As a recreational property buyer, you might not have thought about participating in a land auction or bid sale, thinking that it’s an event where everyone knows everyone else’s business.
But that’s not how a sealed bid land auction works, says Mark Knight of Davis DuBose Knight Forestry & Real Estate, a PotlatchDeltic Preferred Broker. Instead, a sealed bid auction is a way you can confidentially submit the price you’re willing to pay for a property, making the process efficient for everyone involved.
And while a bid auction is not usually the preferred way to buy or sell a property, in certain situations it can be a good choice.
Davis DuBose Knight sold a 68-acre PotlatchDeltic tract in Independence County, Arkansas through a sealed bid sale earlier this year, resulting in a deal that worked well both for the buyer and for PotlatchDeltic. The property was desirable, with quality hunting and a water feature, an example of how auctions are often used for quality properties.
“Working with a knowledgeable land broker, you can determine a fair price you’re willing to pay for a property, giving you confidence going into an auction,” Knight said. “It’s important to work with a broker who knows recreational property, and one who knows how the bid process works.”
Is there room for give and take in the process? That depends on what type of auction it is, Knight says.
In an “absolute auction,” the property is sold to the highest qualified bidder with no minimum sales amount. In an “owner confirmation auction,” the highest bid is presented to the seller, but the seller is not obligated to sell to that bidder. And in a “published minimum bid auction,” the seller is committed to selling the property at a certain price or above.
Land auctions and bid sales continue to be popular options for some recreational and timber properties, said Knight, whose Arkansas-based brokerage ran 25 land auctions in 2020. Owners of adjoining properties often participate, along with potential buyers who receive marketing material about the auction and are interested.
And can you offer a price that’s above the asking price? Definitely, especially if you are confident that buying the property at that price would be a good value for you.
Certainly, participating in a land auction or bid sale isn’t the right move for every recreational land buyer. If you want more flexibility in negotiating, or if you don’t want a set deadline to buy a property, buying a property in this manner would not be the way to go.
For many buyers, it all comes down to knowing what property you want, in terms of location, amenities and price range. Working with an experienced land broker, you can narrow your choices, and if your top property of interest is being offered in a bid sale, know that the process is clear, confidential and easy to navigate with the right help.
For questions about auctions, or to get your own property search started, contact one of the experts in the PotlatchDeltic Preferred Broker Network today.