How to Buy Land at Auction: A Step-by-Step Guide

[00:00:08.140] - Chris Griffin
Welcome to Back to your Roots, a podcast that provides insight into all things farming, financing, and farm life, guiding you Back to your Roots. Thanks for joining us today on Back to your Roots. I'm your host, Chris Griffin.

[00:00:20.670] - Jordan Turnage
Hey, guys. I'm Jordan Turnage. As always, thank you so much for listening to us. Today, we've got Mr. Michael Harris. He's the owner of Harris Real Estate & Auction. He's a staple in Mayfield and Graves County Community for years now. It's a multi-generational company. We thank you so much for coming on, Michael. Thank you for listening to us.

[00:00:37.060] - Michael Harris
Hey, I appreciate you guys having me today, and I look forward to the interview and getting some information out there to the public.

[00:00:43.270] - Jordan Turnage
Yes, sir. Hey, so we just kinda touched there real quick. You're a multi-generational company. Just give us a little bit of your heritage behind Harris Auction with your family.

[00:00:53.550] - Michael Harris
Yeah, my family goes back four generations. Currently, I'm the four-generation auctioneer and real estate broker in the family. My great grandfather started in 1930 in a little town called Lowes, Kentucky, in North Graves County. Paul Wilkerson was the founder. Then my dad and my uncle took over years later as the second, third generation. Then now we've developed that into moving to our Mayfield office many years ago, and we're going to continue the legacy we hope to a fifth generation.

[00:01:22.970] - Jordan Turnage
I won't say so. You think your great granddad probably didn't get to see the first load of dirt that was brought into Western Kentucky, but he did get to help put it up for sale, right?

[00:01:31.230] - Michael Harris
He tried. That's right. He absolutely did.

[00:01:33.880] - Chris Griffin
I always joke because if you've driven around Western Kentucky and seen a piece of property up for auction, I would say 99% of the time it's probably got a Harris Real estate auction sign in front of it. I figured that out pretty quick working here. I've been to a few of your auctions, too, and I always joke. I said, you can't miss them because they're going to be about 15 red shirts running around, and they're going to take good care of you. It's run like a well-earned machine, the few I've been to. That's always appreciated. My dad was an auctioneer, and he didn't do land auctions, but I did a lot of personal property auctions and stuff. I remember holding up stuff as a kid and taking bids. So brought back a lot of good memories.

[00:02:06.070] - Michael Harris
I was right there with you. We did the small stuff. We do the small stuff still today. And, of course, land auctions and residential and waterfront properties. But yeah, I did the same thing. I held that item up and stand on top of a trailer while they sold them and when I'm five years old. So I get it completely right in the same shoes you were in.

[00:02:26.030] - Chris Griffin
Oh, yeah. My brother, I still joke about that today. So I'll talk about how many signs I see all over Western Kentucky. I know you look on your website, it's not just Western Kentucky, it's pretty much the four-state area. You're kinda all over. But about how many auctions do you average a year? Of those, how much of those are just your bare dirt land type farm auctions, you think?

[00:02:44.880] - Michael Harris
So annually, we're going to conduct about 110 to 125 auctions a year. It's going to be a mix bag of real estate and divide it up in maybe commercial farmland, timberland. Then you got your waterfront, residential properties as well. Ag land is probably going to be a 60 to 65% of what we do annually. And then the residential and waterfront would be second and third.

[00:03:11.960] - Chris Griffin
Okay.

[00:03:12.230] - Jordan Turnage
How far out is your territory? Just so the listeners now?

[00:03:15.580] - Michael Harris
Yeah. I'm licensed in 10 states. Just like I told somebody the other day, we're currently looking at an auction in California on an agriculture land track. I've got staff and licensed realtors and auctioneers that are reaching further and further all the time. Anywhere you can hear us at, we basically can conduct an auction in your territory. We're willing to travel and help those because we like to bring our system that we have in place to those areas, we think sometimes our system and the way that we operate, and we'll go into that, I think a little later on here about multiple multipar and multitrack combinations is very intriguing to the families that we serve.

