got a multi-million dollar business,
most likely, right?
You've got your farm
and we have to look at it as a business first.
This is going to be a business transaction.
Now, I don't know about you,
but anytime I get into a business transaction,
I am going to fully vet
whoever I'm going into business with.
I'm going to make sure I do my due diligence.
I do a whole bunch of research
to figure out if these people are just blowing smoke
or if truly this is the type of people
I want to get into business with.
A lot of companies will come in and they'll say,
hey, I can get you this much.
Beware.
Because here's the thing,
I can't get you anything, right?
However, the market,
whatever the market price is,
we can get the market price.
And so that's what you want to be careful of
first things first.
So something is only what somebody's going to pay for.
Yes, yes.
And now there are tactics and strategies
that can get you more,
but we'll get to those in a minute.
So kind of step back first
and view it as,
hey, I've got a business.
If I'm transitioning an asset to somebody else,
I want to know the type of people
I'm working with in this transition.
So things that you're going to want to look for
is, first of all,
if they're shady
and they're doing shady things like that,
maybe they've got this thousand plus mailing list.
That's not going to get your land sold, right?
If they've got all the glossy flyers in the world,
that's not producing a profit margin for you.
So what you have to do is you have to step back and say,
okay, what's really important here?
I need to know that they've got a good marketing plan
for my land.
If I'm selling land,
I want to make sure this company,
first of all,
knows the type of buyer who's going to come in.
And most likely it's the three,
four neighbors around that area
who are going to be bidding on that land.
It's not,
you know,
I'm actually on some of these competitors marketing lists.
And so I get their mailers.
Well,
why are they sending it to me?
You're just wasting that person's money.
The seller's money is totally being wasted in that situation.
And so how do you know,
you talk really fast because you're not here.
Oh,
I'm sorry.
Yes, I do.
That's okay.
So I'm just going to jump right in there.
Yes, ma'am.
So how do you know that they're actually sending those mailers out?
Because there was land that went for auction close to us,
like within five miles of us.
And I didn't get a mailer on that piece of land.
Had I not gone to the website to see that they had land for sale,
I would have never known.
And so these people said,
I'm going to have you do my auction service for me.
And you're sending out all these mailers because you told me you were going to,
but yet none of the neighbors even got them.
Which is terrifying to think about as a seller.
Think if you hired that company and you're finding out that the neighboring tracks,
those people didn't get a mailer,
red, red, red flags, right?
So if they're not personally picking up the phone and calling those people to say,
hey, Mary Jo,
did you happen to get the flyer that we sent you?
If not,
here's our website.
So that's what we do is we actually pick up the phone and say,
hey,
I'm sending you out a pack.
Look for this.
We're calling,
we're texting,
we're doing all the things.
Because at the end of the day,
I work on commission,
right?
So I want that person to get the most amount of money for their land.
You said you work.
I do work.
People don't work for their commission.
That's right.
You work for your commission.
Right.
Well,
and my thing is that if you're going to run a company,
I want my clients to be my advertisements,
right?
I want them to go and tell other people what a great job we did for them.
I don't want to have to rely on big ads and things like that.
That's not how you get stuff done.
I want them to be my best advertising right there.
So that's the kind,
I mean,
you want to work with people who will pick up the phone,
who will get after it and really have that good,
solid marketing plan for you.
I think as a seller,
like just on that one point,
I know you have a ton to add.
Yeah.
But just on that one point,
if you're selling land,
or even if land around you has sold,
you better pay attention and say,
oh,
did they actually send me a mailer for the land around me?
Because now they're going to come and sell my land and say,
oh,
we're going to get a mailer.
But the mailers didn't actually go out because they're trying to save some
money and make more commission.
Right?
Right.
Like you better do that research,
right?
So if you're going to hire that firm,
you better call around to some of the sellers that they've worked with
recently.
I wouldn't ask them for recommendations and referrals.
I would instead,
I would find out maybe the last 10 sales that they've done.
And I'd pick up the phone and I'd call those sellers and say,
hey,
were you satisfied?
Because I've actually done what I consider seconds for some of those
companies where the sellers have been dissatisfied.
And then the next time around they call us and they say,
hey,
we were not happy.
Can you sell this for us?
And I'm thinking,
boy,
if the next seller would just call those folks,
they would have a clear understanding of who they're working with.
Yeah.
Interesting.
Okay.
What else?
Yeah.
So with sellers,
first of all,
just the due diligence.
Secondly,
you want to watch out for commission.
Okay.
So commission is really important.
Again,
they're going to come in and they're going to tell you,
hey,
we can get you this much money for your land,
but they might be charging 10% commission.
So at the end of the day,
you're walking away with less profit than if you had hired,
another company who's going to charge you 5%.
So please be careful.
Do not sign up for,
I mean,
some of these are multimillion dollar deals and you're paying 10% commission for a half-hearted job.
Beware.
And you have to sell your land for more per acre.
Yes,
you do.
To walk away with that versus...
And that's not going to happen.
I'm just going to give it to you,
Frank.
Your land is not going to be worth more than what it is in order for you to make up that commission.
Because at the end of the day,
it's a market value.
So it's supply and demand,
right?
So can they hide commission?
Can they come in?
If you guys are taking five and the next guy is taking 10,
can they come in and say,
oh,
we can compete with Hauglunds.
And so...
Watch out for fees.
We'll take five.
So what I would say is watch out for extra fees.
Also,
I would have an itemized advertising budget because sometimes those advertising budgets really balloon
and it gets to be terrifying.
They might be hiding things in there,
but fees are the other thing.
So they could say,
hey,
we'll come in and match 5% commission.
We've got just a few other small fees.
Well,
what are those fees?
Like I want it all ahead of time and I want it in writing.
And then if it's me,
I'm going to go around to a couple of other companies and say,
hey,
what would you do this for?
Tell me what you would do.
So I would actually get three or four,
I guess,
quotes on that to see who I want to work with.
And you'll find out pretty quick.
There's going to be a difference between people
and you're going to align more with one than another.
Well,
it's just like selling life insurance,
right?
Like,
you know,
just by watching the podcast,
you either like me or you don't.
You're not scheduling an appointment with me.
Like I ran into a guy a couple of weeks ago that said,
I haven't called you because I'm scared of you.
What?
Oh,
that's probably the thing.
Yeah.
Right.
Like after talking to him for a little bit,
I was like,
yeah,
that's probably not,
you probably made the right decision there.
Yeah.
We're not for everybody.
Right.
Right.
And so it's kind of the same thing,
but I feel like some of these people come in and they just,
I'm elderly.
I want as much for my land as I can get.
I'm moving to town.
I need money to buy that house in town.
And with as little work as possible too.
Right.
Because they,
they aren't at that point of knowing what to do.
Right.
So I,
I think that stops people too from doing some due diligence because it is,
it's a lot of work.
But they're going to pull on your emotions.
Yep.
Instead of telling you the truth.
Yeah.
Oh,
I'm going to get you X amount of dollars.
Right.
And,
and,
you know,
we're going to take X amount of commission and you think,
oh,
okay,
well that's what we're going to get.
And that's what we need.
And I feel like,
like mom and dad aren't going to be the ones watching this.
No.
Like who's watching this podcast are going to be the kids.
The kids.
Yeah.
But I,
hopefully the kids share that with mom and dad so that they can hear you talk
about what they need to look for.
Cause I don't care where you're at in the country.
This is going on.
Oh,
it's everywhere.
Does not matter.
Absolutely.
But how you get those bids and how they talk to you.
It's kind of like when the pipeline company comes through and makes all
these grandiose promises of what they're going to do and they don't do any
of it.
And you have to sit back and just really think about it and not let them
leave.
If they're going to leave your house,
let them leave without giving them some sort of a yes or no and sleep on
it.
Because if they are pushing you into a decision,
that should also be alarming.
