If you’ve never participated in a land auction before, it can be daunting to begin to think about everything that a land auction may entail. Understanding the basic process of a land auction beforehand may save you from undue stress and give you a few questions to ask your Land Professional as you begin to think about how best to sell your property.

What is the Process of a Land Auction?

Land auctions are a means of selling land through competitive bidding instead of the traditional process of setting a list price and negotiating with prospective buyers to come to a final sale. Rather than waiting for the right buyer to come along, land auctions attract qualified buyers from all over the country!

From start to finish, the land auction process is as follows:

Preparation

Preparing your property for auction consists of obtaining all paperwork pertaining to your property including any necessary permits, inspections, and other documentation. During this stage, you’ll also work with your auctioneer or Land Professional to set a date for the auction and establish a marketing plan.

Marketing

Depending on the auctioneer you choose, marketing a land auction can be done through a variety of means. Effective marketing of a land auction includes advertising in local newspapers, online land listing websites, and via direct mail to qualified buyers. Some companies even have proprietary technology that can be used to showcase your property in unique ways to attract more attention!

Auction Day

On the day of the auction, potential buyers will gather either in person or online depending on the type of auction. Once the bidding process begins, interested parties will compete for the highest bid over a predetermined period of time. 

Live auction bidding is typically done in a single session, whereas other forms of auction like sealed bid or online auctions may allow for a longer bidding window to afford more prospective bidders a chance to make their offer. Once the bidding period is complete, the individual with the highest bid is named the winner.

Closing

Once the highest bid has been accepted and meets any set reserve prices, the sale is considered binding. The closing process generally takes place over a specified period of time, on average roughly 30-45 days after the auction day. 

During his appearance on the National Land Podcast, AR Land Broker Jeramy Stephens explained how auctions can expedite the closing process. He stated, “One of the main [benefits] from the landowner’s standpoint is there are no contingencies. You’re going to get cash at closing in 30 days or 40 days, whatever the agreement is, upon signing the contract. You don’t have to go through waiting on somebody to get their financing or the appraisal, or this or that. You drop the hammer and sign the contract, and you’re closing in 30 days.”

Transfer of Ownership

Once the closing is completed and all the documents have been signed, ownership of the property is transferred to the winning bidder and you receive the proceeds from the sale.

If you’re ready to learn more about whether a land auction is the right way to sell your property, contact your local Land Professional and see how National Land Realty can help!