[00:03:58.500] - Chris Griffin
Yeah.

[00:03:58.720] - Chris Griffin
And I witnessed that firsthand. I was at an auction. It's actually one that you hosted off-site here in Paduca at a central location. It was really interesting to see there was about seven or eight tracks and how that all shook in. I definitely think for that seller, you were able to get maximized the value for them, which is obviously the ultimate goal and what you want for them. It was pretty neat to see.

[00:04:19.680] - Michael Harris
Yes, sir. Absolutely. It's a system that helps the sellers and it helps the buyers. Buyers can compete, and we'll go in that, I'm sure, here in a little bit. But buyers compete with the buyers that are wanting all the property, and that makes a big difference for the bottom line for your seller.

[00:04:33.800] - Chris Griffin
Yeah, for sure.

[00:04:34.450] - Jordan Turnage
For sure. So let's just deep dive into that real quick. So, let's talk about the process for someone that's wanting to purchase land or home at auction. Starting with getting the pre-approval and navigating through the buyer's premium. Can you just give us that first 30,000-foot view of what it's like for folks to get started in looking to purchase land through auctions?

[00:04:54.380] - Michael Harris
Yeah, the process is no different in auction versus real estate listings, as I tell them all the time. I'm a realtor. We do listings inside our real estate company as well as the auctions. Our auctions are the bigger portion of what we do. But you're going to go through the same process. You need to call your lender, call River Valley AgCredit, and talk to your lender and get the plan up front, get prepared to put your deposit down the day of the auction, and then the transaction is going to flow like any other real estate transaction. The lender, we're going to go back to them with the contract, and then the lender will get it to the appraisers and then to the closing table. I mean, it's really that simple. It's just a three or four step process. But preparation prior to the sale day is key. Make sure to touch base with that lender.

[00:05:45.190] - Chris Griffin
Well, the place I came from before, I didn't really do any type of auctions. But when I came here, you get a lot of people that would call you. You have auction schedule for Friday, or Saturday, and they're calling you Friday in the afternoon at three o'clock, or before you walk out the door. But they've known about the auction in three weeks. I try to tell people, I'm like, hey, if you know you got auction, come up and you want to get pre-qualified, give me some time. Most time, I've got enough. I've got a guy right now that just bought one at auction and walking them through that process, the buyer's premium, what it looks like on the day of the auction, deposit, understanding the terms. That's the biggest thing, I think, when you show up just being prepared, like you said, and that makes your job a little bit easier. It makes them a little more confident when they're making their offer, making some bids. I love the fact when you say, go talk to your lender, because that's really the first step, if you're getting ready to borrow some money. But I feel like people forget that first step sometimes and get a little ahead of themselves.

[00:06:35.870] - Jordan Turnage
Can you get our listeners a understanding of what you mean by buyer's premium? Because there are auctions that have buyer's premiums and some that and I just wanted to get your two cents on that.

[00:06:48.960] - Michael Harris
So the buyer premium has been used for many, many years. And honestly, it's probably 98% used in all auctions anymore throughout the country when you go nationwide and look at what their process is. The buyer's premium is the seller's money. A lot of folks always have it written in stone that, well, that's the commission to the auctioneer or the commission to the real estate broker. That's not true. That is the seller's money. Then our terms are negotiated on our contract when we listed the property. Sometimes, yes, the buyer premium is our money. Sometimes there's negotiations that we may be taking 60% 70% of that buyer premium. But the buyer premium was instrumental in offsetting the cost of the seller. So, the seller may have advertising cost, and that may be worked in the buyer premium. There's just the negations of how that goes down is between the auctioneer and the seller. So that's where you're at.

[00:07:51.980] - Chris Griffin
That's the best explanation I've heard of that because I've heard different explanations and that makes more sense what that actually covers.