Oh,
that's a huge red flag.
If they're pushing you and you feel that you need to step away,
you need to step back.
Right.
And think about that.
And to your point on pipelines,
you know,
it's the same concept to where if somebody comes in and they give me an,
an offer on a pipeline,
I'm going to take that offer.
I'm going to think about it.
Right.
And then I'm going to go to my neighbors who have also received the
pipeline.
That's what you should be doing.
And ask what they're getting offers for.
Right.
So you need to step back.
Do not just sign up for the first thing that comes along.
Do not just get enamored with the flyers and the mailing lists and things
like that.
You have got to figure out who's going to be marketing your land,
how they're going to do that.
And what's the best strategy for you.
There's different processes that you can use.
You can do a straight out public auction.
You can do a sealed bid,
which follows with let's say top five bid live auction.
That's actually my favorite.
That's we've had the best results with that.
And,
and just a couple of cautions with some of those.
So public auctions,
it's really easy for unethical auctioneers,
I should say,
to find phony money.
Right.
So they might say,
Hey,
we need to take a couple minute break and we're going to make a quick phone call.
Well,
as an auction company,
I don't need to call anybody.
I don't need to step back and take a break for me.
It's one thing if a buyer needs to take a break to call the bank,
call dad,
whoever you need to call.
That's fine.
A buyer can call for a break,
but for an auction company to call for a break,
that's absolutely unnecessary.
And something shady is going on because usually what happens at that point is they've stepped back,
found some phony money,
just raise your bid essentially is what they did.
They came back in.
Oh,
we've got another hundred thousand.
Oh,
we got another twenty five thousand,
whatever it is.
And this one,
that's a fake bid.
Yeah.
And I want to elaborate on that because I can and you probably can't.
But I've seen it firsthand now watching these auctions and calling you and going,
what the heck is going on,
Amber?
Because the last auction that I was watching,
he was begging for his bid,
just begging and begging and begging.
And it just stopped.
And he was asking for another bid for a long time.
And then he's like,
OK,
we're going to take a five minute break.
Well,
then after the break,
we miraculously found a new bidder,
a brand new online bidder.
And so did we find a new bidder?
We didn't.
We bid you.
The company bid you up.
Right.
Or did the company bid us up?
Or did you do that?
Does the company have investments?
Like,
it's not obvious.
It's obvious to me now what they're doing.
Now that you're aware of it.
Right.
But before that,
I was like,
why are we taking?
Like,
I'm annoyed with the breaks because this is an auction.
Like,
come on,
let's get it over with.
Yep.
You know,
you know,
why are we taking all these breaks?
Why do we have a two minute break,
a two minute break?
Oh my gosh,
it's just ridiculous.
And so I wasn't quite understanding.
But now I've talked to a lot of auctioneers,
not just you,
a lot of auctioneers from a lot of different states.
And this is just a known tactic kind of everywhere.
It is.
With dishonest auction companies.
Is we're going to take a break
and then we're going to come back and have a new bidder.
And now that puts the buyer in a really shitty situation,
which we will talk about later,
or we're going to go squirrely.
But it puts the buyer in a hard situation that,
do I bid against fake money?
Right.
Or am I actually bidding?
Now on the seller side,
that's great for the seller.
Because that auction company...
But is it?
I'm going to stop you there.
Because I don't,
I don't know that it is.
Okay.
Because what's happened there
is if they're saying,
oh, we're pulling out this fake money,
they either don't have a bid
and they're just like,
ooh, what are we going to do with this?
All right, we're stalling, we're stalling.
Are we going to get them to bid?
Sometimes they might, sometimes they won't.
Sometimes they'll get stuck with that
and they have to go back to the seller and say,
you know what?
We did have a bidder $10,000 ago,
but we came back
and we didn't have anybody at this amount.
So do you want us to go back and sell it?
Or not?
You know, and so it's...
I have heard from other auctioneers
that that has happened.
Oh, yeah.
Go bid and beg them.
They will go back and say,
oh, the winning bid
didn't totally understand
what they were bidding on.
Red flag.
And there's now all the,
will you come back
and or will you offer more?
Right.
Right.
Yeah.
And it's fine if there is a reserve.
Just be honest with people.
Like, hey, we haven't met the reserve.
That's fine.
And even if they don't declare it up front,
that's okay.
As long as they are honest with you to say,
but when it's phony money,
a buyer has to make a decision there.
And we can get into that in a minute.
But back on the seller's perspective, though,
the best thing that can happen for a seller
is truly just to have an absolute market price
determine where that goes.
Now, I do think there is a better process
than just a public auction for a seller.
And that would be doing a sealed bid process
where you have people submit bids
and then you take those bids
as an auction company.
And as of a certain date,
the top five or however many your seller wants,
the top five, top 10 bids
are invited to an auction.
At that point, it's all live money, right?
All of those people have signed their name off
saying, I'm willing to bid this.
You come in with live money
and it's just those five or 10 bidders
who are bidding against each other.
And you cannot believe how high that increases
and the market value just increases on top of that.
So that is a really good strategy and tactic
to get sellers the most amount for their property.
And that's something that we do.
And again, I work on commission.
If there was a better way, I would do it.
But this is the best way that we've found in our company.
So when you're doing a sealed bid,
is there a certain timeframe
they have to have that sealed bid in by?
Yes.
So there's the one downside of that
would be a last minute.
Like I heard about some land
at eight o'clock in the morning
and it was selling at one.
So there's no way for me to be bidding on that
if I had just found out about it.
Right.
So there's...
But in my defense of that too,
I would say there's no reason
you should just be finding out about that
if I've done my job as an auctioneer.
Right.
So there would be a whole marketing campaign
that should have reached you.
There should be no surprises
if the auction company's done it.
Well, in this case,
it was not even in our county.
Oh, okay.
Okay.
It was on the other side of the state.
That could be the case.
I mean, yeah.
So no matter all the marketing in the world,
you might just be oblivious.
Maybe you're on vacation.
I don't know what the case might be.
Yeah.
Some of that stuff can happen.
There's a tiny risk there.
Yep.
And that would be good to disclose.
But again, on the opposite side of that,
I still did not bid on that
because I did not have enough time
to talk to Scott about it.
Sure.
I mean, I do run occasional things by him.
I didn't have...
I didn't have enough time
to talk to Scott about it,
to talk to the banker.
Like, I had meetings.
I was trying to coordinate the day.
Like, I wasn't a super serious bidder.
So if that's the case,
I would imagine if I was super serious,
I could have called and said,
hey, is there any possible way
I can get into this today?
Right.
Because I am very serious about buying this.
If somebody did that
during a sealed bid situation,
what would you do?
So we have a firm deadline of...
Let's say we have a June 1st deadline.
We're going to say June 1st at midnight.
So if those people reach out to me
and they're like,
verbally, I'm going to commit to you
this amount on the phone,
as long as they get me
that sealed bid in writing,
I don't even care if it's a text message,
something to confirm that bid
and that they're willing to put down
10% the day of the sale,
I'll accept that.
As long as I get them to sign off on that,
you know, the following day.
But their bid actually has to reach me
by midnight.
And that's for the fairness
and transparency of the whole process.
Because if I do that on one auction
and I accept a bid a day or two
after the deadline,
then I got to do it on every sale.
And then we create the problem where...
So there is no...
Then it's unethical.
Then it's...
In my mind, there is no exception.
You have to stand firm on that
because the moment you start
wiggling the rules,
then the ethical is gone, right?
Yeah.
Yeah, that makes sense.
Okay.
So we have a public auction.
We have sealed bids.
And then we have this online auction stuff
that even drives me more crazy.
Yeah.
Online only, right?
And then it's every two minutes
you got to wait from the last bid.
And then this piece of this parcel
or this property or whatever
hasn't moved in 15 minutes or an hour
because we're an hour in every two minutes.
