When the COVID-19 pandemic changed the world in March 2020, the auction business changed too. The global lockdown affected every business — including farm and equipment auctions — and has since shaped the way auctions have, and will continue to be conducted.
To accommodate the traditional busy auction season, many farm auctions made the move to online that spring, joining what was to become the pandemic e-commerce boom.
At the time, the concept wasn’t actually new. Some auction services were already offering live online bidding options for in-person auctions. In fact, Ritchie Bros., Canada’s largest farmland and agricultural equipment auctioneer had already piloted two online timed auctions in 2019.
Read Also
Will investments in defence benefit Canadian agriculture?
A bump in Canada’s NATO spending commitments could lead to infrastructure investments that would benefit rural areas
“We expected to move to offering timed auctions for larger equipment within five to 10 years, and instead, decided within five days of the onset of the pandemic to move our entire business online,” says Jordan Clarke, vice-president, Canada Prairies with Ritchie Bros. Auctioneers. “And we haven’t looked back.”
Clarke says Ritchie Bros. conducted 71 farm auctions within the first six weeks of the pandemic and the success was overwhelming.
“Customers only get one chance to hold an auction, and for many, the outcome determines their retirement funds,” says Clarke, who was grateful for the confidence their customers had in the company throughout the early days of transitioning to 100 per cent online auctions.
[RELATED] New ways to buy and sell farmland
At earlier sales that offered a combination of onsite and online participants, the company was averaging 1,500 bidders per auction. With the move to timed auctions, that number jumped to 3,500.
The new platform offers online bidding for up to three days, and it has proved a game changer for sellers and buyers. Importantly, Clarke believes, the whole process is also a more enjoyable experience for everyone.
In fact, while traditional in-person auctions still serve an important social function in rural communities, people are finding new ways to interact, meaning in-person attendance at auctions has dropped over the years. Says Clarke: “The benefits of the new online options are outweighing the traditional process.”
Extending the benefits
Brothers Glenn and Cliff Mikula farmed 4,400 acres with their wives near Peace River, Alta., and after retiring from farming had scheduled a farm equipment auction for April 2021. Due to pandemic gathering restrictions, they didn’t have a choice about the format of their sale. Ritchie Bros. organized a timed auction, with bidding open for three days and an on-farm preview of the equipment ahead of the sale.
“I enjoyed the online format much more than a traditional sale,” says Glenn Mikula, who believes spreading out the bidding enabled the Mikula brothers to represent the equipment properly and to thoroughly field any buyer questions. He was also surprised by the volume of bidders and the sales results that saw most the equipment sell to buyers more than 100 km away.
“The process reduced the chaos of sale day and we were happy with the outcome,” says Glenn Mikula.
[RELATED] Used farm equipment sees big demand
It’s easy to see the benefits for both sellers and buyers of the new timed auction system. Clarke says this new format is, “One hundred per cent a better experience for sellers on sale day.” Whether you’re selling a farm property or equipment lineup, for many sellers, the auction process displays their entire life’s work and it can be an emotional experience. The online format allows sellers and their families to sit back and watch the sale from a screen rather than watching first-hand as neighbours and strangers sift through their possessions and walk through their farm buildings.
Clarke and his team have found new ways to make sale day a positive experience for their customers, setting up computers or large screens in a shop for family and friends to watch as the sale closes. The greatest benefit of a timed auction is the increased pool of buyers, because stronger competition translates to stronger prices. And it’s more convenient for buyers. Clarke says the ability for customers to bid 24/7 has changed the sales too.
“People don’t have to take a day away from the farm to go to a sale anymore, many of the bids are coming in early in the morning or late at night, so we’re attracting a new type of crowd that’s bidding over their morning coffee or after the kids go to bed,” notes Clarke.
Auction advantages
When it comes to selling a farm, an auction offers an element of transparency that private sales or even realtors can’t offer. John Stephens of Great West Realty Inc. in Petrolia, Ont., and the first Canadian franchise owner of United Country Real Estate, the largest seller of land in the U.S., has spent 35 years in both businesses, as a realtor and auctioneer.
He’s seeing the same shift to timed online auctions as a result of shrinking in-person sales crowds and the recent pandemic-related push to online bidding.