[00:07:59.230] - Michael Harris
Yeah, The other side of it is the buyer premium. The buyer premium, again, is covered. That's a KRS. That's a Kentucky statute that the buyer premium has to be part of the purchase price. You bid $100,000 at the auction, then let's say it's a 10% buyer premium add on top. That's $110,000 purchase price. That's what you see on the deed when you go to closing. Then it's worked from a closing statement from that $110,000 because the state, the Kentucky state The Kentucky State is looking for the tax revenue of the 110, they're not going to leave the $10,000 laying off to the side. That's where that gets pushed over to be the seller's money. Then again, it's just a negotiation of what the auctioneer and the Harris Real Estate and Auction has done on the buyer premium for our commission.

[00:08:50.200] - Jordan Turnage
And generally, with those contracts that we've got set up with the buyer's contract, those are 30 to 45 day contracts as well.

[00:08:58.650] - Jordan Turnage
I just want to make-

[00:08:59.280] - Michael Harris
Yes, we Typically, we put 30 days. Sometimes we'll have a range of 30 to 40 days. As we all know, everything doesn't work out as perfect as it used to. It's nothing against anybody out there. It's just the timeline and the steps that lenders have to go through to get everything completed takes a little longer than it once did. Hey, I remember, I remember I've been in this long enough that I remember some things in 10 or 15 days back 20, 25 years ago. But that's just not it works anymore, and it's probably a better process today.

[00:09:32.940] - Chris Griffin
When you're talking to a potential buyer, if you had some words of advice, if they're coming to their first auction, never really been to one, what's some words of advice, what they're going to expect, some questions maybe that they need to answer before they get there so they're well-prepared and ready to make a solid bid.

[00:09:49.820] - Jordan Turnage
Yeah, because when it takes off, it's a process.

[00:09:52.110] - Chris Griffin
I've been a part of that. I've had a couple of buyers that it was really their first auction, and you could tell it's not an overwhelming process from what you all do, but when you've never been to one, it is still an eye-opening situation. Especially when you've got people there that go to multiple ones a month and year, and they're just used to the lingo and what that fast-paced movement. If you could just give us some advice to the listeners on if they're going to their first auction and what to expect and maybe how to be prepared for that.

[00:10:18.090] - Michael Harris
Well, I don't think it matters if you're a seasoned veteran or if you're first time. All bidders are typically nervous when they're there. So, the nerves are going to be on against you at some point, I guess. But the advice that I give is, number one, don't be afraid to talk to me or my staff or call us a week ahead. If you want to come in and sit down and let's do a chart and we go through what the auction process looks like. I always tell everybody, I want you to be as educated as possible when you come to a multi-par land auction and not be really nervous and upset that. Well, this isn't going the way I thought it was. They want to be able to bid on something. That said, always just reach out to us. That'd be the secret to the sauce, as you would say, in cooking. So, reach out to us. Let us know what we can help you with. The other thing is the multipar auction is not super-fast paced. So, it's probably going to take what? An hour, hour and a half sometimes to sell a farmland in multiple tracks.

[00:11:21.410] - Michael Harris
So we're able to work with you while you're there. But do not be scared to reach out and say, hey, can you just explain this to me? Or, here is what I'm wanting to buy. And then the other part of that is, is I highly recommend you to create a chart on your own, write down the tracks that you're wanting. You want to bid on the largest combination of tracks that you want and then let's say you work backwards from that. So, what I mean by that for your listeners to hear is, if you wanted five tracks of a farm that had 10 tracks, then make sure to do your combinations of the five tracks. Put the five tracks in a combo. Well, let's say you get out of the money. It's more money than you want to spend on the five, then you can always come back, well, we could settle four tracks or three tracks in a combo. And so that's part of the planning process of, hey, start up here with the most tracks and then work your way backwards from that.

[00:12:11.020] - Chris Griffin
Okay. That makes sense. Almost like a big piece of the pie and then take those pieces out and hopefully still get what you want and what you're prepared for. So, you're saying you're taking the time. I think from a seller's perspective, obviously, they're paying you to auction off that piece of property, but you're taking the time and then meet with the buyers, potential buyers, which in turn, honestly makes them more educated Hopefully, we'll get, and I think would eventually lead to probably them spending the maximum amount of money because they feel comfortable, right? And they understand property that they're buying. From a seller's perspective, they're getting a lot of value out of you as an auctioneer because you're taking time to meet with both the buyer and the seller. I think that's important for the listeners to hear. Yeah, it's not just marketing. It's that value. Yeah, it's that value-added situation.

