Did you know that after you use a Section 1031 exchange to acquire new property, you will face the same tax-related issues when you decide to sell that property? Is there any way around paying capital gain taxes when you sell your property? With the issuance of Rev. Proc. 2008-16 and some advance planning, there are now two answers to that question instead of one. The one answer we always used to have was, "Yes, there is a way, but you have to die to accomplish it." (When a property owner passes away, property owned passes to heirs at a stepped-up basis, i.e., the value of the property at the time of death. If the heir(s) sell for that value, there is no capital gain. Helpful for your heirs, but not too much that you can do with it.) That answer isn't one that most people want to hear. Now, however, there's a new, more acceptable answer in the affirmative.
Let's assume that Mr. and Mrs. Jones own a farm worth $800,000 that has a tax ba
sis of $200,000. (Substitute "apartment building," "business location," or whatever fits your situation for "farm.") Further, let's assume that Mr. and Mrs. Jones do not live on this farm, so there is no personal residence exclusion available to shelter some of their $600,000 capital gain if they were to sell. They're not too thrilled with the prospects of being taxed on a $600,000 capital gain on this year's taxes, but they do want to sell. What to do? How about this:
- Mr. and Mrs. Jones sell their farm as the relinquished property in a Section 1031 exchange.
- As their replacement property in the exchange, they acquire two vacation houses, each worth $400,000 (House #1 and House #2)
- Mr. and Mrs. Jones rent the two properties in accordance with the new IRS Revenue Procedure 2008-16, which sets clear requirements for vacation home property to qualify for a tax-deferred exchange.
- After a period of time (at least two years to satisfy the requirements of Rev. Proc 2008-16), Mr. and Mrs. Jones sell their residence using the personal residence exclusion provisions of Section 121 of the Internal Revenue Code and move into House #1.
- After occupying House #1 for a period of at least two years to establish it as their personal residence, Mr. and Mrs. Jones sell it using Section 121 to exclude their capital gain and move into House #2. (I think you can finish the steps yourself.)
Can we quantify the benefits of such a strategy? Mr. and Mrs. Jones exclude the original $600,000 of capital gains from taxation. In addition, they can shelter the appreciation of their vacation homes over the period of time they own them (to the extent of the $500,000 limit on each residence). This strategy results in three interrelated benefits:
- The exiting of the business of owning the farm land (or apartment house, or whatever),
- The exclusion of otherwise taxable capital gains, and
- A potentially large addition to their liquid assets for retirement.
Is this legal? Darned straight it is.It may or may not be something that you or your client would ever want to actually implement, but perhaps it will help you better realize the tremendous benefits that Section 1031 of the Internal Revenue Code affords us all when we plan properly.
(We strongly urge you to consult your tax advisor to see how this exit strategy could apply in your situation.)
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Please consider IOWA EQUITY EXCHANGE as your source for answers to your questions about Section 1031 like-kind tax-deferred exchanges. Contact us at your convenience for prompt, accurate information. Please think of us for your next exchange.
Ken Tharp
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2008 By Ken Tharp, All Rights Reserved. * Section 1031 Exchanges - Tax-Deferred or Tax-Free? * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
In order to clarify things in the mind of anyone who is uncertain about it, the farm bill that was pass
ed by Congress does not include the language about like-kind status that those of us in the exchange industry were concerned about. The Senate version of the bill sought to redefine the term “like-kind” as it applies to agricultural ground. The crux of the change was to make land that generated any sort of subsidy from the government for its owner non-like-kind to any other real estate investment. The central objection to that provision, in my opinion, is that the government essentially imposed the subsidies on f
armers over the years and it is not equitable to now make it so those same farmers could not exchange out of their long-term investments into something more manageable in their later years.
While this is good news indeed, investors and real property owners all across the country should remain vigilant with regard to potential changes in Section 1031. The mere idea that Congress took a shot at changing like-kind status as a means to raise additional funding for their other activities is cause for concern. Considering the possibility of chipping away at the provisions of Section 1031 is frightening.