“No matter the format, some choose selling a farm through auction because it can be an easier option. It eliminates the pressure to select your buyer, especially if you have to choose between neighbours or family, and it removes any hard feelings because everyone knows the final sale price,” explains Stephens.
Selling everything all at once, such as an entire farm, including land, equipment and buildings, can also offer peace of mind for many farmers who find the experience of having to divide and sell their entire life’s work daunting. Clarke explains that, while real estate listings have their advantages, being able to sell everything all at once and also setting a predetermined date when everything will be wrapped up versus the unknown of real estate transactions can be appealing.
Stephens has helped hundreds of farmers and rural property owners across southwestern Ontario negotiate sales and purchases through real estate and auction. He’s still seeing high demand for rural properties as buyers continue to move away from urban areas.
“As long as there is high-speed internet so people can work from home, people continue to be attracted to farms and rural life,” says Stephens. He’s also noticed an upward trend of younger buyers attending farm and equipment auctions. These buyers are eager to establish farm businesses and are often seen with their family or a member of an older generation for support.
The best advice Stephens can offer buyers is to do their homework. Rising land values and strong equipment prices are making it harder for new farming entrants and even established farmers looking to expand. “Come to an auction with your hand in the air and your homework complete,” he says, noting this strategy works for auctions or any real estate opportunity that may arise, like a neighbour selling out.
“Have your financing in order and know what you can afford to borrow so you can react quickly,” says Stephens.
Trending online
The transition to online timed auctions has changed the course of business for buyers and sellers. More bidders are driving prices higher, keeping buyers happy, and auction companies have reported some of their most successful sales in the months since the pandemic hit.
“The pandemic created uncertainty and the result is more activity on auction day(s),” says Clarke. Since March 2020 he’s had a front row seat to the effects of supply chain disruptions, farm equipment shortages, strong commodity prices and increased land competition.
[RELATED] Manitoba Co-operator: Farm equipment logjam not clearing any time soon
These changes have all driven stronger prices and he predicts they will continue in the near future.
Auctions have served farmers and rural communities as a source of commerce, connectivity and entertainment for decades. While new technologies are enhancing the experience, auctions will always be a fundamental part of doing business in rural Canada.
Says Clarke: “As an auctioneer, we’re in the business of managing people’s livelihoods and futures, so we have to get it right, in person or online.”
Winning with timed auctions
Timed online auctions create more opportunities for the farmer to purchase land and equipment by allowing them to inspect items and to place bids from their phones and laptops without ever having to leave home, tractor or truck.
Timed auctions do require preparation and a winning strategy, though, even if the digital format sticks to the basics of the age-old auction process, minus the auctioneer.
“My personal advice is to bid early and not to wait until the last minute,” says Jordan Clarke, vice-president, Canada Prairies with Ritchie Bros. Auctioneers. “The longer you wait, the more susceptible you are to external factors beyond your control, like local internet connection issues or forgetting to bid before closing.”
Most timed auctions are open for a few days, allowing interested bidders to participate at their convenience. Items are closed at staggered times and extended if last minute bids are entered. In order to take part in a sale, Ritchie Bros. requires participants to register for an account through its website (rbauction.com) ahead of the sale and to submit a refundable deposit.
Convenience is the greatest advantage of a timed auction. Bidders can participate manually or take advantage of entering a maximum and instructing the system to bid automatically.
“I recommend using the max bid function and let the system bid on your behalf as opposed to bidding in the requested increments every single time,” advises Clarke. “It will be a much better experience as opposed to babysitting and potentially having to sign in and bid potentially dozens of times on an item.”
Online participants can also sign up for email alerts, notifying them when they are outbid on an item or if they’ve won. If successful, winning bidders will also receive an email with payment and pickup options once the sale has closed.
The logistics of a timed auction may be different from traditional in-person auction events, but the essentials are similar. Buyers still need to do their homework. Clarke advises buyers to inspect items they are interested in ahead of time if possible. If that’s not possible, research the value of the items to help establish a maximum limit. Timed auctions are making it easier than ever for buyers to purchase items from across the country, so don’t forget to factor shipping costs into your buying strategy and purchasing costs.
*This article was originally published as ‘Land online’ in the November 2022 issue of Country Guide.
