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Our Response to the Viral Story: Farmers Stay Silent During Auctions So Young Man Can Win The Bid on his Long-lost Family Farm

By Jason Smith, CAI Auctioneer | Land Broker | Published August 25, 2018

selling farmland at auctionYesterday I came across a post in social media that stopped me in my tracks. The post, linked to a story titled "Farmers Stay Silent During Auctions So Young Man Can Win The Bid on his Long-lost Family Farm" was probably one of the most attention-grabbing headlines I've ever read. For good reason too, I represent peoples financial interest and conduct farmland auctions in the Midwest for families that have worked hard to have those farms. This was essentially what I would call a "nightmare scenario" for somebody like me.

I'll get back to my response to this story but first, let's talk about news and "the Internet" Finding the truth on the Internet can be downright frustrating at times. As a person with a high level of knowledge of Internet marketing, I have a strong understanding of how the world has gotten to this point and it can be summed up in a couple of words "advertising revenue" The Internet is a big noisy place that's no different than the rest of the world, everybody wants to get your attention and try to sell you something but there are ethical and unethical ways to go about it.  Given the fact we are in the business of selling thats exactly what we do at DreamDirt, trying to attact the attention of the right people to our listings, only we do it with a much higher degree of ethics.  

We are always on the Internet fishing for buyers of farms and its an effective place to get peoples attention. Unlike us, for a good many websites their only product is advertising, that is all they sell is ad space on the website and they will stop at nothing to get you to the website.  Getting you to the website is them delivering their promised product.  You really are the product and they use places like Facebook and Twitter to "harvest you" using "click bait" which is content whose main purpose is to attract attention and encourage visitors to click on a link to a particular web page.  They typically use headlines that evoke a strong emotional reaction or make it as contraversial as possible to ensure they get a maximum amount of traffic to their website.  

You'll quickly know if you have you ever been on one of those websites.  They have an ad everywhere they can possibly squeeze one in, plus "news articles" that are actually ads for products.  Most of them use forms of trickery to get you to click on ads when you believed you were clicking to the next page.  They usually have several spots for network advertising from Google Adwords or the likes.  Or how about the ones where they promise you 40 interesting photos but it only shows 1 photo per page and you have to click next 39 times to see them all?  Thats because they can refresh ads and show you 40 pages of ads delivering many more impressions and boost their numbers.  They really don't care if you look at the photos, in fact they intentionally try to confuse you and get you to click on an ad with their NEXT button.  When you click an ad their advertisers sees the questionable website sent traffic and it boosts their standing as an advertising platform.  

Here is a fact, these websites sell advertising and A LOT of it. The "value" of their advertising is directly related to the volume of website traffic they get. The volume of website traffic they get is directly related to how good (shocking) their headlines are OR how well they can get particular articles to "go viral" in social media where they get "free advertising" and lots and lots of clicks. For every person that clicks on the story to go into their website the higher their statistics go, the more impressions of advertising they produce which makes their advertisers happier which in turn gets them more money. Millions and millions of dollars are collected in ad revenue from many of these websites and as long as people keep clicking on the stories in social media they will keep making money. 

Oh, and I might mention. These stories are not always based in fact nor is it illegal for them to put false stories on the Internet in order to generate clicks into their website, they just need something to get you to click, even better is if you click and then share the article and talk good about it so your friends will do the same!

Information on selling landI have a pretty strong sense that the story "Farmers State Silent During Auction So Young Man Can Win the Bid on his Long-lost Family Farm" didn't really happen. I dare anybody to prove me wrong with the names and coordinates of the farm or even the auctioneer's name. The story is completely void of any real information, its just that, a story.  The main character David didn't even have a last name. 

