While COVID-19 initially moved farmland auctions online, this format is likely to stay. Discover the pros and cons to online vs. live auctions and the most common online formats.
The answer is both. What started as a response to COVID-driven restrictions and lockdowns has become a necessary part of land business and farming. While buyers are more accustomed to it than sellers, it’s unlikely online farmland auctions in some form are going away.
“In the beginning, we saw an online format that was click-to-bid with a soft close. When there were no bidders in the last five minutes, it would close,” says Tucker Wood, a Paris-based auctioneer who does business in four states and is one of only 60 accredited land consultants in Illinois. “Now, by far we see live online virtual format with me in front of the camera selling just like a live auction with maybe one other person on the phone in my office.”
Online Land Auctions vs. Live Land Auctions
Online auctions take about the same time as a live auction, yet offer benefits the live format can’t. For institutional investors – buyers who are not farming their own land – they no longer have the commitment of having someone on site to bid.
What used to be a two-day commitment for auctions that were states away now comes down to hours at a desk in a closed-door office. In fact, Wood says, buyers can even participate in more than one at a time. “Two guys in two offices have handled four auctions at the same time,” he says. “Buyers love that aspect of the virtual auctions.”
While auctioneers also appreciate the efficiency and convenience of virtual land auctions, they do see drawbacks that they’re learning to work around. Like everyone in the post-COVID area, they’re changing the way they do business in response.
“The flip side of virtual auctions is from the auctioneer’s standpoint, we’re losing that human contact that could lead to our next customer,” he says. In other words, often more business for the auctioneer comes from someone attending an auction liking their style and coming back to them when ready to sell land. Or a quick post-auction conversation on site could be an immediate conversion with a commitment to sell land in the near future. That has meant flexing how and when they market and advertise.
But with that drawback has come a positive change as well. Pre-Covid, the typical land auction season ran November to March. Now, Wood says, they’re seeing land auctions the entire year, and he credits that to the online format. “A guy can be spraying in July, planting in May, harvesting in September, and be bidding virtually from his phone,” he explains.
In addition, online auctions have the benefit of separation. “It takes some of the emotion out, so two neighbors who bid on the same thing can still go have coffee the next morning, because they don’t know the other was bidding,” Wood says.
As online auction methods and platforms evolve, they will continue to require some onboarding and a learning curve for buyers. The buyer demographic right now is probably 55 to 70 and maybe even a little higher, with anomalies on both sides. “The generation that does buy is not the most tech savvy, so that has been our biggest grumble,” Wood says. “But at the end of the day, I’ve never had someone say, ‘I didn’t buy because it was online.’”
Common Online Land Auction Formats
The online auction format varies from area to area, and some areas have slowly drifted back to primarily live auctions. But for most, online plays into the mix in some way. The most popular is BidWrangler, a platform that bills itself as beginning “when an auctioneer needed to solve a problem.” While most farmers wouldn’t recognize the name, because every brokerage company has branded their online platforms with their own names and logos, the platform has exploded.
Online land auctions have become fairly seamless, says Wood. A message function allows discussion or requests for breaks. Every auction has a backup phone number if the internet goes down. The auctioneer and buyers see the same bid screen, and a person on the back end is assigned to manage those bids and make sure they all go through. It’s fast-paced, tech-savvy and profitable for all.
Wood’s best advice for both buyers and sellers who are searching for an online auction partner is to educate yourself up front. “Don’t be afraid to call the company and ask questions, and do it in plenty of time before the auction,” he says. “You don’t want to wait until the day before the sale. Do it in enough time for you to be comfortable with the system so they can help you.”
Whether it’s in person with an online option or virtual with a live auctioneer, it’s the new way of land auctions. “The online format is never going away,” Wood says. “I see it only being bigger and more usable, especially given our buyer base.”