And now all of a sudden this one moves
when I should have had it.
Like, what is your thought on that?
So I actually despise
the online auction process
because I don't think it's...
Well, first of all, the transparency.
I don't love the transparency
for sellers and buyers, right?
Because it's pretty easy too
for an auction company
to have phony money just bidding you up.
So you have to be careful of that.
But the other thing that I don't love is
if you've ever been in
like a sealed bid private auction,
when you have neighbors competing,
a lot of times those folks,
when they have to sit down
a couple of chairs down
from that neighbor
that they don't like
and they're not going to allow
to buy that property,
they're going to bid again.
Oh, I know so-and-so's bidding.
I'm going to bid again.
And that gets more money for our sellers.
So that's a good thing.
Buyers...
It's real money.
It's real money.
It's hatred.
It's hatred.
Right.
It's hatred and competition.
But we'll take that.
Yeah.
This is the farming world.
And you know what it is?
It absolutely is.
It's the same concept
if you're at a farm equipment auction
and you're bidding on a tractor
and your neighbor over there
who maybe has been kind of a...
One of those guys
that oversprays every year or something.
You know what I mean?
That situation,
you might bid an extra thousand
or two thousand
or ten thousand
just to kind of,
you know,
stir the pot.
I don't know.
But it's real money.
And I like the fact
that we're working in real dollars
because that's not going to inflate
the market price
because that's not good for anybody.
But these online auctions
just take forever.
Oh, they take forever.
I saw a guy on TikTok
complaining about it
because he was bidding on a semi,
I think.
And he's like,
I had that semi for half an hour.
Yep.
And then because that person
couldn't get something else
down the line,
then they started bidding on my stuff
and I lost it.
Yep.
And he's like,
I'm not mad that I lost it.
Like, that's the bidding process.
But I'm annoyed that I wasted
an hour of my day
sitting there waiting
and watching this
because every two minutes
it's locked up.
Well, and not only
did you waste your time,
but if you did end up
getting that piece of equipment,
you had to pay a buyer's fee.
I don't know why
people are paying buyer's fees.
I'm so against that.
But like on equipment auctions,
you're going to end up
paying buyer's fees.
So they charge the seller commission,
but they also charge
the buyer's fees for.
You tell me.
It's one of those hidden fees.
The auction company's getting it.
Oh.
Do they do that on land as well?
Maybe.
Well, and I don't know on land.
I was talking about farm equipment.
But that's something to watch for.
Take a look and see
what you're paying for buyer fees.
Because everybody wants
to sit at home
and bid on their couch,
but you don't realize
you could be bid up
by an auction company
or phony money
inflating that price.
That's the first thing.
Second thing,
you're paying a buyer fee on that.
Yeah.
So that's something
that we have to step back
and be like,
am I okay with this?
Like, am I really?
Is it worth it
just to have this online auction?
So that's the hard part.
The transparency is really
and the fees.
I don't love them.
We do utilize
like for our farm equipment sales,
we'll have an online company.
Typically,
we use like a DV auction
or somebody along those lines,
but we're not charging buyer fees
because I think that's,
I have a hard time
with buyer fees.
So you already got the fee
on the other side.
Yeah.
It's just gravy.
This makes life insurance
look so much better.
Okay.
Now I feel like I'm,
I'm in two businesses
that are shady, huh?
Good heavens.
So what about
on the online auction side of it?
Is there a way
for you guys to say,
okay,
there's one parcel
that just keeps going
every two minutes.
The other ones we can close.
Is there a way for you
to close those after two minutes
and just keep the one going
that keeps going?
Yeah, there's a way
depending on the platform.
So it depends on the platform
that you use.
And if you separate them out as,
they would have to be like separate,
like this one closes
at the end of that.
So there's a way
it just depends on your platform.
Okay.
So some platforms
do not allow that.
And that's where
the frustration comes in.
Yeah.
They need to start using
a different platform.
I know.
For the sake of everyone's sanity.
Right.
Because if these two people
want to bid against each other
all day long,
then by all means
let them go every two minutes.
Right.
But the rest of us
can get on with our life.
Right.
And we're done
and it's closed
and away we go.
Yeah.
Is there a positive
or a negative
to saying there's a reserve?
And why wouldn't
you tell somebody
there's a reserve?
Here's the thing.
I think everybody
pretty much knows
you're not going to
give something away.
Right.
So is there a negative?
Oh, some people might be,
oh, there's a reserve.
I'm not,
it's not going to sell today.
They might think it's too high.
So there's that stigma
with the reserve.
But come on,
we all know that,
let's say a parcel land
is worth $4,500 an acre.
Market dictates that, right?
But, oh,
they've reserved it
at $3,000 an acre.
Well, we know
we're going to get past there.
If it's truly worth
$4,500 an acre,
we're going to get past there.
But we know there's a reserve.
So,
because you can say
there's a reserve on this,
we're going to get well past there.
So we're not even
worrying about it.
Yeah, but if there is a reserve,
we're just starting
at the reserve.
Start at the reserve.
Or you can start lower
as long as we get past there,
we don't have an issue.
Right.
Right?
As long as you're dealing
with real money.
That's the big thing.
Yeah.
I guess in my eyes,
I would look at it
as an auctioneer
and say,
here's a reserve.
This is where we're starting.
You either like it
or you don't.
Yeah.
Right.
Because even if it goes
for less than the reserve,
they're going to reject the offer.
Yeah.
So now we've gone through
this whole process
and they didn't take
the offer anyway.
So here's what I would say,
kind of what they teach you.
I took auction school
many, many years ago.
But kind of the thing is
you want to get competition
fueling that.
So you might start lower,
get people bidding
because you're going to have
fewer people
who are going to bid
at $3,000 an acre
versus $2,500 an acre.
So you want to get
more people bidding,
more action,
more excitement happening.
That's going to get people
going, going, going
and get it up there higher.
If we say $3,000,
maybe I only have
two people bidding.
Well, that kind of
lost the excitement.
Somebody, these people
are all checked out.
So that is the one thing.
I mean, and I don't think
that's unethical by any means
because we're going
to get past there.
Yeah.
As long as you tell people,
you know, hey,
and everybody knows
you're not giving away.
You're building the excitement.
You totally are.
Yeah.
Because you want to win the bid.
Right.
Like those words
never made sense to me.
You didn't win anything.
Yeah.
You paid for it.
I always think that
when I hear,
oh, I won the bid
and I'm like,
oh, yeah, you paid for it.
You just happened
to be the highest bid.
Yeah.
Yeah.
Yeah.
Yeah.
And I love auctions.
So I have a different perspective
than I think you do.
I mean, we're getting past
this hatred, I hope.
Yeah.
But I think once you kind of
know what to look for,
then you can kind of appreciate it
for what it is.
And you can see the positives
out of working with the right
kind of company
versus the negatives
of some of the garbage
that we've seen.
And here is the piece
of my hatred
for auctions
is when
I have heard
over and over and over
that a neighbor
has offered,
and this just happened
on one a few months ago,
a neighbor offered
X amount per acre.
The sellers
rejected it
because the auction company
came in and said,
we can get you more.
So when it went to auction,
it brought less
than what they were offered.
So now the auction company
is saying,
goes back and asks
the neighbors
if they will offer more.
And they're like,
no, that's what it brought
at auction.
So absolutely not.
And the amazing thing
is think about that.
You've hired an auction company.
They're now going to take
the cut on commission on that.
And you're only getting
the same amount
that you had before.
Like nobody should ever
come in and say,
I can get you X amount of dollars.
And in that scenario,
they rejected all the offers.
Right.
But I've also heard
from people I know,
personally,
that have bought land
that they've offered
X amount per acre on land.
It went to auction.
They ended up paying
$100 more an acre
than what they offered.
