Auctions in 2021: Here's what to look out for this year
While 2020 saw its auctions quickly transform from in-person to virtual, it's unclear if the same will hold true for 2021, or if the beginning of the end of COVID-19 will allow auctions to go on as they were pre-pandemic.
Mark Stock, co-founder of BigIron Auctions, licensed auctioneer and realtor with BigIron Realty, said auction hawks should expect to see less machinery for sale, although late-model tractors are making a comeback, selling with record highs. That's because manufacturing companies have slowed production due to COVID-19 and are still having to pick up a backlog of orders, making supply tight.
He said some people are willing to buy those tractors from over 500 miles away, especially if they have eyes for a specific model. Of course, it's also always important that farming operations keep their equipment relatively up-to-date to avoid any safety hazards.
While some auction houses may switch back to all in-person auctions, Stock said he believes the changes that created the online auction environment are here to stay for the long haul. He said many auction businesses had to entirely re-evaluate their business model to fit in the volume and logistics of timed online auctions. Since BigIron has been online since 2001, there was no need for them to pivot.
"We average 45-75,000 different IP addresses watching our auctions every Wednesday, so it's a tremendous crowd. We're filling (the Badger Stadium) up 75% on an average auction day," Stock said. "We get a lot of eyes on our online platform, and whether or not other auction companies stay in that format or if they want to switch back, that'd be their personal preference."
With commodity prices at 5-7 year highs, Stock said it's a seller's market because of all the extra income in farmers' pockets. Land sales are following that trend with prices going up 5-10% compared to last year, he added, explaining that fixed interest rates being at historic lows is a big factor in those prices.
Stock said the low interest rates are also helping younger producers get into the agriculture business more easily, especially with the US Department of Agriculture Farm Service Agency's loan program becoming more relaxed – the loan amount available to farmers has doubled from $300,000 to $600,000.
"You can lock money for 30- or 40-year loans for the lowest rates I've seen since I've been in business, and that's 35 years. ... That is helping some of the younger folks get involved in buying land," Stock said. "Interest rates (and) run-up in commodity prices are helping the young farmers, and the government's new increased loan limit has helped out dramatically."
Because prices are higher and people have more money to spend, now is the time to put your things to auction, especially if you're planning on retiring, Stock said. Many farmers are looking to expand or improve their operations right now, leading to a high amount of demand that may exceed supply.
Stock said that if you're considering retiring now or soon, be in communication with your tax professional as well as the auction house you want to use. Especially think about getting photos and video footage of your equipment while it's still running in full operation so potential buyers can see it in action. Higher commodity prices also mean higher earning potential, Stock said.
"With $5 corn and $13 beans, if they have some of those commodities to sell, they've got some extra income," Stock said. "There's a lot of revenue shares on these farm leases anymore, where it's either driven by yield production or it's driven by price per bushel, so ... now's a great time to have a farm machinery sale when everybody's got the income potential to expand their operation."
BigIron also has local representatives all over the country that will come right out to your home to talk with you about auctioning your items. He said if there's any health issues that come up, they can also speed up the retirement process for you.