Ken Tharp
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2008 By Ken Tharp, All Rights Reserved. * The Farm Bill Does Not Alter the Definition of “Like-Kind” in Regards to Section 1031 Exchanges *
Its proving that previous big gains in the real estate market by the auction industry are not going to be topped this year. With big gains in the last 5 years, and growth in the last 6 in the real estate market crisis the National Auctioneers Association is reporting a decrease of 2.7% in real estate auctions despite growth of 2.3% in the live auction business. As we hit what may be the worst of the housing and mortgage crisis that comes as somewhat of a surprise to some that felt the auction industry would see gains again this year. At this point I think and agree with Tommy Williams assessment of the challenges auctioneers are now seeing. As values have continued to fall we are at a point where sellers are just not willing to accept that their home could actually be worth what the market is bringing today. Despite the relatively small decrease in real estate auctions this year they are still at an all time high and a very valuable option for many sellers.
While these statistics are all national industry wide stats I think it would be interesting to see a state by state breakdown which isn't possible. If my suspicion is correct you would actually see gains in real estate auctions in some states and losses in others. Without any hard numbers or facts to back it up the best I can say is that, at the very least the number of real estate auction in Iowa has increased this year and I've seen more and more auctioneers jumping into the real estate business. As an auctioneer I'm also seeing more and more Realtors taking notice and partnering with auctioneers to get homes sold here in Iowa. I guess we'll never know for sure but my suspicion is that real estate auctions are more popular than ever here in Iowa.
Below is a release from the NAA about the current state of the auction industry as reported at this years national convention.
National Auctioneers Association Estimates Industry to Grow 2.3 Percent in 2008
Decrease of 2.7 Percent Reported in Residential Real Estate Market
Nashville, TN, July 9, 2008 - During the opening session of the 59th International Auctioneers Conference and Show in Nashville, Tennessee, Dr. James Leiman of Morpace, Inc. announced the results of the industry's mid-year report to the members of the National Auctioneers Association. Dr. Leiman reported that if current consumer trends continue within the live auction industry, gross sales will grow 2.3% in 2008. The 2.3% percent growth during the first half will result in estimated gross sales of goods and service sold at live auction totaling $276.8 billion. This translates to six consecutive years of growth within the industry. In 2007, the live auction industry grew 5.3% with over $270 billion in goods and services sold by auctioneers in the United States.
While automobile auctions continue to dominate the industry with $87.8 billion in gross sales in 2007, the fastest growing sector of the live auction industry is real estate auctions. Real estate auction sectors include: residential, commercial/industrial and land/agricultural. In 2007, the auction industry sold approximately $58.5 billion in real estate assets. Total sales growth within residential real estate auctions has grown 46.6% between 2003 and 2007. Dr. Leiman reported that the pace of real estate auctions has slowed and gross sales have decreased in the first half of 2008. Gross sales in residential real estate decreased 2.7% in residential real estate, 7.1% in commercial and industrial real estate, and 2.3% in land and agricultural real estate.
"While auctioneers have witnessed tremendous growth in real estate auction sales over the past five years, auctioneers are witnessing more challenges in today's housing market," said NAA president Tommy Williams, CAI. "Auctions set the market value and sellers are uneasy with the realization that their property is only worth what the consumer is willing to pay and are concerned about a loss in their properties market value. In addition to seller apprehension, today's buyers are concerned with purchasing assets in an uncertain economy and do not see eye-to-eye with sellers on the true market value of their property."
Every January, the National Auctioneers Association unveils its annual end-of-the-year report to the public. This report provides and overview of the industry, as well as highlights growth within sectors of the auction industry (i.e. real estate, charity, art, antiques and collectibles, etc.). To view a copy of the past three years of reports visit www.auctioneers.org and click on Auction Industry Stats.
In today's slow moving real estate market are you having trouble getting your home noticed?
Real estate auctions can deliver the results you need. In fact, a real estate auction can put cash on the table in 60 days from the very first day you sign the listing agreement with the auctioneer.