But now these people
have commissioned to pay.
But the sellers
told the buyer
that I know
that, oh,
they didn't take commission.
They made a deal for us
that they weren't
going to take commission
if it didn't sell
for what they said
it was going to sell for.
And so they're making
back-end deals as well.
Just to get it,
hoping that they can
drive that price up.
Right.
Right.
You know,
and maybe have their fake money
driving the price up
so that they can get
the commission.
Yeah.
And here's what I'll say on that.
There's snakes
in every industry.
There are.
Right.
I mean,
we've all met a salesperson,
whatever the case may be.
Every single industry.
Right?
Yeah.
You just have to look
for good people,
find the right people
who fit with your personality,
who are truly going
to market your land
with a proven market plan,
who you can call
all their past sellers
and you can figure out,
yeah,
I think they're going
to go to work for me.
But that's the difference.
Finding people
who will go to work for you
and finding people
who are going
to take a check from you.
And my thing too is
when you have
slimy auction company,
they are actually
wrecking the price
of the land.
Oh, yeah.
Because that land
should have been valued
at whatever
somebody legitimate
was going to pay for it.
Now, granted,
the seller made more money
and they're going
to be happy about that.
Right?
If commission don't,
let's like leave
the commission
whatever out of it.
They made what
they think is more money.
But now the farmers
are on the other side
of their mouth
are saying,
we can't afford ground.
Everybody's overpaying
for ground.
Are they overpaying
for ground legitimately?
Or is the fact
that your neighbor
hired an illegitimate company
that is playing games,
making their living
off of agriculture,
and now they are driving
the price of agriculture up
for all the people
that are their buyers?
Yeah.
And that's a real problem
happening right now.
Right?
So it's not only
affects the sales price
of that parcel,
cash rent's going up.
It's all changing
because boy,
land's worth this much.
I got to charge more
for cash rent.
Yep.
And all of a sudden,
hey, we're in a different
ballgame.
Everything has inflated,
right?
Right.
And I am actually
watching now
the different auction
companies around here
to see who's bidding
on what.
Because in my opinion,
if the illegitimate company,
the slime balls
are going to have an auction,
I very well may not
bid on that land.
Right.
Because I don't trust
that whole auction process.
Or if they went
to a different company
that I know I can trust,
then I will bid
on that land.
Yeah.
So now when you have
farmers that are hiring
slimy companies,
are they actually
getting the bids
for you as a buyer
or as a seller
that you should be getting
because you have buyers
that are buyer beware?
Totally.
And it's limited
that pool,
right?
Yes.
It's limited
the pool of buyers
because you can
no longer trust
that this process
is above ground,
right?
Like we're dealing
in the depths here.
And so it has
limited the buyers.
Now some people say,
oh, well,
the results still
prove themselves.
No, we're dealing
with fake money.
So you cannot even
look at that
because that's not
true market price.
Yeah.
So you have to look
and see,
all right,
when you have real money
on the table,
what is that bringing?
That's the market price.
That's all supply
and demand.
It's just so crazy.
Like when you actually
think about
how they're hurting
the very industry
that they are trying
to so-called help.
They are hurting
that very industry
because now you have
maybe investors
coming in,
you're keeping
the young people out
who can't afford it.
Yeah.
Look at the big picture.
Like I did an article,
a blog post
a few years ago
on John Deere Financial
and how
they are not regulated
by FDIC
so they can turn money
more than 10 times.
they can turn money
10 times.
They can turn money
up to 30,
I believe.
That's terrifying.
The very people
that are selling
agriculture equipment
are inflating.
You have inflation
of the dollar.
The dollar is buying less,
right?
Yep.
So you're deflating
the dollar even more
and the price
of that equipment
is costing more dollars
because John Deere Financial
is going to go out
and turn money
or can.
I don't know
that they are
but they have
the ability to.
Right.
So with that inflation
the pool of buyers
used to be large
and now we've scaled it down
to there's only a handful
that can buy this now.
Yeah.
And then you see
what happens
to the used equipment,
right?
Then that goes
through the roof
and again,
here young farmer
who wants to get in,
how can he afford
to buy anything?
Yep.
Well,
what's contributed to that?
Like we need to step back
and look at those things
because it's in that part
of the industry,
it's in the land sales,
I mean,
it's in a lot of parts
of the industry.
It is.
And it's also that
the auction company
who told a lie
can prove
that they're not liars.
The amount of emotional effort
they have to put
into their sale
is insane.
Oh.
And how do you sleep at night?
Because I'm like
the energy
to keep that going.
I don't know.
I don't know how
you sleep.
Like how do you get any rest
when all you're trying to do
is cover up every lie
and get the highest price
and figure out
who's going to bid
because you need
all these other auction ears
or people working for you
that are listing properties.
They'd be realtors, right?
You need all these other realtors
in on your game.
Yep.
Yep.
And then those people
have to try to sleep at night
or they leave the company.
And so when you see
an auction company
with a lot of turnover
you should probably
also be alarmed.
Again, red flag, right?
That is a huge red flag
because usually
when you've got good loyalty
people sticking around
it's because they believe
in what you're doing, right?
So if you have a lot of turnover
like that
you've got to step back
and say,
hmm, yes,
probably a red flag here.
We've covered the seller piece
now.
What about buyers?
Oh, one other thing on sellers.
Let's make sure we hit this.
Do not list your property
with a realtor first.
Oh yeah, we were going to talk about that.
I want to hit that, right?
That went through my head twice.
That's okay.
That's okay.
Do not list,
sellers,
do not list your property
first with a realtor
because you've tipped your hand
to say,
this is what my market price is
and it might not even be
what your market price is
but you've already said
I'm willing to
either accept this
or you've given away
your cards, right?
So my biggest ask
when I enter in
with my sellers
is you don't tell anybody
what you want
for the land.
you leave all of the marketing
to us, right?
We're the professionals
we'll take care of that.
I don't want you telling anybody
what that final amount is
because my job is to get you
way more than that.
So we're not going to worry
about that, right?
The problem is
is when you say,
hey,
this tract of land
I want a million dollars for it.
Well, what if you could have got
1.2 million dollars
if you had kept your mouth shut?
Let your auction company
do the work for you.
You need to just
not tip your hand
because it's a negotiation, right?
And we have to start thinking
of our farms as a business
because we have to step back
and say,
okay,
if I'm in a business negotiation
I'm never going to say
ahead of time,
yeah,
I'd take X amount of dollars.
No,
I want the mystery
of the unknown
to drive whatever
that market price is.
You have to be
a good negotiator.
And what if they do
have it listed?
What if somebody's watching this
and they do have it listed?
Do they take it off the market
for a certain amount of time?
Yeah.
You just,
you kind of played your game,
kind of showed your heart.
So,
yeah.
So what you need to do is
first of all,
find that kind of auction company
that's going to actually
get you a good marketing plan,
right?
I would say take it off
for a little bit.
Get that auction company
to go to work for you.
They're going to go
and they're going to say
if somebody asked them,
hey,
I saw this was listed,
you know,
is that what they want
for the land?
They're going to say,
hey,
this is an auction.
We're going to get
what that land is worth.
They're going to defend
or reject that for you.
They're going to take
that heat off of you.
Now,
moving forward,
as a seller,
you need to have a tight lip,
right?
You need to keep your cards close.
But your auction company
is going to be the one
that's going to hold those cards
and go to work for you.
You know,
you don't need to go
and tell the neighbor this
and tell the neighbor that
because that's the worst scenario.
You have just given away
all of your power.
And your auction company
is left in a position
where they're like,
well,
I could have negotiated for you.
I could have gotten
that price higher,
but you just stripped us of that.
So,
make sure
you are all
on the same page
as to whose job
it is to say what.
And truly,
as a seller,
once you hire that auction company,
you really don't need
to do anything.
