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Senior Contributor

'Spite effect' & high land sales

So, I saw some info from Murray Wise over in Champaign, IL, about some of the emotions behind these crazy land prices we've been seeing at auctions over the last few months. The "spite effect" has a lot to do with some, while growing regulatory pressures on livestock producers have a lot to do with others.

 

So, anybody have examples or stories of things like the "spite effect" creating some crazy prices and circumstances at land auctions? 

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22 Replies
Senior Advisor

Re: 'Spite effect' & high land sales

I never saw the need to bid way too much for something just to prove a point. I always pay too much for land. It's only afterwards that I realize it was a wise decision.

 

However,  those with few financial limits can do things because they want to and the wisdom of the transaction is a moot point.

 

 

 

 

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Honored Advisor

Re: 'Spite effect' & high land sales

Yes, spite happens.  There was a younger fellow that was bidding at a recent auction on, I think a 40 or 60 and was "in" at a little over $7,000.  The auctioneer took a "short break" and a "new fire" started.  The neighborhood BTO added another $2,000/a to the bidding, now the young guy bought in by the skin of his teeth.  Now just a little background on the BTO, it`s an outfit that only a mother could love, they are BTO`s and if you`re too dumb to know it they`ll be sure and tell you.  The young guy was all giddy after his new purchase, one of the tribesmen came over and says "Oh, I didn`t really want the farm, I just didn`t want anyone to get a deal.".  Now there are two kinds of people that will read this true story and the one camp will say "That`s too bad how greedy and petty that farmers have gotten!" .  The other camp will say "WHAT DO YOU CARE??? WHY DO YOU HATE THOSE WITH ONE MORE ACRE THAN YOU?? DON`T YOU CARE ABOUT THE GUY SELLING THE FARM, HE GOT $2,000 MORE BECAUSE OF THE BTO!!!  Bigshots are just little shots that keep shooting!".   The way farming has gotten any legal way that you get the most when selling is I supose, fair game.

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Senior Advisor

Re: 'Spite effect' & high land sales

You must have a special need to categorize people in their own special boxes. I see one of my neighbors an exceptional fartmer that has grown his operation though good management and hard work. Plus one might consider some inheritance as another factor.

 

What is it about this fellow that earns my admiration and your disgust?  BTW You may like this fellow as well because he is alikeable sort but there are those that dislike him for what he has done.

 

Do you realize how seldom it is that very good progressive farmers are awarded with our admiration? Most often it is a highly critical bunch that has to take a swing at some GD BTO.

 

Perhaps it is as simple as having a positive attitude versus a negative one. I don't have neighbors that I think ill of. Is there something wrong with me?

 

BTW. I think an auction is a method of selling property and it is usually open to all bidders. Usually grownups will expect the bidders to establish the selling price and no one should criticize anyone that responds to the invitation to bid.

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Honored Advisor

Re: 'Spite effect' & high land sales

Don, the BTO isn`t my neighbor and I don`t hate him.  I applaude the fact that you admire the fartmers in your neighborhood, but I did pretty accurately anticipate the catagory that you`re in.  Anyway, that`s fine the BTO jumped in and run up the auction on the young guy, good for him.  However, what kind of jerk goes up to someone after the auction and say he didn`t really want the land he just wanted to run it up on the other guy.  Jeff asked for examples of "spite" and that gets my vote as being very spitefull.  I agree about auctions finding fair value.

Veteran Advisor

Re: 'Spite effect' & high land sales

Thanks for sharing the story , BA. Some people are just plain mean and vindictive. I may never be the richest farmer in my county, but if people say I raised the nicest kids I will die feeling very wealthy.

 

I know that I have got out of the way more than a couple of times already to let someone else buy  or rent a property that they either needed more or it fit their operation better. What goes around, comes around. Others have done the same for me....I feel very blessed to have good friendships in my commnunity. I doubt that the spiteful ones can say the same.

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Honored Advisor

Re: 'Spite effect' & high land sales

Sounds like some under the table talk- putting some parties in  cahoots during the break - got that price run up on the young guy.    Getting beaten out by someone with more assets happens in life, I guess.  I think some people never bid, because they think they will never win teh war. 

 

It is not at all classy for the BTO, as you have called him, to come up and let the smaller guy know how he screwwed with him for the heck of it.  The outright implication was that he could have bought it if he had wanted to...and, as the example fo that huge operation with over-leveraged dents that you guys posted about a while back shows, that isn't always the case. 

 

I hope the young guy didn't hurt himself in getting this parcel. 

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Senior Advisor

Re: 'Spite effect' & high land sales

A Jerk is a jerk no matter what the circumstances. Would he have bought the land if the little guy didn't raise the bid? Perhaps he wanted the ground but at  his price and not a few dollars more. What he said to the buyer was just a smart ***ed remark and probably just meant to irritate the buyer.

 

The category I am in puzzles me in that I wonder what category that would be. The category that believes in auctions to acheive fair market value on that day and at that time? The category that assumes that all bidders are welcome and invited to bid whether they own one acre or 2000? The category that gives everyone the benefit of the doubt and doesn't beleive that wealth or the lack thereof disqualifies them from being a decent person.

 

So I assume that chap that bought that $20K land in northwest iowa is good businessman and a decent person. I don't automatically assume he is a greedy so and so that is out to screw anyone over. Why you would always look for the worst in someone is beyond me. I don't even look badly on you but I do think you are a bit confused. But otherwise you are probably a fine chap that doesn't like to be challenged.

 

I don't know about spite. Is it spiteful to be determined? I'm going to buy that farm even if it costs me $25K per acre. It's next to me and I always wanted it.

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Honored Advisor

Re: 'Spite effect' & high land sales

The "spite" effect comment has kept me out of this thread so far, but you make some great points Kraft.  The idea that the "inappropriate" comment after a sale is fully the responsibility of the mouth and not the ear stuck with me as I read through this one.  Often we know who the big dogs are at the sale.  What we expect from those folks affects what we hear and how we frame it.  There are no doubt bidders without social skills at every auction.  And money behind a poor response always makes it easier to remember.

In our area we are seeing more and more phone auctions, handled over a month or so, by a real estate broker.-------I would still prefer to see the other bidders.  No matter how bad their social skills or attitude.  At least I know they had to drive to the auction site(or send someone) just like the young bidder did.  The young guy at least has an idea how the bid was determined.

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Veteran Advisor

Re: 'Spite effect' & high land sales

Around here, the highest priced land seems to be the parcels that fall between two well established farms, who have been eyeing it ever since the owner started getting gray hair. 
I would say the attitude of 'gotta have it' drives the prices up more than 'spite' locally.  It is more the 'I need it and if I don't buy it now I'll never get it' than it is 'I don't want so-and-so to own it'.

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