The first 30 days are spent marketing the property and the sale is held near the 30th day. Closing is set for 30 days after the sale and often occurs before that time so you can expect to have your home sold in 45-60 days.
The first argument is likely going to be "well I won't be able to get what I want for it" You may be absolutely right and you might be wrong. Sometimes real estate sells at auction for more than the seller wanted to ask for it through an agent. In some cases you'll never get what you want, have to have or need to get. In some cases its just not possible. I'm well aware, as are the banks that a huge portion of Americans now have negative equity in their homes today. If you are facing foreclosure its possible your bank will work with you to "short sell" your home, in which case they allow you to sell your home for less than you owe against it in satisfaction of your debt to them. This is not always the case but in todays market short sales are very common, and often a cheaper option for the bank than actually going through with foreclosure. An Auctioneer can work with your bank and help sort out the details and request the short sale if you sign an authorization for them to discuss the situation with your representative.
A home is only worth what someone is willing to pay for it and those numbers fluctuate constantly. If a buyer can buy a home that fits them just as well or better for a cheaper or comparable price it affects the value of your home in their mind. Buyers will compare all of their options and establish a value for your home, value is what they are willing to pay. They are willing to buy your home, at a certain price, everybody is willing to buy your home at a price that is right to them. The driving force in today's home sales is how much a buyer will pay for the home, not what the seller wants for it. If the seller wants to much why would the buyer not just walk across the street, down the block or across town and buy another home that is more appropriately priced?
How do you know if you are ready for an auction?
I believe a real estate auction should be your first choice each time for the sale of your real estate. It guarantees you do not leave even one dollar on the table, it is much easier than listing your home, and it establishes the absolute highest dollar someone is willing to pay for your property. Here are some signs that its absolutely time for an auction.
You've had your home listed with a Realtor for more than 180 days.
You've had your home listed with a Realtor for 90 days and had fewer than 3 showings.
You are tired of getting the house in order for showings to get no offer.
Feedback from lookers always revolves around price, location or condition.
You are facing foreclosure. (Call quickly)
You are being relocated, or have another reason you must sell quickly.
You are an absentee landowner and do not want to commit 6 months or more to selling property.
You are settling an estate
You have many other items to sell along with the real estate such as machinery, tools or household items.
At Smith Auction Marketing Company we work with Realtors, and while I understand they want to hang onto you as long as possible to recoup the money they have into marketing your property, they do have the option of working with an auctioneer and splitting commission no differen than they would with another real estate agent. If you are sitting at home reading this I can only assume you are motivated to get your home sold, recommend to your agent the possibility of partnering with an auctioneer to sell your home.
For you to be successful with an auction you have to be ready, willing and able to sell your home. This includes a realistic view of what you will get for your home and understanding the highest bidder may be below what you want for the home. You may get what you want and more if your home is marketed correctly, either way IT WILL get an offer on the table that you can work with.
What is the alternative? Languishing in the MLS for another 6 months, 12 months, 18 months? They are out there, homes that have been listed for over 18 months. There are more of them than ever now. When I first was licensed as a real estate agent I was told that I was to call all my sellers each week, and even if there was no activity on their listing I was to tell them we had a few calls on it but the callers thought the price was a little high. This was supposed to prompt clients to reduce their price and make the listing easier to sell. I value my integrity and have always felt honesty was a better policy, after all its my job to give good honest advice.
Do yourself a favor and call real estate auctioneer today, get your home sold in 60 days.
The best Iowa Auctioneers, or at least those competing to be the best Iowa auctioneer this year will all come together on Tuesday, August 12, 2008 in Des Moines, Iowa to compete against each other in a bid calling championship. On February 2, 2008 in Des Moines, Iowa 30 contestants competed at the annual Iowa Auctioneers Association convention and the field was narrowed to 20 auctioneers that would move on to the state final.