[00:12:52.570] - Jordan Turnage
Let's dive into the multiple tracks because that's something here that I feel like...

[00:12:59.030] - Jordan Turnage
We've We touched on it a little bit, but that's always the fun part to me, going to a land auction, is seeing us break down those tracks individually and then getting combinations, groups, all that stuff. If you just would, Michael, just talk to us a little bit about how all that works, too.

[00:13:16.920] - Michael Harris
When we approach a large property and determine how to divide it up, first we survey it out and then we decide where are the best tracks and what makes sense that somebody may want to build a residential home or a small any farm, and then it still give all the opportunities for you to bid on all the property. So multipar is set up for you to be able to bid on any combination at any given time. It's basically the easiest way to explain it. So You can be bidding on, as we said a while ago, we'll use a 10 total track. You've been bidding on five tracks. Well, at any time that you decide you want to put seven tracks together and add your five into the other two, make seven, the seven tracks, you can do that. Or if you decide, hey, I don't want to go any further than $300,000 on these five tracks and the bids at 350, you can come back and say, well, what's it take for us to get tracks one, two, and three in a combo? And that multipar system, it's just a calculation of what it takes to get the highest price to put tracks one, two, and three.

[00:14:20.850] - Michael Harris
Let's say if you go back to that one, two, and three tracks, and what does it take to buy those, but also shift four and five back into either a combination or single tracks that they previously were in prior to this last bid. That may sound a little confusing. It's not. It's really simple. And when you see it on our marker boards, as you all seen, our marker boards up there, it makes sense. So we make sure it's very, very open and easy to see what's taking place with our marker boards. So use $350,000 on that board and you can decide on what you want to do. But our guys will come back there to you and they're going to bring tracks one, two, and three, and they may be able to say, okay, for these two tracks, you're going to be able to bid $285,000. And I'm just throwing numbers out here, but you're going to be able to bid 285. But again, everybody always asks me, well, what happens to four and five? Well, four and five over here earlier on was at 50,000 a piece. So let's say they just for talk, and those tracks four and five go back at 50,000 a piece to the previous bidder.

[00:15:19.900] - Michael Harris
Well, that's 100,000. When you add that 100,000 to this 285 that I just spoke about, that's 385,000. So, it exceeds that $350,000 bid. No That's a little bit off in the weeds, probably listening on the podcast, but when you see it written down, it really makes sense. It brings it all back together.

[00:15:39.620] - Jordan Turnage
To just help them understand, I feel like in that situation, it helps to explain folks that not one person can win the auction. It all doesn't always just come down to one person. Like you said, with those combinations, those people that are involved in tracks one, two, and three, if we come to the decision that that's the highest that's going to tap out, you got one person at four, one person at five. If everybody's happy, there is my... I had a great uncle that did auctions, too, and his big thing was always saying, is anybody happy, is anybody mad? Before he would sell a farm, shout out to my cousin Bob Turnage on that one. But you could have in that situation, you'd have three different people that would all be in certain sections of the farm, and all that money goes back to the seller of the way, but then you're just going to have three individual closings. I will say that, but a lot of the auctions we go to can be cut down that way, but it usually comes into somebody buying the entire tracks. But you can have situations where people can, individuals buy multiple tracks on their own, that satisfy everybody at the auction.

[00:16:41.490] - Michael Harris
Absolutely. Just a couple of weeks ago, over in Almo near Murray. I mean, that 259 acres we sold over there, it never was combined all in one track. It was a big, nice farmland track, but we had a lot of pushing and pulling. I call it pushing and pulling on the tracks where you buy, one guy, all of a sudden, he's got three tracks. Next thing you know, he doesn't have the three. I had a lot of single-track bidders, and we ended up having that, probably five different buyers at the end of the day out of eight tracks.

[00:17:13.090] - Chris Griffin
Yeah.

