SUCCESSFUL LAND SALE: NORTHERN IOWA ESTATE AVERAGES $12,900 PER ACRE

John Cowin has a rule of thumb about land auctions: the quicker the auction, the higher the selling price. 

By that measure, the five-tract, 592-acre estate sale his firm – Central States Real Estate – had August 17 in Kossuth and Winnebago counties in northern Iowa was a good one. From the beginning of announcements to the time the gavel fell was 45 minutes. The result: $7.63 million in total, for an average $12,889 per acre.

What made this sale unique is that four tracts made up one contiguous property totaling 441.2 acres. That property was made up of Tracts 1-4, straddling the Kossuth and Winnebago county line just west of Buffalo Center.

“A tract that size selling at auction is very rare,” Cowin said after the sale. 

The sale method featured all five tracts individually. Tracts 1-4 sold at buyer’s choice (one tract or any combination of the four), and Tract 5 individually. All the land was available to farm beginning the 2022 crop year.

Here’s how the sale went:

• Tract 1: 69 acres, with mostly Harps, Clarion, and Harcot soils. There are 65.1 acres of tillable property with 2.4 acres of Conservation Reserve Program (CRP) paying $184.50 per acre through 2028. The farm has a Corn Suitability Rating (CSR) 2 of 61.2. It sold separately for $565,800 ($8,200 per acre) to a farmer.
• Tract 2: 127 acres, with 123 tillable, featuring Nicollet, Canisteo, Clarion, and Webster soils and a CSR2 of 82.3. There is 6.5 acres of CRP, paying $184.51 through 2028. 
• Tract 3: 103 acres, with 98 acres tillable and the rest in roads. The property has a CSR2 of 79.94 and features Harps, Webster, and Nicollet soils. 
• Tract 4: 141 acres, with 139.45 tillable (including 6.2 acres of CRP paying $203.97 through 2028) and 1.76 acres of roads. The CSR2 rating is 74.8. Soils include Webster, Okoboji, and Canisteo.

Tracts 1-4 sold as one 370-acre unit for $13,000 per acre. A local landowner/investor bought these properties. 

• Tract 5: located southwest of the rest of the property, this unit has 151 acres, 149 of which are tillable. Soil types are Canisteo, Clarion, and Nicollet and the CSR2 is 84.1. It sold for $2.144 million, or $14,200 per acre. A local farmer bought Tract 5.

The atmosphere was energetic, with five or six active bidders on each property. A local lender served lunch to about 70 people.

AUCTION COMMENTARY

Cowin says land prices are on the rise, due to high commodity prices and the 2020-21 CFAP money. 

“There are a lot of guys with pent up cash and money to spend,” he says. 

Since January 1, 24 farms have sold in Kossuth County, Cowin says. They’ve brought an average of $157.74 per CSR 2 point. In 2020, the average selling price was $105.42 per CSR2 point, he says. That return is driving more people to sell farmland. For instance, Central States Real Estate has another land sale Thursday, and three more next week.  

“When you start getting $12,000 to 15,000 per acre, a lot of people decide it’s a good time to get out. Markets are up, interest rates are still low, and there is some unknown about President Biden’s tax plan,” Cowin says. 

Interestingly, most land transactions in 2020 were private treaty. This year, sellers are returning to the auction method, he adds. “If you want to know the market value of a piece of property on a given day, an auction is the way to find out.” 

WINNEBAGO COUNTY FARM FACTS

In 2020, Winnebago County led Iowa’s corn yield, with an average of 208 bushels per acre. Soybean yields were 59.7 bushels per acre. The average cash rent paid in the county is $224 per acre, with higher quality land fetching $250 per acre, according to Iowa State University data.