- Scott Stutzman - Mt. Ayr, IA
- Leroy Hoffman - Titonka, IA
- Steve Maynes - DeSoto, IA
- Steve Gaul - Hawarden, IA
- Jason Knapp - Cedar Rapids, IA
- Jeffery Craun - Boone, IA
- David Wendt - Des Moines, IA
- Ben Hollesen - Sioux Rapids, IA
- Emily Wears - Solon, IA
- Jeremy Clay - Maryville, MO
- Craig Hilpipre - Cedar Falls, IA
- Gary A. Littrel - Bettendorf, IA
- Chris Richard - Mt. Pleasant, IA
- Larry Sears - Grinnell, IA
- J.J. Wise - Manly, IA
- Brent McCall - Onawa, IA
- R.J. Brinkmeyer - Hubbard, IA
- Randy Stabe - Merrill, IA
- Chad Shepard - Waterloo, IA
- Eron Prevo - Bloomfield, IA
The state final to determine this years best Iowa Auctioneer will be held at the Iowa State Fair. In reality it doesn't make them the best Iowa Auctioneer but the state champion bid caller for the year, who will then represent the Iowa Auctioneers Association at events and functions throughout the year. Those competing in the competition do put a great deal of work and practice into their bid calling and with the enthusiasm and dedication of an Olympic athlete they practice day and night. If you want to see something new at this years state fair I hope you'll come out and have a great time with us there.
My Website: Iowa Auctioneer and Iowa Land For Sale
Today's real estate market is flooded and I mean flooded with desperate sellers. I keep abreast of the real estate 
market on a daily basis, after all that is how I make a living and if you are serious, and I mean serious about selling a home today you have to know one thing. Price!
I read blogs, news, industry websites, newspapers, watch industry videos on YouTube and I have constantly seen the same thing for the last 12 months. There is one side saying things are bad and getting worse and then there is the other side saying "don't read the newspaper or listen to the news it's a great time to buy a home"
Both are a little bit right but I know it's a confusing message to the consumer. My concern today is what it means to a seller and not a buyer. I'll say this about the buyer and move on. It is a good time to buy a home. I'm not saying it's the best time, but it's a good time. Mortgages are hard to get and you'll be forced to buy within your means, you'll need a larger down payment than in recent years and you'll have lots to choose from. You will however have to wade through lots of overpriced homes. Its just a fact of today, there are folks trying to sell homes, they have mortgages on them and they have to pay off the mortgage to sell it, its that simple, they have to ask that price because they do not have the means to make up the difference.
If you are a seller price is what its all about today and there is a great chance that if you purchased your home in the last 1-7 years your home is worth less today than you paid for it. To sell a home today you have to be very realistic. I mean extremely realistic. If you have a mortgage and you have to have X amount of dollars to sell and its above market value then look at your options to keep the home until things improve. If there is no immediate need to sell them then keep it. If for some reason you have to sell it, lets say your job has relocated you then you'll have to do some soul searching on what you plan to ask for your home, if in fact you want to sell it. If you are facing foreclosure then time is of the essence, do not wait, call a real estate auctioneer today. There are options and they will know how to help you.
"Lets list it and start out high and see what happens." If I had a dime for every time I had heard that. In real life its one of the silliest things you can do if you are listing a home. You are wasting your greatest opportunity to sell the home right there in the first 30 days when it comes up for sale. Its the time most people will see it, say its overpriced and move right past it. You have to ask your self "do you want to put the home up for sale, or do you want to sell your home"
If you are realistic about your price and motivated to sell your home let me give you a great option to "lets start off listing it high and see what happens" I know and you know the reason you want to start high and see what happens if because you want the most money available for your home. You don't want to leave money on the table. Make sense to me, I wouldn't want to leave money on the table either. An auction does exactly that for you, it doesn't leave any money on the table.
Selling your home at auction exposes your home to the public, it brings every interested person to the sale and they compete against each other. Your auctioneer will see to it that he reaches the highest bid, and you don't leave money on the table. Now isn't that a better option than wasting the best opportunity to sell the home? Look today and see just how many homes are on the market, can you think of a better way to get your home to stick out in the crowd than to use a different sales method than everybody else is using?