[00:17:13.550] - Michael Harris
Well, it's one of the reasons that I want to make more tracks than less tracks. I know some people are like, Why you cut that up in so many tracks? Well, on the day of the auction, I can't cut up more tracks for somebody that was like, Well, that didn't reach out and said, I really like to have this, or I'd really like to have 10 acres over here. I can't do that the day of the auction as easy as I can prior to the auction and preparing. So I can give them more choices and they can make more combinations. Certain times of the season, and it's not like the yearly season, but the health of the economy and all that, there's times that we have seen that a farm in some years would never sell altogether. And then there's times that when you don't have as many house track buyers may be bidding and you have more farm buyers, that's when you see the farms stay together. Or if it's a high-end agriculture track that has good building sites, then you got a blend of everybody. I would say, historically, the farming community is going to buy that track if it's got good dirt, class one soil or something to that degree.

[00:18:20.910] - Chris Griffin
Well, you're talking about the blend it. I've ran into that a few times here in McCracken some properties that one of them, you auctioned off. You could tell there was a wide variety of buyers there. There were consumer buyers wanting to buy a track to build a home on. You had farmers there, you had developers there that may turn that into a subdivision or whatever. It definitely is interesting because every one of those potential buyers, they all have different price points on what they're willing to pay for acre. They're all fighting against each other a little bit. Then you hit on a little bit about different times of the year. That was a question that we skipped over earlier, but going in that a little bit deeper about, is there a time that you prefer to push auctions a little bit more? Land auctions, or does it really matter? Is it really just a fit to the seller on when they need to sell it, when they need the money? Because I know sometimes you run into estates and people passing away and things like that. So, give us some advice on that and what you feel like is the best option.

[00:19:12.590] - Michael Harris
Yeah, the timing of the year, I don't really know. I think demands year-round. I think you got to go back. I always talk a lot about the stock market to folks. The stock market's year-around. There is definitely certain months that are a little less, maybe a sell-off month. And then there's buying months, right? And land is the same thing. I mean, land in bid at auction is like a daily stock market, people bidding on Microsoft or Meta as a piece of land. I mean, so you're bidding on these tracks, and I try to compare that for everybody's mindset that you can do this year-round, that it doesn't make a whole lot of difference when you're going to have that auction sale because everybody wakes up wanting that piece of ground. There's somebody always out there looking to buy your stock. If your stock that day is a land track, so I hope I don't confuse anybody with that, but that's how I look in the mindset of it. Crop land tracks, I do like a maybe early September to as late as June 1. I like to go ahead and try to sell those to where your farming community can potentially have the rights for that coming year.

[00:20:23.750] - Michael Harris
I do think that's something that you can look at. Residential properties, commercial, waterfronts, I think you can sell them year-round at any time, and I think you can sell the farmland at any time year-round. It's just if it's heavy crop land, we do like that range of September to June.

[00:20:39.400] - Jordan Turnage
Going off of you talking about the market, seeing how things changed over the past few years, what do you see in your crystal ball you keep there at the office? What do you see in the future as far as... Do you see land prices holding? Do you see them appreciating, or do you see a trend where we could possibly start seeing a downward trend Because I know average costs of farmland right now are pretty much whatever you want to give. When folks ask me, what's a piece of property worth to you? I would say, well, it depends on how much you want to give for it because what it's worth versus what you're willing to give or two different things right now. It's going back like, what do you see as far as trends going forward?

[00:21:17.760] - Michael Harris
And I agree. It's all about what you're willing to give. And I guess some people would say how much money you're willing to spend in total for that property is going to set the market. If you have two guys or four guys or four ladies and gentlemen all trying to bid and buy on these properties that have the assets and maybe they touch this property, that drives the market, too. But the trend that I don't see the land's coming down. We're not making any more of it as you hear that all the time. There's only so much land out there, and there's not a lot of turn on this ground. You're not seeing as many land auctions, probably, or land sales as you did 25, 30 years ago. I feel like more people bought and sold, but some are holding on because I think because of agriculture rent is another deal that they can make a little bit of return on it. And then some want to go ahead and sell and put that money somewhere else working. The trend to me is going to stay... We may have a deal, but I don't see any depression type land values falling back anytime soon because we've been in just a good trend up for many, many years, and there's a lot of stability behind what we have.