You know,
you need to sit back,
keep your mouth shut,
and allow them
to go to work for you.
The other thing
that we haven't hit on
is these companies
coming in and saying,
oh,
here's the land values around you.
This is what we can get you.
You and I have talked
about this in the past,
that some of that
is not 100% accurate
of what they're presenting.
So,
as a seller,
how do I know
what they're presenting
is accurate
to an average land cost?
Yeah.
So,
you don't even want to look
at average land cost.
I mean,
you can have them present that to you.
That's fine
to get some comparable sales,
but you need to have them run,
okay,
you got to have
all of your soils data
so you know
how productive your land is
in comparison
to the land
that they're talking about.
So,
you might have a tract of land
that's way more productive
or even far less productive
than whatever the land is
that's sold nearby.
I mean,
productivity indexes
could be 10,
15,
20 points different
between tracks
even within a couple miles
of each other.
So,
they need to tailor
that to your land
to say,
you know,
in comparison
to what we got here,
maybe you have a disadvantage
because there's a roadway,
there's an oil site,
there's transmission lines,
whatever the case might be.
They're going to justify
why they think
it might be a little bit less
or it might be more.
But again,
that comes from
a customized marketing plan.
So,
if they just come in
and say,
well,
the average
in this area
is X,
nope,
you are not customizing
it to me.
I don't care
what the average is
because what if
we're below average?
Like,
I want to know
what is my land
in comparison to that,
but I also know
you're not going to be able
to just give me a price,
right?
You can't.
The market determines that.
What about survey costs?
I don't think you and I
have ever talked about this,
but I'm a little bit annoyed
that this land
that we bought
a couple of years ago,
I had to pay
to have it resurveyed.
I'm the buyer.
Why did you have to pay
to get it resurveyed?
I don't know.
They had,
they passed that on
to all the buyers.
Like,
the seller didn't have it,
the seller didn't.
They just passed it on,
right?
So,
did you get an abstract
with that purchase?
Yep.
Okay.
Because it was one big piece,
right?
And they had to resurvey it
to parcel it out.
But they had the abstract
done ahead of time,
just not the survey?
No,
they didn't have the abstracts
done until they know
who bought what.
Okay,
that's where I would,
that's where I would stop
and I would be like,
hey,
when I buy this land,
there should be an abstract
and it already should be surveyed.
There should be an abstract
that comes to you
when you purchase that land.
Otherwise,
they're just passing the cost to you.
Yeah,
we got the,
we got the abstract.
Just after the fact.
But they had,
they did just pass it to us.
Yeah.
Is that normal?
Not in any of our auctions.
Okay.
So,
that's,
that's a really interesting one.
I guess we've never done that.
So,
again,
that would be something
that I would question.
Why am I paying for your costs?
No,
they shouldn't.
They should have surveyed it
ahead of time.
That's like me paying for your closing costs.
That's not my problem.
But,
I mean,
you can't do anything as a buyer.
No.
Like,
everybody who did it,
that was part of their,
that was part of the deal.
Yeah.
And so,
you just did it.
But,
as I've been,
like,
not even paying attention to that,
but as time goes on,
I'm like,
that is so dumb.
If I have land,
I'm going to survey it out
the way I want it surveyed out.
I'm not paying for that.
No.
I'm the one that owns the land.
I divided it.
So,
I should pay the survey it.
Right.
I agree completely with you.
That's not something that we do.
All right.
Buyers.
What do buyers need to be aware of?
Yeah.
So,
buyers.
So,
obviously,
let's talk public auction first.
Right.
So,
you know ahead of time,
hey,
there's land coming up for sale by me.
Ahead of time,
you kind of obviously want to know what your max price is.
So,
you've done all of your work ahead of time.
You're going to look at the productivity.
You're going to see,
you know,
how good that land is,
the kind of yields that you're going to be able to get off of that,
figure out what your market price is.
And then,
as buyers,
and this is easier said than done,
because I've also been on the buying end before.
When I go to an auction of somebody else's,
it's hard to stick to that price.
But,
for the sake of your farm,
because it's a business.
Well,
and you get a little heated.
If you're like me,
I'm pretty doggone competitive.
I'm going to get it.
Yeah.
Yeah,
exactly.
I'm going to win,
right?
So,
you kind of want to have that market price ahead of time.
Like,
hey,
this is the max price that I would go.
If the market dictates as higher,
I got to walk away.
Right.
So,
you have to look at it again from a business perspective.
What is my farm business willing to offer on that land?
If it's not,
I'm okay leaving.
I've seen some very interesting things.
I've had to almost break up a fight once at an auction.
That's not very fun.
So,
that's not the best scenario.
So,
just try to keep your emotions in check.
Usually,
it's not a personal dig that somebody else is bidding.
I mean,
it might be,
but you never know.
Yeah.
So,
anyhow,
know ahead of time kind of what your max is.
When you go into that auction,
red flags are,
if anybody but a buyer calls for a break,
red flag.
The other thing is,
is at the beginning of the auction,
there should be some full transparency
as far as,
is there a reserve on it?
You know,
don't be afraid to ask some questions.
I don't know that they'll give you the reserve.
They don't have to,
but you're going to want to know like,
all right,
how's this going to be handled?
If you have any other questions,
whether it's closing costs,
anything like that,
it should all be spelled out ahead of time,
but make sure you know what you're getting into.
Because a lot of times,
there are some hidden things.
I mean,
what if you didn't know you had to survey?
That can be a few thousand dollars,
right?
Right.
So,
know those things ahead of time.
You get in there.
If the auction company calls for a big old break,
and they come in with an extra $50,000,
you have a choice to make,
right?
You know,
most likely,
they either have a group of investors
that are backing them bidding you up,
or it's just phony money,
and they haven't met their reserve,
right?
I have had other auctioneers tell me
that you can ask,
who is I bidding against?
And you can,
whether or not they tell you is another thing.
Right.
They should,
and it will put them on the spot.
Can you ask,
at that time,
who am I bidding against?
Oh, yes.
I've had people ask that before, too.
So,
even when we do,
like,
the sealed bid auction,
if we have somebody
who can't attend personally,
and we have them on the phone,
we'll put them on speakerphone,
and I have asked somebody,
ask,
who am I bidding against?
And I'll say,
oh,
it's this person who's on the phone.
Can you hear it?
You know,
and we'll ask them to say,
yes,
I'm bidding at this amount,
or whatever,
so they know it's legitimate.
Yeah.
So,
you have the right to ask that.
Whether or not they tell you is another thing.
But yeah,
I mean,
put them on the spot.
I want to know,
is this funny money,
or is this real?
Right.
And maybe they could just make up a name.
I mean,
I don't know.
I would hope not,
but,
so you have a choice to make.
Are you going to continue and get bid up?
But if that's not something that's asked often,
for them to make up a name that quickly,
you'll know.
Right.
They're going to dart their eyes and sweat.
They're going to be like,
well,
that's what somebody else told me,
is,
even if they don't give it to you,
it's going to make them
very uncomfortable.
And they probably won't bid you up again.
Because they're like,
oh,
they're checking on me.
They're checking me.
Oh,
interesting.
So,
that's keeping them in check too.
But again,
they could have somebody on the line.
They could not.
Right.
So,
that's okay to ask and keep them in check.
But again,
if you know you're bidding against funny money,
you have that choice to make.
Am I going to continue with this inflation?
Or,
am I okay to walk away?
And you have to make that choice.
And it's not an easy choice.
I get that.
We all want that tract of land
that sits right next to ours
or is a mile down the road
that we've always looked at.
We all want that.
But you have to decide,
is it worth it
to continue this?
Because if I pay an extra
$200,000
on this lot,
am I going to be good with that
for the next 20,
30,
40,
50 years?
Or am I going to be kicking myself
that I was a sucker?
