Farmland auction question: Financing

[Packard27]

Another amateur farmland question today. Okay, really two questions.

Suppose you go to an Iowa farmland auction and wish to bid on a parcel of land. You eventually have the winning bid.

1. What sort of up front credit credentials does one usually need to produce in order to participate in the bidding?

2. If the person wins, what is the normal or customary time to produce his cash? For example, is the winner expected to write out a six figure check on the day of the auction or is there some sort of grace period to transfer what might be considered for some to be, significant funds?

Thanks again,

Packard

[k-289 · Accepted solution]

Arrangements are usually on the listing - bank letter of credit,  10%-25% down day of sale , non refundable down payment, 30 -60 days to closing --- 

[Packard27]

Thanks!

[sw363535]

Packard,  289's got the Iowa knowledge.

The main point is at a public or private sale, something is being offered for sale.

The point of the auction is price discovery  or even on an advertised offer to sell...... Price is the question and if you agree to it,,,you have a price and have defined what is for sale.  

But your only done with the simple stuff.

Provide some earnest money... ie something to hold the parties to the promise

If you agreed to the price and the description of what's for sale.  The next step is ....... The seller must show clear title either by an insurance companies examination of the record ........ or your(or your legal representatives) examination of the record to determine if the seller is representing ownership accurately and has the right to provide you a clear and unencumbered title.

Anyway you have an opportunity to be sure the seller is or represents the owner.... so you get what your paying for and not a struggle to get your money back.

States vary on the process but generally that is what happens.

[sw363535]

Closing is the actual sale

[k-289]

Title ''  Insurance '' costs are usually split 50-50  ---

[Hobbyfarmer]

Kansas has title "insurance" 

Iowa still has abstracts.

Have gone to four re auctions, never had to do any thing but name and address to get number.

I bought three of them. All out of state. 10 to twenty % down day of sale balance due at closing with delivery of clear title.

Was amazed that a banking outfit was there and all over me to loan me the money after I'd bought it. Do people really go to sales and take high bid without knowing how  or where the rest is going to come?

[k-289]

Abstract  is  still the best - title insurance can be    say    short cut  -  read the policy -  designed for the lending side  -  not necessarily for the purchaser ---  

[sw363535]

Whe you buy you want the land.
Title insurance just gives you back your money.
When they lied about “clear title”. You still loose the ground and the improvements you made and probably forgot to buy more title ins.

[sw363535]

Title ins. Does not clean up the title. It’s expensive to keep or fix up abstracts that have problems.
It just helps sell property.