[00:22:32.120] - Michael Harris
And the investment crowd that you have out there that may get out of the stock market, sometimes you see that. I notice my buyers that are moving money out of the market that they've made that they need to reallocate their portfolio. Currently, I'm working with one right now. He's doing that very thing. He's buying land and taking some off the table in the stock market. It's very interesting to see that. We deal with a lot.

[00:22:59.710] - Chris Griffin
It just diversifies your financial portfolio.

[00:23:02.970] - Chris Griffin
You're talking about selling tracks as a piece of stock. I mean, it's the same deal. You could keep it in real estate, you can keep it in the market. You just got to know when you lock it up in the land, it's just not as readily accessible a lot times, but it's got a pretty good appreciating value, typically, if you hold onto it long enough.

[00:23:19.730] - Michael Harris
To your point on that, that's another deal that a lot of folks don't pay attention to. They want to see that income off of that land. A lot of times somebody else say, well, I can only get 2% off the land. But what you have to be paying attention to in buying a track of land is if you go back 10 years ago and you divide the appreciation of the land into a percentage, then that's your true annual percentage. You got to be able to blend that in. So did that land appreciate 5% a year over the last 10 years, and you got 2% return for the farming That's a 7% return. I mean, that's where you got to pay attention to some of that.

[00:24:05.000] - Chris Griffin
Yeah. And that's where I think sometimes, like you said, people don't look at the full picture on that. And when you do, if you're looking at the farming rights and you're looking at the true appreciation, year over year on a piece of real estate, especially with land prices per acre increasing over the last two or three years, and obviously less and less of it available, it's a good investment, especially if you want to diversify your financial portfolio. So, land never a bad option, in my opinion.

[00:24:32.080] - Michael Harris
But we agree.

[00:24:33.190] - Michael Harris
We here at Harris Real Estat and Auction. We're going to agree.

[00:24:35.520] - Chris Griffin
Me too. We can lend you money all day long.

[00:24:38.030] - Michael Harris
That's right.

[00:24:38.460] - Chris Griffin
Kind of piggyback off that, what factors you see influence land prices the most? And that could be recently, that could be over your time of doing auctions, somebody who sees it every day. What's your opinion there and what have you seen?

[00:24:50.710] - Michael Harris
Well, the land prices, what influences the most is, I think, from the capital that somebody has in their pocket. And then does that piece of property adjoin something they have? They may tell that seller two months ago that they're not interested in buying. And then we'll wake up on the morning of the sale and we'll find out that that's our buyer at the end of the day, right? So that's the biggest thing I see is the influence of who joins your property? Is it in a demanding pocket of the area? But there's always somebody out there looking for that piece of property. More so, I think there's more buyers in the market over the last 20 years and probably was in the previous 20. I don't have statistics on that, just for say, but you can just tell that there's more participation from maybe a smaller track buyer that used to not be there all the time.

[00:25:39.360] - Chris Griffin
Yeah, that makes sense.

[00:25:40.750] - Jordan Turnage
Let's go the opposite side of the coin here. Let's talk about the advantages and the steps into selling property through auctions. Michael, can you walk us through what somebody would want to... If they came to you, what would be the situation, the steps that you would advise them to do?

[00:25:58.040] - Michael Harris
So, I look at the properties. As a matter of fact, I've been to two appointments prior to this interview this morning, and one was, do we auction, or do we put it in real estate? For where it's located and the condition and market in that area, it was my opinion that we were listing that. We listed that property this morning, and we're going to try it for two or three months like that. There's one good thing about our company versus others that don't have an auction here on their staff is we can turn that property right over to an auction when our seller is ready. So he wasn't in a great big hurry. That was one of the biggest things. If he's not in a hurry, I recommend doing a listing with him until we have the auction if that's what it comes to. I thought maybe for his location, where the property is at, some of the hurdles that we may have with that property, it would probably be better to be sold in our real estate portion of the company. On the other hand, I just went to another property here in Paducah, and it's an estate, and the family is ready to move that piece of property.