It really would not be that hard to make up and write this story with the full understanding that its going to get a lot of clicks and a good number of shares. The happy story has been around forever, we've all heard this story or variation of it since childhood. It's the typical "feel good story" that gets passed from generation to generation or today shared from wall to wall in social media. In fact, I started to follow the story across social media to see peoples reactions about it. They loved it. I saw comments like "that is true compassion and definitely lack of greed. Hats off to the farmers" and "Respect, something we don't see enough of today" I even shockingly saw other auctioneers share it saying it was "heartwarming" and another that said "Take 5 minutes to read this great story". But wait?   You are an auctioneer or in the land sales business?  I'm really going to stir people up now and disagree that the story is anything but great or heartwarming.   You represent sellers of farms just like me?  Certainly we are nice generous people that do all kinds of good in our communities but come on are you serious?  Has anybody stopped to think that a seller had to be financially harmed in order for this story to made?  What about the person that owned the farm?  Have we come to a point we are willing to take somebodies property from them by mass community decision now and reassign it to another party with no regard for the owners interest?  That sounds very un-American to me and absolutely against the principals of our free country.

I get why people enjoy seeing farmers win.  They have enough enemies in today's world. I get why the story is popular and I understand that ownership of the farm or putting a farm back together after some tragic loss has that country romanticism and appeal to a very wide audience. I don't begrudge anybody for liking the story and having had good happy thoughts but as a professional auctioneer that makes a living selling farmland at auction and a significant investment in a company that's successfully represented hundreds of sellers and sold 10's of thousands of acres of farmland and as an industry member that has invested significant time and effort into promoting our craft as the best way to sell a farm I obviously have to respond to the article.  

When people consider selling a farm one of the first things they ask is "what is the best way to sell farmland" and the answer is more often than not "by auction". If I was one of those people getting that advice from me and then I'd read this fake news story  there is no way I would ever consider selling my farm at an auction. This story says quite a few things that simply are not true about farmland auctions.

First, absent so many details lets talk about the most obvious of things. Keep in mind that the story is likely not true but for a moment lets pretend it is for the sake of education. There are two types of farmland auctions. Reserved and Absolute. The story does not say which this was. As an auctioneer, it would read that it was an absolute auction that was to sell to the highest bidder regardless of price but it could have been a reserved auction where the seller accepted the high bid. The story also never says what the buyers first bid was. Perhaps they were inexperienced buyers and they bid a very high price for the farm and nobody else in the room was willing to top it. There just are no details to go on however the title of the story leads you to believe it was a very low price and everybody else refused to bid against the young man.

Get a Free Valuation For Your Farm or Land PropertyIn real life, the vast majority of farmland auctions are sold as reserved farmland auctions which gives the seller protection from a financial disaster. I've written many times about reserves in farmland auctions. To this day in the hundreds of farms I have sold only on 5 occasions has a family elected to sell the farmland absolute. One of the greatest benefits of a farmland auction is the seller remains in control of pricing via reserves. One of the reasons we sell so many farms is that we encourage sellers to use REASONABLE reserves which is fair for buyers and sellers. We prefer to take auctions with reserves in and below "the grey area" of value. Some people believe that everything has a price but in reality, farmland priced by auction will achieve a "market price" or its value at that particular point in time. You can have all of the appraisals done you want ahead of time and while they may be close none of them will be dead on accurate. Nobody knows what a farm is worth before it sells. We've found that sellers that reserve farms in the 75% of expected value and the auction is conducted properly walk away happy as can be with what it achieved. Having a 75% reserve is a piece of mind for the seller to bring the farm to the open market and its obviously a no-brainer for any serious buyer. Some sellers elect for an even lower reserve and some will go a little higher, each situation is different but the fact remains the seller was protected to a level that made them comfortable enough to bring it to the open market which gave everybody the opportunity that wanted to buy it a chance.

