when are farms more valuable in iowa

When Is The Best Time To Sell Farmland in Iowa?

May 22, 2017

If you want to hear a debate about when is the best time to sell farmland in Iowa just ask it during a gathering of land brokers or auctioneers!  Despite all of the experience in the room there will be all kinds of opinions and Iowa farmland prices can be a complex issue affected by many things.

Why would people want to time a farmland auction?  In most cases to get the most amount of money but in reality there isn’t a time of year when farms are worth any different amount of money because they are business assets and their value is very closely tied to their ability to produce income so more than likely they will be judged by how much return they can make.  Now thats not the end of it, there are many other factors that can play into the value of a farm but none of them are seasonally related such as location, field shape and size, CSR, area livestock populations, road access, timber tillable ratio, past management practices, improvements etc.

Where the time of year does affect how a farmland auction is conducted and how well it sells really is based on tenancy and what you offer the new owner as compensation for their time as a landlord if you sell while the farm has a tenant on it.

Iowa’s farm tenancy laws strictly lay out when a tenant must be notified the lease is being terminated and when they must give up possession of the farm to the landlord.  If you intend to terminate a farm lease you must notify the tenant prior to September 1st and when you do they will have until the following March 1st to vacate the farm.  If you were to serve the notice on September 2nd the tenant would have 18 more months or full crop year remaining on their tenancy.  Now, that doesn’t matter if that is the case, however it will require you to structure your auction or private sale in such a way that the buyer will receive compensation for that crop year.  If you have your farm rented for a low figure you might consider adding to the compensation to hold the value of your farm to the market to ensure bidding or offers match comparable sales.

Lets imagine for a minute that you decided to sell a farm on July 1st, you are right in the middle of the year, right in the middle of a crop and you likely already received your rent payment on March 1st or perhaps the first 1/2 of the rent on March 1st with the remaining half coming on September 1st.  This is a situation that many people believe prohibits them from selling their farm because it has a tenant when in reality many farms sell with a tenant like this, however there must be some remedy or compensation for the buyer of the farm as they will own it from August 1st of this year and will not receive any income from it for almost 18 months when the following yeras harvest occurs.  In cases like this I often advise the seller to include a cash rent credit at closing which is essentially discount off of their bid so you do not have to have a separate transaction outside of closing, unless for some reason that would make more sense for the seller to have a paid outside of closing expense.  Every situation is different and its worth checking into so that you understand how to do it.

So back to the original question, when is the best time to sell farmland in Iowa?  For me I think the question has a different answer all of the time, but the best answer is “right now” .  I have said that to many prospective clients for one reason.  We know where we are at right now, we know the patterns, we know the prices, the mood, the markets right now and the situation can only vary for an up or down market.  In today’s declining market many sellers are pushing off farmland sales waiting on the market to improve but the numbers can be downright scary right now.  With corn prices down 57% from 2013 and farmland prices only down 29% you have to wonder when that will equalize?  In May 2017 we are still seeing farmland prices that rival market highs of 2013 on good high quality tillable farms so if you are considering the sale of a farm but want to wait until Fall to sell it you could be gamblign the results.  Sure, it could be the same, its not likely to be better but if you look at the big picture right now is a sure bet because you know what prices are doing right now.

If you are considering selling Iowa farm real estate we track Iowa farmland prices across the state and can help you understand when the best time is for you to sell your farm.  I would be glad to visit with you and show you how we can maximize the price of your farm with our marketing products and exposure.

About the author: Jason Smith

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