[00:26:58.290] - Michael Harris
They don't want to wait any longer. Actually, they have had it listed for many months, and they need it to be sold to final out the estate. I look at all factors, and if I don't think a property fits the mold for an auction, I'm going I turn that down. We go on a lot more auction appointments than folks think, and we turn auctions down. A lot of times, folks think that, well, you just go out here and sign every auction you go to, and that's not true. I vet it, and if I don't think it works for an auction process. The biggest thing that I'm most concerned about is my family and my seller, whether it's an individual or multiple family members, is I want them to be happy and satisfied at the end of the deal. I do not want them to have a new feeling toward the auction process or toward Harris Real Estate and Auction at the end and say, hey, you led me down the wrong road. That's what I strive to make sure that we don't have that. Can we hit the mark every time? No, it's an in a notorious bidding process.

[00:28:01.740] - Michael Harris
So, I can't, as I told the lady a while ago that we signed up her farm, I said, I cannot twist the public's arm to bid.

[00:28:10.730] - Chris Griffin
Yeah. Well, like you said, I mean, sometimes some of those things are just out of your control. You could be You guys have obviously had a ton of success, and you advertise and do a great job at the auction. But like you said, it could be a day where the weather's bad, not as many people show up, or for some reason, they don't bid as much as you thought they would. And I know sometimes that's... My dad, I know when he was doing it, it's always... He wanted them to be happy, but at the end of the day, there's only so much you can do as an auctioneer, too. I think that leads into the next thing. You hear a lot about absolute auctions versus the regular type of auction that you would do. Can you explain to the listeners? I'm pretty familiar with it because my dad did a lot of absolute auctions when that became really popular for a while. Can you explain to the listeners what the difference is in the two, the disadvantages and advantages of both, and what that looks like for the seller?

[00:28:55.770] - Michael Harris
Yeah.

[00:28:55.940] - Michael Harris
An absolute auction means that the current owner is going sell the property regardless of the price with no fraudulent bids as it states under the law of Kentucky. I now use Kentucky law, and all states are the same. But that's basically what you have. It just is what it is. It's going to sell regardless of the price. A reserve means that that seller can say yes or no to the top and final bid. Now, advantages for absolute auction, I truly believe that it'll get you your best and highest price. I've seen that happen. Time and time again, it creates the urgency. They know it's selling that day, and your buyers have went out and got all their financing in order and prepared to make that bid the day of the sale, we hope, right?

[00:29:43.360] - Chris Griffin
Yeah.

[00:29:43.900] - Michael Harris
So reserve, sometimes it's more challenging for the auctioneer, in my opinion, than it is for the seller or the buyers. But I have more buyers and more people that will come forward going, well, what's it going to take to buy it? Well, I really don't know because I tell my seller sellers, do not tell me what you want for this property.

[00:30:02.070] - Michael Harris
I don't want to know. I just need... If we decide, and we are a 98% absolute auction company, I would say, statistically, but if we decide to take an auction this reserve, I really don't want to know what their price point is. I just assume the public come together, make the bids, and let the market show what your property is worth. Then we're going to have to have the discussion of, here is all the bids. What do you, Mr. Seller, want to do now? I think another disadvantage is the buyers get out there talking about it and say, well, Mr. Seller, he priced that property for $30,000 an acre. The day after the sale, you get that phone call. Somebody calls and says, Well, what did that bring? And you say, well, it brought $15,000 an acre. And they go, well did they sell it? Yes, it sold. Well, I'd have came if I'd known that. That's the biggest disadvantage that I see. Now, whether that Mr. Buyer would have showed up or if it's just that phone call that you hear. But you get some reservation for a reserve auction from a buyer to even show up because they don't believe he's going to sell.

[00:31:08.700] - Chris Griffin
Yeah, that makes sense. It makes sense.

[00:31:10.920] - Jordan Turnage
It would have, could have, should have family.

[00:31:12.260] - Chris Griffin
Yeah.