I have long held that farmland auctions are a benefit to the buyer and seller both for that reason. When a farm sells privately "off-market" some people do not get the opportunity to buy the farm. I know of quite a few heartbreaking situations where certain people didn't get an opportunity to buy and they'd spent a lifetime hoping one day they would get a chance. I myself have at least two occurrences where farms were sold that I'd personally hoped I'd get an opportunity to buy but when they were sold without open public participation I never had a chance. At least one of them was sold at 1/2 of what I would have been willing to bid in an auction. At the same time I've been to auctions for farms I wanted to buy, I bid my money and was not the top bidder, but I felt like I had every opportunity and the process was fair.

Now let's get back to this story again. When is the last time you saw 200 farmers from Nebraska at a land auction? Sure seems like a stretch for 80 acres. The vast majority of Nebraska is pretty rural and having conducted farmland auctions in Nebraska myself I can say that 200 farmers at a land auction for 80 acres would potentially be a record, it would be an extraordinary crowd.

How farmland auctions work in iowaNext, how did these farmers know not to bid against them? There were 200 of them right?  Was there collusion? Did they all agree ahead of time not to bid? Did the buyer threaten them not to bid? My friend Mike Bradley wrote about collusion at auctions and it's certainly an issue with this story and means that if the story were true the farm was bought through an illegal act which sure doesn't seem all that heartwarming to me! That's not all that honorable and in my opinion most farmers would not allow this to happen and for good reason.  Farmland Real Estate is often a basis for borrowing capacity on farms.  The value of the land always based on farmland appraisals and by allowing a farm to sell cheap creates a comparable sale in the system that hurts everybody and can drive down borrowing capacity.  I have in fact seen auctions where bidders bid only to protect the integrity and value of their own land holdings.  

Let's not forget, as "heartwarming" as the story is there is a victim here, the seller of the farm.  An actual person was selling the farm and I know some will argue with me that it was a long lost family member or heir that didn't deserve it but thats none of our choices.  The heirs to the farm are chosen by those that own them and willed them to the person or people of their choice.  Who are we to after their death pick and choose who should get a good deal or who should get and attempt to undo their last wishes?  We aren't and it doesn't serve anybody well for such a system to exist.

I have often said DreamDirt provides cheap insurance for sellers of farmland and it relates to this probably fake story. Our system is built to protect sellers and provide a fair experience for buyers. When you engage an agency to sell a farm for you, you want to ensure that you have every opportunity to receive the top price for your farm. When you go to an auction to buy you do so with the expectation you are treated fairly, honestly and that the time you invested in the due diligence was not wasted. Sellers want to sell, buyers want to buy and our auctions ensure that happens.

My nightmare scenario is equally and probably more scary for sellers. In the end, it's their financial interest at stake, I just get a black eye if I were to experience a bad auction. Today's most progressive and professional auctioneers know how to properly lead a seller through an auction campaign to sell a farm. This is the reason our company has worked so hard to create relationships with institutional buyers that often participate in our auctions. It's also one of the best arguments for online bidding. Online bidding or simulcast auctions have changed and completely thwarted bidder collusion at auctions and gives sellers a piece of mind. I know of multiple situations where bidders stayed home and bid offsite to avoid the pressure of bidding among the crowd and avoid the influece of certain parties. People openly talk to us about their bidding and we often ask questions or they just volunteer it. It makes collusion in our auctions almost completely impossible.


iowa farmland appraisalsShould you be worried you would sell your farm at auction and this could happen to you? Absolutely not. I strongly believe the story is a complete fabrication to entice clicks to an advertising revenue website with no thought of the consequences for anybody else, whether its the auctioneer or the seller of the farm that has to worry.

Auctions are the best way to sell productive farms and it is the fairest way to ensure all potential buyers get an opportunity to participate.  Properly conducted by professional auctioneers with a strong understanding of their role in the process its the best way to find the market value that creates a successful transaction.  Auctions are a win win for buyer and sellers both and while often tilted in the sellers direction price wise, it still ensures every buyer had the opportunity to buy.  Thats open, transparent and fair dealings that serve everybody in the agricultural community best.  

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