Because that's what it is.
They're playing you,
right?
You're a sucker.
So as a buyer,
I've rented that land forever.
I've given them a verbal offer.
They come to you
and they say,
oh,
hey,
can you get me more than that?
Is there a fine line
that you kind of play to
and think about the buyer
that,
hey,
that guy is going to be
buying land from me
because he's in my neck
of the woods.
Maybe you guys should take
that offer
because after commission
and whatever,
you know,
that was a good offer.
So as an auction company,
of course,
we always encourage people
to go to a public auction,
right?
Or a sealed bid auction
because truly,
when you get competitive,
if that guy was willing
to offer it there,
he's willing to offer it
at an auction,
but most likely
he's willing to pay more.
So as an auctioneer,
I'm going to say,
most likely we can get you
more than that.
So you're leaving money
on the table
if you do take that offer.
Now,
some people are okay with that
because they've had that tenant.
They love that tenant.
They have a good relationship.
That's a good tenant-landlord
relationship.
That's going to say,
yeah,
we'll sell it to you.
Might not be market price,
might be a little bit under,
but we want you
to have our family land.
And I've seen that happen before.
I mean,
we've done some opinions
of values for folks like that.
So we come in and we say,
hey,
this would be an approximate
fair price
for this transaction.
So I did one of those
just,
what,
two months ago?
Just gave an opinion
of value to say,
hey,
I know you're not going
to sell this by public auction,
but they wanted it fair,
a third party to come in
and say what that land
transaction
would be fair
for both.
And so I did that
and everybody was happy with it.
So it was under
what I think market value
could have been,
but was it a fair price
for what the sellers
were going to get?
I believe so.
So you can do something like that.
Market value minus commission,
right?
Minus time to wait for it
to go to auction
because,
you know,
we have to wait for it
to go to auction.
There's all those factors.
And there are.
There's a lot of factors,
you know,
absolutely.
And,
you know,
there's always a situation
where,
you know,
we've had people too
who say,
oh,
I want to,
I wanted to go to auction.
Typically,
this is a sealed bid deal.
Bring those top five in,
but then I want to offer it
to my tenant
at 10,000 more
or 5,000 more,
right?
So we have had those scenarios.
Sometimes the tenant
has declined
and that's okay,
you know,
because it went too high
or whatever.
But I thought it was
a good nod to the tenant
to say,
hey,
at the end of the day,
would you like to buy that
even though it's
a little bit above
what probably you would
offer to me on the side?
The one auction
that I watched,
it was the neighbor
that offered the land
that offered the price
did not bid up the auction.
Yeah.
Which was,
I believe,
a very smart move.
It worked out okay,
didn't it?
Yeah.
In that scenario,
they didn't even
get the reserve,
they didn't get
to what his offer was,
and then the auctioneer
goes to him
and asks him
why he didn't bid.
And he's like,
I already gave him my offer.
The fact that you have
to go back to somebody
to say,
why didn't you bid is...
Yeah,
and so,
but because the auction
company comes in
and they ticked off
that neighbor,
you know,
and so now,
if I was the guy
offering the money,
knowing the situation
of what happened,
I may never go
to one of their land auctions
again.
Yeah.
Right?
Completely.
You have a bad taste
in your mouth forever.
Right.
And it sucks
because if the land
comes next to me
and I want it,
I almost have to go
and play their game.
But,
man,
like,
if you're going to be
pulling that kind of shade,
then him not bidding,
I was like,
that's so genius.
It's awesome.
I would have been
stuck it to him.
I would have been
bidding.
I'd have been like,
well,
I offered him this much.
I'll go up to that much.
Exactly what you said.
Yeah.
And so,
buyers can have
upper hand in that regard.
Oh,
absolutely.
Don't bid
until they get
to where you're at.
Right.
And then you can start bidding.
Yep.
And that's,
that's again,
again,
that is another component
of keeping your cards
close,
right?
So,
if you're a bidder,
please never tell
an auction card.
I mean,
as an auctioneer,
I love hearing that
because I'm like,
oh my gosh,
I know where we're able
to go with this person.
But as a buyer,
don't tell anybody
what you're willing to pay.
Right.
Don't tell the auction company.
Don't tell the seller.
Don't tell anybody
because you have
no negotiating power.
None.
It's gone.
And back on tenants too,
I want to touch
on one other thing too.
I think anybody
who's truly has
a heart in the right place
wants to see
fair market value
for land,
meanwhile,
allowing young people
to come in
and be able to
purchase farmland,
right?
I think it would be
horrible if we had
an industry that was
just dominated by
old folks who were
retiring and corporate
America comes in
and buys it all up,
right?
So we're all,
we're just in
corporate farming now.
I think that's a disaster
for our country
and I think it's something
that we need to have
healthy growth
in the industry
without having
unethical inflation,
right?
There's a way
that we can do this
and still allow
young people to come
into the industry
and I think that should
be the goal
for everyone,
right?
I want to have
a cheap and abundant
food supply.
Well,
how do we do that?
We have a lot of farmers,
right?
We have a lot of ranchers,
a great food supply,
right?
So we have to have people
being able to buy
these things,
buy equipment,
buy land,
buy all of the things
that you need to do
to farm and ranch.
That's so important.
What about owner finance?
What if I'm hiring you
but I want to
owner finance?
Yeah,
you can do that
and I've had
one person
overall.
So I don't have to sell it
privately to owner finance.
I can hire you
to auction it off
and I can still
offer the owner finance.
You can offer the owner finance
whether or not the buyer
chooses to accept it
is the other thing.
If you make it a contingency
that this must be
owner financed,
ahead of time
it has to be advertised
that way,
right?
So all of your pool
of buyers have to know,
hey,
it's only buyer financing.
Now,
that should be fine
with most people,
right?
Because most likely
I was going to go
to the bank
and pay them
whatever X amount
of interest,
which is way too high
right now,
and have them
finance this
and obviously
the sellers
are going to pay
a whole bunch more
in tax,
right?
So it's a great
opportunity
if it's written
in the offer,
if it's written
in the initial contract
and all of your
sales brochures
and everything lists
that it must be done
by contract for deed.
So as long as
that's the final contract
that that's entered
into with that buyer,
that's an option.
And I love that option
too because it works
out great for buyers
and sellers.
But it does,
it may limit
whoever wants
to do contract for deed.
Sometimes we've had
cash sellers come in,
but most of the time
those folks would be
okay with it too.
Cash buyers.
Or I mean cash buyers,
excuse me.
So what if I wanted
to offer it
as an option?
Does that still go
in the marketing?
Yes.
Okay.
Yep.
Option for contract for deed
or owner financing.
Because that would
truly like,
okay,
and then if I'm going to say
I will owner finance that,
put that in the
whatever,
the marketing,
do I have to then say
this is what percent
I want down?
Because I would think
that that would matter
so that these buyers know,
okay,
now I can go to the bank
and I really can plan.
Oh yeah.
Ahead of time,
as long as they know
day of sale,
you better put down
whether it's 10%,
whatever amount
you're getting that day.
And these are the terms
they know ahead of time.
That's great.
That is definitely an option.
Now,
the one tricky thing
is on the seller side,
you have to say,
okay,
am I okay with anybody
who walks off the street
coming in
and I'm the owner of finance
this guy who,
I don't know that he's
got good credit.
I don't know if he's
going to pay his bills.
Then you got to be careful.
Owner finance by discretion.
Yes.
Yes.
And I would say
within their subject
to providing a letter
of financial credit approval
or,
you know,
something from their bank
saying that they've got
sufficient assets,
that's a good protection
for our sellers.
Do you talk to your sellers
about that?
Or because I feel like
people don't know.
Yeah.
Yeah.
So we've had a couple folks
where that's been
in the conversation
because tax,
right?