If you are serious about selling your home and you are realistic about the value of your home then call a real estate auctioneer or visit our Iowa Real Estate Auction website. I also work with and with Realtors, after all they would never think twice about splitting commission with another agent, why not an auctioneer? In the end the home is sold and thats what we are all after right?
Western Iowa Land Auction
Yesterday I was able to attend the large land auction in Monona County in western Iowa. The land up for auction in this case was a of some historical value and a well known local operation. The large 560 acre feedlot had originally been built by the Hanson family and was later purchased by the Johnson family. The land auction was held at Moorhead Iowa while the location of the land was near Turin Iowa.
With many local folks in attendance, many of them to see who would purchase the farm and what the land would be valued at by the end of the auction. Many stories were shared about the old farm and especially the number of head they used to run in the feed lots. Even today it would be considered a large operation.
Bidding on the land started around $1500 per acre. The farm was sold based on a taxable acres of 554.81 with all of the structures and infrastructure to go with the property. It was all set up and ready to recieve a new cattle operation that very day, in fact the buyer would be allowed to place cattle on the property after signing the purchase agreement after the sale. That was very generous of the sellers, and in addition the sellers were also throwing the 95 acres of corn crop in with the sale.
By the time bidding stopped the last bid was $2200 per acre for a sale price of $1,220,582 which was right where I thought it would land in the end.
If you are thinking of selling a farm or land in Iowa give us a call today to discuss it. We sell Iowa farms and land and they are in demand today. Visit our Iowa Farm and Land website for more information on farm and land auctions in Iowa. While you may be tempted to accept an offer from a neighbor for the ease of "not dealing with it" I'm sure you won't realize a higher price than with a live public auction. Auctioneers more than pay for themselves and can put more money in your pocket.
Every now and then you hear a story that makes you cringe and the other day while talking to another auctioneer friend of my he told me a story of a sealed bid auction that had occurred in his area. The sealed bid auction was not conducted by an auctioneer but by a local attorney.
Yes, lawyers sometimes when hired to represent an estate will conduct a sealed bid auction for the farmland rather than refer it to an auctioneer. Obviously in my mindy I feel this is a terrible injustice to the client. In my mind this becomes a case of taking a broken down car to your dentist and then asking your plumber to fix your toothache. I can tell you that when someone comes to me with a legal problem, even if I'm pretty certain I know the answer I ALWAYS refer them to an attorney, thats what attorneys are for.
Should you use an attorney to sell your farmland by sealed bid auction?
You have to ask yourself a few questions to come up with the answer. Answer these as you go along and I'll answer after you do.
#1 Is this attorney also a marketer? Can he/she get your listing in front of as many people as possible? Will they put up signs? Will the lack of marketing and publicity hurt your sale?
#2 Is this attorney going to have waiting buyers on mailing and email lists?
#3 Can this attorney create the excitement, sense of urgency and open competative bidding like an auctioneer can?
#4 Will this attorney be able to advertise your sale on popular auction advertising websites like auctionzip.com, the auctionservices.com network, auctionbill.com or any of the others?
#5 Will a lawyer know current market conditions, what things are bringing, be in touch with the agri business world to know current cash grain markets, recent fluctuations, or coming concerns?
If you have formed some answers to the questions you can now listen to the way I would answer them.
#1 An attorney is usually not a marketer and is not going to be familiar with where to post auctions for the best exposure, nor will he/she have memberships to places where folks usually look for auctions such as the auctionmls.com or auctionbill.com The lack of publicity will hurt your sale, sales are always better the bigger the crowd. Wait, crowds are not possible with a sealed bid auction.
#2 Sure an attorney may have a few waiting buyers. Maybe his buddies at the country club said "hey next time you have a good deal on some farmland let me know" I doubt very much they will have the list of buyers we have that have signed up on our website or contacted us through our blogs to be notified of upcoming auctions.
