Farmland Realtors in Illinois and Indiana are reporting an abrupt cessation in sales of agricultural property in the midst of the COVID-19 pandemic. In an attempt to ignite sales, some Realtors are now looking toward online sales and sealed bid auctions.

“Since the live sale shutdown, we’ve had two online only auctions which resulted in no sales,” reported Halderman Real Estate and Farm Management, of Wabash, Indiana. “Fear of the unknown played a factor in the prices people were willing to pay as well as their willingness to bid at any price. The sellers were willing to hold their farms until later this year on the chance that prices recover.”

In comparison, during the first quarter of 2020, before restrictions were placed on the large gatherings typical with auctions, Halderman conducted 17 live and online auctions. Sixteen of the 17 auctions resulted in at least partial sales of the acreage, with the remaining sale completed privately at a later date.

Realtors with Ag Exchange, who sell farm property in Illinois and Indiana, are reporting similar results with their post COVID-19 auctions. Ag Exchange is now preparing for its first sealed bid auction, for 19.84 acres in St. Joseph County, Ind.  

“We felt that with the stay at home measure, everyone is distracted and is not purchasing right now. It’s not the best timing to do a live auction, even online. In a controlled setting, we feel more comfortable going forward with a sealed bid,” said Stephanie Spiros, an Ag Exchange farm property specialist who has traded in farm real estate since 1995. 

Ag Exchange has been advertising their May 26 sealed bid auction in trade papers and reaching out to prospective buyers in other ways. Bidders can submit offers to Ag Exchange via USPS or email. 

“I would agree with Halderman that the timing right now, due to the extension of the stay at home orders in Illinois and other conditions, is not right for live auctions,” Spiros said, while adding that farmland values have held fast during the COVID-19 pandemic. “It’s still a good investment. Farmland prices are remaining secure and steady during a volatile stock market.”

In addition, farmers still remain the top buyers of farmland, rather than investors. “I am not noticing or anticipating any shift in that trend,” said Spiros. 

A University of Illinois farm real estate advisor noted that not only have farmland values remained strong during the COVID-19 pandemic, they may add a layer of support to investors. This is according to Bruce Sherrick, director of the U of I TIAA Center for Farmland Research, who offered his observations during the recent Illinois Society of Professional Farm Managers and Rural Appraisers 2020 Land Values Conference, held online. 

“Virtually everything we do in our daily lives is driven by decisions surrounding COVID-19. There’s been massive realignment of economic activity and unprecedented stock market volatility,” Sherrick noted. “The spillover is disrupting demand for commodities. It might push additional demand into real assets.” Falling interest rates add additional appeal to purchases of real assets, such as farmland, he added.

The ISPFMRA confirmed that farmers remain the top buyer of Illinois farmland, with investors, who control just 35 percent of purchases, coming in second. Reasons for increased investment in farmland include a tight supply, historically low interest rates and a history of returns, according to the ISPFMRA. 

The average return on farmland investment from 2000-2019 was nine percent, compared to three-to-six percent from the stock market, Sherrick noted.