So what they've always
done in the end
is they've gone against it
because they weren't
willing to take the risk
of if that person
walks away,
right?
Because that is
a big concern.
I don't want to overfinance them
because financially
they don't look good.
Then they walk away.
Yep.
And then I'm starting
this process all over again.
Everybody knows
what my market price is.
I'm limited to that,
right?
So that's where
we truly,
none of our sellers
have ended up doing it.
Some have wanted to,
but in the end
when we lay all the cards
on the table
and we say,
okay,
here's the pros,
here's the cons.
What do you want to do?
They all say auction it
and I don't want to finance it.
But if you're going to do
a sealed auction
and I know
who those top five are,
if I want to owner finance them,
I can look at their financials
ahead of time.
Then we can say yes or no.
I love that idea.
Can you do that?
Oh yeah,
you absolutely can.
So at the end of the day,
your sellers are the ones
in the driver's seat,
right?
And here's the other thing too
is an auction company
might come in and say,
oh, you don't want to do that.
Sometimes it's because
they don't want to do the work,
right?
So if that's in your best interest,
find the auction company
that'll make that happen,
right?
Because it's not like
you're just shooting
in the dark that way.
No.
You know,
you got here are the five people.
Yep.
And provide your letter
of credit approval
from your financial institution.
Right.
If you want to be owner financed,
give us everything
in your sealed bid.
Right.
And then they can make
that determination
so you know ahead of time
if you need to back out or not.
Yes,
completely.
That's a great opportunity
for both buyers and sellers.
Great.
Yep.
Yeah.
Because I just think that
people don't know about it.
And the more people that get told,
hey,
why don't you just owner finance
some and make some interest?
Yes,
you're going to have to pay taxes
on that interest.
Yep.
But make some interest
to offset some of those capital gains
that you were going to pay anyway.
Right.
And if you do that
through an auction setting,
you're getting the most amount
of your money,
you're limiting your tax burden,
you're getting somebody to come in
maybe who wouldn't have had financing before
and be able to purchase that land
like it's a win-win.
Mm-hmm.
But I would include that auction company,
I mean,
also as an auctioneer,
but secondly,
getting you,
that competition drives the market price.
It does.
Well,
it's nice to have an auctioneer
that would allow that.
Oh, yeah.
I just have never heard
of an auction company
allowing it,
but I haven't asked either
because I think that
most auction companies
are just going to say,
hey,
this is just,
let them figure it out
with their banks.
Like you said,
I'm not making any more commission
to do all this extra paperwork.
And truly,
if you think about it,
the contract is going to be
between the seller and the buyer.
It's most likely going to be
written by an attorney.
So it really isn't that much more
extra work for the auction company.
They will need to take
their commission up front
out of that.
So your first payment
is going to be significantly less
because they'll need their commission
right off the top.
but it's still a workable option
for you.
That's a great scenario.
Interesting.
Okay.
Most of the time,
it's dictated, though,
by the out-of-state kids
who just want their money fast.
So that's where we see
most of the time
when the families get involved,
nobody's interested
in contract for deed.
Everybody just wants money.
Oh, sure.
Because mom and dad have died
and now they're contacting.
Okay.
So that brings up
a whole other subject.
Right.
Not to increase the,
right,
can of worms here.
Yeah.
Yeah.
But is there any advice
on how to deal with siblings?
Because like in my head,
I,
for whatever reason,
I just didn't even think about that
because the auctions
that I've had in my head
are the actual owners.
They haven't passed it off
to the kids yet.
So what's your advice
for families
that are feuding
or kids
that have had it
and we got to step up
in basis
and we want to sell it
really fast
or,
my gosh,
that's a whole nother 20 minutes,
but let's go.
Yeah,
exactly.
So a couple of things.
So first of all,
out-of-state kids
a lot of times
are going to be,
they're going to be familiar
with the big auction companies
who,
oh,
I searched this auction company
and they look great.
Do not let that dictate
the direction that you go.
You need to meet
with these folks.
You cannot just find
somebody online
or you've heard
of a reputation,
what,
you've got to do
your due diligence.
I don't care
if you're the kids
or you're the parents,
you know,
once the parents pass,
the kids,
you have to do
your due diligence
because you can be leaving
lots of money on the table
if you don't.
So my big thing is,
again,
now kids,
this is your business,
right?
This is your asset.
You have to figure out
how to sell this.
So you've got to find
that right auction company
that's going to have
that marketing plan for you.
It's the same type of advice,
but a lot of times
we have siblings
who disagree on the direction.
So we had one recently
where we were reached out
to buy a family
of seven kids
and they said,
well,
the four out-of-state kids
want to go with
this big auction outfit.
And so they did
and the commission
was higher
than what we were
going to charge,
but they voted,
majority ruled,
they went with
the big auction company.
They came back to me
for their second parcel
and said,
will you sell this?
Will you help us with this?
It did not go well.
So do not
enter into this lightly.
It is,
we're dealing in
millions of dollars
for the most part
in these sales.
In that case,
did you meet
with all seven?
No.
And that's the problem
was we requested
to meet with them.
Oh, no,
couldn't.
They already decided.
Already took a vote.
Three of the siblings
lived in our area.
Three out of the seven,
right?
Those three wanted
to go with us,
but the four didn't
because they're
who knows where
all across the country.
So that's the big thing
is for the siblings
who are probably
still on the farm
or in the area,
try to convince
your other siblings
who are out-of-state,
we got to all get
on a meeting.
We got to all
be on the same page.
And don't enter into it
if you're not
on the same page.
So what would you
encourage those three kids
to do then
when they are,
like the other four
aren't listening?
Like,
is there anything
or can you say,
you know what,
we're not meeting
with anybody
if not everybody's there
or do you record
the meeting
so that they can get,
it can get sent
to the other four?
Yeah.
And so we haven't
done that.
That's a great idea.
I mean,
somehow getting everybody
on the same page
is really important.
Right.
But as the siblings,
you got to be
in full agreement.
Because the out-of-
You do.
The out-of-state kids,
they tend to think
they know a lot.
Oh my gosh.
About everything.
I think this is
every family farming scenario.
Everybody off the farm,
everybody out-of-state
knows exactly how
everything should be run.
Yes.
And we've seen that
time and time again
on the land sales.
It's mind-boggling.
I think that the value
should be what it is
where they live
or they don't have
any idea.
Yeah.
And there's been
multiple times
we've had to tell
family members,
I've had to say,
you know what,
if there was a better way,
I would do it.
I work on commission, right?
So this is the best way.
This is the proven results.
You know,
we've gone through this.
And if you are not
comfortable with that,
you need to find
another auction company.
Just give it to them straight,
right?
Yeah.
Because you can't
just pull magic,
right,
out of a hat.
You can't.
So this is the process.
This is how this works.
Everybody's got to be
on the same page.
Everybody has to be
in agreement.
But especially those
ones on the farm
and those who have
a good relationship
with an auction company,
they need to stand
their ground and say,
hey, these are the type
of people.
But what I would say
is lay it all on the table
too to say,
here's the benefits
of this auction company.
Here's the commission
we would charge
or they would charge.
Here's the fees.
Here's the advertising costs.
Here's everything
that this one would do.
Here's what this one
would do.
Now let's look at the two
and say at the end
of the day,
is it worth going
with one over the other
and why?
And the local kids
need to call the people
to get the testimonials
to take to the other ones.
Find out.
Because I would truly
call the last 10 people
they worked for.
Find out their experience
and then I would relay
that to my out-of-state
relative
or my out-of-state siblings
to say,
hey,
so-and-so down the road
had a terrible experience.
Do you really want that
to be our legacy
for our family farm?
No,
this is another thing
that parents need
to add to their estate plan.
This is the auction company
you're going to use.
Absolutely.
If you're going
to sell this place,
this is the auction company.