#3 Most sealed bid auctions done by attorneys that I have seen have placed a couple local newspaper ads describing the property and giving an address to send your bid to. Sound exciting to you? I've seen a few that typed up a flyer using a word processor and put it on colored typing paper then mailed it out to local farm coop and farm credit businesses. It sure wasn't as attractive as our 13X18 inch glossy color flyers we use.
#4 As auctioneers we subscribe to services that we pay for every month. We pay membership dues to professional association to stay current on the current industry. It allows us access to certain resources, networks, systems and websites where we can advertise our auctions. These websites like auctionzip.com, auctionbill.com, the auctionservices.com network of syndicated websites, the NAA's auctionMLS.com, state association auction calendars get thousands and thousands of visitors looking for everything from antiques to farms. If your property doesn't make those websites you'll never know how well you could have done.
#5 Its possible, and the most possible out of the 5 questions I asked. I don't myself know any lawyers that are also farmers, where would they find the time? I'm sure there are some out there somewhere, and some that come from farm families and some that own land. Some attorneys invest in land and may be land owners themselves. Maybe 50% of them are going to have at least some knowledge and experience with land owership, farm life, or farming but not all. In fact it may be just enough to talk you into the feeling they know all about farms and farmland. It might be just enough to make you forget about the importance of the marketing and competative open format bidding process.
Thats how I would answer the questions and I'm fairly sure there is really not much to debate about any one of them. Do the attorneys get the farmland sold in the end using sealed bid auctions? Absolutely they do and I'm sure there are many people walking around today that don't know they could have done much better at live auction. Nobody will ever know what the land would have brought had it been marketed properly and the sale held with live open competative bidding. In Iowa where we are seeing new record land prices set with each new month and a 22% increase in value last year alone I'm not sure how anybody could use the sealed bid format with a clear conscious. In my opinion when faced with having to sell a farm most good attorneys are going to refer the client to an auctioneer or a handful of auctioneers. Auctioneers are no different than real estate agents, shop around and see who fits you the best. 
You might wonder how it could really make that much of a difference right? Well consider this. What if you are selling a 240 acre farm. Let say you have a buyer bid $4000 per acre with the sealed bid auction. What if he would have gone to $4050 per acre? Thats a $12,000 difference. Everybody comes to an auction with their top dollar in mind. With a sealed bid auction they submit it on paper and don't get a chance to go up, with a live auction they still have the option of weighing everything out and moving up if the situation warrants it. I know from experience that most people at auction will go well above the dollar amount they had in mind.
Lets take a look at another larger dollar amount from one of my own auctions. The current tenant and an investor are bidding against each other on a 160 acre piece of property. I already know from talking to both of them before the auction that their minds are in the $3800 per acre range. Guess what happens when a tenant sees someone else wants to buy the land he has been farming and wants to buy. In less than 5 minutes of bidding we landed at $4550 per acre on the 160 acre. I'm fairly positive that had each of these individulas submitted a sealed bid they would have bid in the $3800 per acre range. On 160 acre you are talking about a difference of $120,000. That more than pays for the auctioneer by a long shot and puts alot of extra cash in the sellers pocket.
Sealed bid auctions have their place and there are times when they are the best option. With very unique hard to value properties sealed bids work great at establishing value. With common property such as farmland sealed bids do happen, but the question always enters everybodies mind "why are they doing it by sealed bid with a lawyer, why didn't they get an auctioneer, is there something wrong with the property" The very sales method alone could affect the amounts bid. Buyers may also gamble on the thought that there are going to be few bidders so a low bid may be more appropriate. Believe me, the buyers know when an auction is not being marketed properly and they know there is no reason to go to top dollar on the chance they may have found a deal. I know one fella that once told me he bids on every sealed bid land auction he sees knowing that usually there are few bidderss and he's been successful giving mediocre bids before, in which case he was able to immediately turn around and sell the farm for a nice profit quickly.