[00:31:12.740] - Chris Griffin
That's right. I would have done that if I'd been there. I'm like, Well, I'm sure you would.

[00:31:18.100] - Michael Harris
That's right. Yeah, that's right.

[00:31:19.690] - Chris Griffin
It's always amazing.

[00:31:20.920] - Jordan Turnage
We've got some challenges. We've talked about that stuff. Before we cut you loose, Michael, I just want to know, do you have any good auction stories you give us that you go and ran into lately?

[00:31:31.770] - Michael Harris
Oh, me. Let's see. You got me off guard on that one. I don't know. Good auction stories. The good ones are whenever your family, when you sell a piece of ground, they come up to you and tell you, you knocked it out of the park. It brought $2,000 more an acre than I ever thought of. That wasn't too long ago. That makes us feel really good. I don't know. There's always some fun stuff out there. It's like a gentleman. We had an auction in Nashville last year. This is a personal property. It's back to that, holding up those items in the deal. The family was all good with each other, but they all were bidding on stuff that they wanted from grandma and grandpa's house. A corner hutch brought just a little over $10,000. That was just because it was grandma and grandpa's, and the family was just having fun bidding against each other.

[00:32:27.480] - Chris Griffin
That's hilarious.

[00:32:28.000] - Michael Harris
You can run into that in the personal property. But most time you're not going to find that in the real estate. But, hey, in the estate situation, a lot of people want to know about the law, and I love talking about the law as much as possible.

[00:32:39.680] - Michael Harris
I'm no super expert on it, but if it's an estate, then you got any of those areas can bid and buy at an auction just the same. So that's why you get to see some of that fun stuff every now and then.

[00:32:52.480] - Chris Griffin
No doubt.

[00:32:53.070] - Chris Griffin
I have no doubt you've seen some cordial families and ones that's not so cordial. So, I know you've probably haven't seen it all.

[00:33:01.120] - Michael Harris
That can happen. That can happen. But anyway, we've had a great time over the course of 95 years of our family being in the business, and we hope to continue that tradition on.

[00:33:13.940] - Jordan Turnage
Yes, sir. Well, I think that's the best way to wrap this up. Michael, we thank you so much for your time and taking time out of this with your busy schedule to lighten on land options and giving us, our listeners, some insight on how to be successful with purchasing and selling their land at auction. We wish you all the best. We thank you for always giving us a shout out when we come to the auctions. Anything we need to help each other is what we're here for, and we appreciate you.

[00:33:38.160] - Chris Griffin
Yeah. Thanks so much, Michael.

[00:33:39.310] - Michael Harris
We appreciate it. And all my staff at Harris Real Estate & Auction really appreciate working with you guys throughout the year and for many, many years, we've been going back and forth getting deals closed. We look forward to many more. All your listeners can come out to the... Go to harrisauctions.com and look at all the auctions coming up and pick out a track they're looking to buy and get some lending at River Valley AgCredit.

[00:34:06.090] - Chris Griffin
I love it. Thank you.

[00:34:07.390] - Jordan Turnage
That's right.

[00:34:07.690] - Jordan Turnage
Get your number and come see you, then come see us.

[00:34:10.030] - Chris Griffin
Yeah, that's right.

[00:34:10.640] - Michael Harris
That's right. That is right. Well, Jordan, Chris thank you all very much for the opportunity today, and we look forward to seeing you soon at an auction.

[00:34:18.020] - Jordan Turnage
Yes, sir.

[00:34:18.540] - Chris Griffin
For sure.

[00:34:19.210] - Jordan Turnage
Well, guys and gals, thank you so much for listening to us today at the Back to your Roots podcast. For Chris, I'm Jordan. Thanks for listening.

[00:34:25.580] - Chris Griffin
Thanks for tuning in to Back to your Roots, where we dish the dirt on all things AG. Be sure to never miss an episode by following and subscribing. While there, leave us a review about what you want to hear next. Stay in the know between episodes by following us on Facebook, Instagram, Twitter, LinkedIn, and TikTok. For more resources, go to our website at rivervalleyagcredit.com.