Like,
if we want Haugland
to sell it,
then Hauglands
are selling it
and that's in the estate plan
and nobody's fighting over it.
You know,
at least,
my goodness,
if you can't decide
who's going to get it,
at least decide
who's going to sell it.
I have never thought
of that before,
but that makes sense
because now you have,
I mean,
they're already fighting
because some want to keep it,
some want to sell it
and the majority have ruled
that they want to sell it,
but now we're going to fight
over the auction company.
And then we're going
to fight over the cost
and we're going to fight
over the...
Everything.
Every part of it
you're going to fight over.
Right.
And guess who gets
to deal with it?
You.
You get to make sure
that you are now
being kosher to everybody.
Right.
When mom and dad
could have just put that part
in their estate plan
and we could be done.
Yeah.
And I'll tell you,
you know,
my dad passed away
four years ago.
I was so thankful
that mom and dad
had a really good estate plan.
I mean,
that was huge
because it was
a very difficult process
watching my dad
pass away, right?
He battled for three years,
but knowing that
we didn't have to fight
about things,
oh my goodness.
Like,
that's a huge...
And you and your sister
have a great relationship.
Yeah.
And I've got two older brothers
and we just all,
we don't worry
about those things.
It's not,
oh,
you got this,
you got that.
There's none of that.
We're just family
and that's awesome.
At the end of the day,
you can still talk to each other.
You can still have Thanksgiving.
You can still,
whatever.
You want that legacy
for your family.
So,
the most you can spell out
ahead of time is huge.
So,
what do you say
to the parents
that are saying,
no,
I'm not going to sell it now.
None of the kids
are going to come back and farm.
I'm not going to sell it now.
I'm going to wait
till they get a step up in basis.
Is that a good idea
or is it just sell it now,
take the money,
put it into
a life insurance policy,
put it into a CD,
put it into some place
that when you die,
that's still going to go
to the kids?
Yeah.
So,
that's what I would encourage
them to do
is putting that,
obviously,
into a life insurance policy.
You and I are both
very passionate about that.
We both had it work
in our situations,
right?
That's what I would encourage
them to do.
We don't know what tomorrow
is going to bring.
But I mean,
we could see something
to die to pass it on.
Sell it now.
Sell it now.
Enjoy the money.
I mean,
your kids aren't coming
back to farm anyhow.
Help someone get
into the industry,
right?
They're going to sell it.
They're going to sell it anyways.
They're going to sell it
the second you get it anyway
to go buy their lake cabin.
Yeah.
I think a lot of times
we just don't want
to deal with things.
Like,
oh,
I'll just put it off.
I don't have to deal
with that now.
Deal with it now.
Right?
Is it really capital gain
stopping them?
No,
I think it's,
I think it's just putting off
what they don't want
to deal with.
I don't think it's any sort
of tax issue at all.
I think it's just,
we just kick it down the road.
Just worry about it
another day.
It's the same reason
why people don't have a will.
People don't have
a life insurance policy.
Deal with it another time,
right?
Well,
guess what?
Tomorrow eventually comes,
right?
So,
you got to deal with it.
Why wouldn't you deal
with it now?
Be responsible.
Take that asset.
Get the most amount
of money for it.
Do something where you're
going to get some
compounding interest
with that asset.
Like,
put on a life insurance policy.
Right.
If you sell it early enough,
we can get it into a policy
and then you're leaving
the kids with even more
money and death tax-free.
Income tax-free.
Exactly.
Because what they're doing
is they're just taking it
and then they're putting
it in an IRA
and then they're losing it
if the market crashes.
You're passing it off taxable
and the kids have to take it
in a 10-year period.
Right.
And those kids are probably
in a financial situation
where they don't want
to pay any more tax themselves,
but they're having to take
it out of that IRA.
Right.
So completely.
And so why kick it down the road?
Right.
So why hate to sell the land?
If you're not farming it,
sell it.
Like,
I don't know if you saw
that my dad gave me his brand.
I saw that.
And I was like,
so special.
That's it,
right?
I'm like,
that is such a big deal.
And Scott just couldn't
quite understand it.
And I'm like,
you got to turn around
because we got to get a picture.
Yeah.
Okay.
And when I saw it,
it gave me chills.
I wanted to cry
because I know what that means.
I know.
I'm like,
you don't give your brand away
till you're dead.
And I didn't,
I had called him ahead of time
and I was like,
hey,
can I have your brand?
He's like,
no.
Surprise.
I was like,
okay,
well,
I knew that.
But my brother,
him and my brother
share the same name.
So I did not
for even five seconds
think,
oh,
he wants that
to go to my brother.
And I just so happened
to say something
and my brother was in the room
and he's like,
give me the brand.
I don't want it.
And so dad was like,
okay.
You know,
he must have thought,
well,
okay,
if he doesn't want it,
then that's fine.
Which I totally understand.
Like,
it's the same name.
He should have had the brand
if he's the one
that wanted it.
Even though he'd never have cattle,
whatever,
I'll just go get my own brand.
It's better to me.
But it's the heritage
of passing it off.
But it is the same.
Like,
dad,
you can now see it on cattle.
Yes.
Like,
we've got to get the correct color.
Yeah.
But you can see it on cattle
while you're alive yet
versus waiting until you're dead
and then I can put it on some cattle.
Right.
Enjoy this.
Yeah.
Yeah.
We want to hold that land
until the day we die.
And I get it if we're farming.
I 100% understand that.
That makes sense.
When we're 80,
85 years old
and we're in a nursing home
and we're not farming
that land anymore,
is it really necessary
to still be holding it?
No is the answer.
Just,
right.
Just sell it,
take your money,
distribute it
while you're alive,
see what you can do
while you're alive.
Yeah.
And just be done with it.
You know,
maybe get a private room
at the nursing home.
Whatever.
You got options.
Yeah.
Why are we holding on to it?
I always thought it was to avoid taxes.
I don't believe it is.
That's interesting take.
I would have not thought that.
I think we just kick down the road
to another day.
Well,
you can only kick so long.
Right.
Before you kick.
Yeah.
Yeah.
Exactly.
Oh,
she's cracking herself up.
I am.
I love it.
I just laugh at myself.
Oh,
that's good.
All right.
Anything else to add
before we end?
How,
if people are in North Dakota,
do you sell in North Dakota,
Montana?
We do.
We do.
So we're
Haugland's ActionAction.com.
So again,
that tongue twister
at the beginning.
Or Haugland Insurance
Services.com.
And North Dakota,
can anybody call you
or just North Dakota,
North Dakota,
Montana?
Anybody can call us.
So as far as,
you know,
if you wanted to talk through
questions or things like that,
I mean,
feel free to give us a call.
Okay.
It depends on your state regulations,
who we can work with,
because there are
different regulations
based upon the state.
Okay.
So that would be the one factor.
But otherwise,
I mean,
the big thing is
find people with the right ethics,
the right morals.
Those are the kind of people
you want to get into bed with,
right?
It's a business partnership.
So find those kind of people.
So what is the website?
Haugland'sActionAction.com.
Haugland's?
H-A-U-G-L-A-M-D.
ActionAuction.com.
You got it.
A much slower pronunciation.
Sorry.
You're good.
Do you do auctions
for like nonprofit events?
Yes, we do.
So if somebody wants you
to do an auction for that too,
you can...
We do those as well.
Okay.
Awesome.
Very good.
Well,
that's all we got for today.
If you guys have comments,
questions,
concerns,
you know the routine.
MaryJoWithoutTheBank.com.
If you have not gotten the book yet,
go to farmingwithoutthebank.com,
grab your book,
schedule your appointment,
and we are happy to help you.
All right.
You have a fantastic rest of your day.
Thanks for listening to the
Farming Without the Bank podcast.
We hope today's episode
has inspired you
to take control
of your finances
in new ways.
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Farming Without the Bank.