If a sealed bid auction is what you want to have and won't have it any other way then I would still encourage you to hire an auctioneer to hold the sealed bid auction. I've come across folks that did not want the attention of an auction, did not want the entire town at their house on sale day and would only have a sealed bid auction. If you feel that way then certainly go for it, hire an auctioneer to do your sealed bid auction. When an auctioneer holds a sealed bid auction he/she understands the process and understands how to do what, why, where and when. We understand that when we have opened the sealed bids and we have the highest one in our hand the process is just starting, not over.
The bottom line is here in Iowa land auctions are the norm. Selling your farm in Iowa at open live public auction is what folks expect. They enjoy the fact that they can see the other bidders bidding, the transparent process puts them at ease. Auctioneers work hard for you, often you may be their only client so their attention is not split between your land auction and a divorce case or upcoming criminal case.
Auctioneers are marketers. We specialize in marketing assets, bringing a crowd together and then talking them out of every last dime they are willing to pay for what you are selling. We pride ourselves in bringing you the top dollar that was available for your asset and nothing less.
I'm not trying to paint all Attorney's with the same brush because I actually know one that is a bonifide auctioneer but generally 99.9% of them are not marketers and do not understand auctions. I won't take anything away from them because I appreciate the jobs they do. Having spent nearly 20 years as a police officer and police chief I know many attorneys and remain friends with them today. The fact remains that they do what they do, and we do what we do. We sell your stuff and get the most money that someone was willing to pay, and we know nobody else was willing to pay more because they were all standing shoulder to shoulder and given the opportunity to offer more. With a sealed bid auction they submitted their lower mediocre bid hoping to get lucky!
Over the weekend I had the opportunity to sell with the Behr Auction Company at public auction in Mason City Iowa. We were selling commercial real estate as well as the building contents. With 5 auctioneers including myself we were able to complete the sale in exactly 5 hours with two selling rings. The Behr family name is synonymous with auctions in Iowa. Behr Auction Company has conducted thousands of auctions in over 35 years since it began in 1971. Since that time it has grown into a multi-faceted/full service Auction Company now specializing in Iowa Real Estate Auctions including farmland, homes, acreages, and commercial real estate. They also conduct estate auctions.
Owned by brothers Paul C. Behr and Dennis Behr you'll also find many family members working behind the scenes and on auction day. Cory and Dennis run the day to day operations of the company. In my photo above you can see Ed Behr calling bids, while Cory Behr (Dennis's son) on the ground catching bids, while Cory's sister is acting as the clerk in the trailer. If you could look around you'd also see Dennis Behr and his wife Jane working, and Cory's wife Jennifer Behr. The Behr family runs a highly professional auction business and they are the best of the best in Northern Iowa. Their farmland sales have achieved record prices
Paul C. Behr is a 3 time world champion auctioneer and President of the World Wide College of Auctioneering in Mason City Iowa while Dennis Behr is one of the lead instructors at the college.
The opportunity to come help the out for the day was an exciting day and certainly one I was able to take away a few good lessons from. My most sincere thanks to the Behr family for their invitation to come help out on sale day.
Looking for an auctioneer in northern Iowa then I hope you will give Dennis or Cory a call at 641-425-8466 or visit their website Behr Auction Company You can email them at behrauctionco@gmail.com
Jason Smith is an Iowa Real Estate Auctioneer and member of the Iowa Auctioneers Association as well as the National Auctioneers Association.
I have many conversations with folks about the value of their property. It might be Iowa farmland or a house, after all everything has value and as an auctioneer value is important to me. Value is complex and more in-depth than I can cover in this short blog post, but I'll hit the high points from an auctioneers perspective.
In nearly every conversation with a potential seller I will always hear something along these lines. "Well I bought it 10 years ago for X amount of dollars and then I did this and that and then this to it, plus I did this, this and this and I know my neighbors down the road sold for X dollars 3 years ago so mine has to be with Z dollars now."
Certainly looking at value from that perspective would seem to be a common sense approach, but it doesn't work. If you are serious about selling real estate you've got to know, and this is the best advice I can dole out..... it just doesn't work that way. You cannot take your purchase price, add all of the things you did to it, add interest, a real estate commission and get that dollar figure today, in most cases. In some cases you can but home values have dropped and being realistic today is what will help you sell your real estate.
Value is determined through many things and in today's residential real estate market pricing is everything, I can't even begin to explain just how important pricing your home is today. Values of nearly everything fluctuates every day. If you look at the stock market you'll notice that values change on a daily basis, things go up and down based on a certain set of factors surrounding them. Certainly demand has the greatest affect on value. When demand is low and supply is high your asset drops in value. If demand is high and supply is low you'll see the value of your asset increase. Supply and demand can be used to summarize all of the factors affecting value.
All other things that affect supply and demand are sub characteristics and you see many of them affecting value today. They do not affect each area the same however. A plus for one area, may be a minus for another area. Take for instance gas prices. Gas prices are affecting today's supply and demand in the housing market where I live. Since we are on the outer fringes of the Omaha Council Bluffs metro area in western Iowa and eastern Nebraska we are starting to see folks put their homes up for sale to move closer to their employment in the city, and fewer people moving out to the country. This creates an oversupply of homes in the area and reduced demand or a minus for our area. Adding supply to a market that already had an oversupply with increased foreclosures in the last 12 months spells a real reduction in value. That very factor however is a plus for the cities of Omaha and Council Bluffs that are seeing more folks move in to avoid commutes and save on gas.
Supply has been affected by speculative building, mortgage defaults, and decreased demand while demand has been affected by a poor economy, gas prices and knee jerk reactions to the credit crisis we are seeing. It's much harder to get a mortgage today than it was 18 months ago. All of these things affect the value of your home.
If you look at that compared to the original statement above in the second paragraph you'll notice that sellers often do not think of supply and demand or current market conditions to determine value of their asset. There is no magic number to calculate the value of your house today and I'm not saying that its worth less than you paid for it, but I can tell you the best, easiest and cleanest way to determine the value of your home is with a real estate auction. Real estate auctions are the best form of appraisal you can find. Better than even hiring an appraiser to appraise your home. An appraisal is only one persons opinion of the value of your home. 3 appraisers would have 3 different opinions and NONE of them are offering you money. With a real estate auction you have someone offering you REAL CASH and not an opinion. Your auctioneer has marketed your home to every buyer interested in purchasing a home, they all came together, bid against each other and the highest bidder has just given you an appraisal for free! The most a person is willing to pay for the property is the value of your home, not what some appraiser said.
While the residential real estate market is experiencing a buyer's market today, land sales in the Midwest are in a seller's market that continues. A very different set of factors are playing into the land sales market and values of land continue to increase month to month. If you thought all real estate was the same and experiencing the same downturn today I'll explain why it's not true.
Today's grain prices are up, the stock market is down and more people are investing in the safety of farmland ownership. Farmland used to produce income is the most valuable land. This may be row cropped land for producing corn, soybeans, wheat or many other types of land. Land used for pasture of livestock comes in second in value while other lands used for timber production, recreation such as hunting usually falls 3rd in value. Determining the value of the land you are interested in selling will be determined by the amount of income it can produce, or its proximity to development. Certainly you'll see cases of land in close proximity to metro developments that will fetch a much higher price than it would if it was not in close proximity.
A reasonably steady supply of demand has not kept pace with the demand for land. Land auctions have been especially popular over the last 24-36 months with great attendance, many times with record prices set at each consecutive auction. Things continue to look bright for the future of land sales and ownership and as long as income keeps pace the value will remain steady and increase.
Could value of land fall? As I said before values fluctuate everyday up or down and if you were subject the land market to the same things the housing market is experiencing today you would see the same affect. While its highly unlikely its possible because value is affected by the supply and demand.
The distinct difference between homes and land is supply and demand. Land has a higher demand than supply today while homes are in oversupply and in low demand. In either situation an auctioneer can get you the best offer with cash on the table in 30-60 days. The alternative is to list it and let it sit on the market for months, or even years while you continue to pay the holding costs of interest, taxes and insurance. Add those up and see what you could save by calling an auctioneer today.