BUYERS are sick and tired of the tenders and expressions of interest (EOI) process when purchasing farmland.
That's according to Nutrien Harcourts WA sales representative Chad Smith, who with co-listing agents Yves Beagley and Craig Walker, has opted for the online auction platform Openn Negotiation to sell the quality 3301 hectare farm Arrowsmith, at Arrino.
"With the way the rural property market is at the moment, it is pretty difficult to put a figure on it because on the back of a good year, people are keen to purchase land and pay that little bit more," Mr Smith said.
"In the past 12-15 months, we have seen prices jump fairly well, above expectations."
Mr Smith said the issue with the tenders or EOI process, which is the most common selling method for Western Australian farmland, is that buyers offer what they think the property is worth and are unable to see other offers.
Then the property might sell for slightly above the figure they offered and had they known, they might have paid a little more to secure the property.
Once the property is posted on the Openn Negotiation website, the auction is live and usually lasts about four weeks.
Mr Smith said if the price surpasses what prospective buyers are willing to pay, they can opt out and it doesn't take up any more of their time and they can perhaps look for land elsewhere.
"Otherwise with a traditional auction, more people wait around thinking that they have a chance and end up getting blown out of the water in the early stages," he said.
"The transparency side is what we are looking for in rural sales, but it has to be a property that has quite a bit of interest in it so you can get some emotion in the auction itself."
Another appealing factor to online auctions is the anonymity for buyer and sellers.
"Once bidding starts, you can be assured that whoever is bidding against you already has a signed and accepted contract with the seller, so at the fall of the hammer, you know that the person bidding against you is actually a person - there are no vendor or auctioneer bids," Mr Smith said.
For sellers, the platform also offers potential for them to achieve a higher price than a tenders or EOI process as buyers can decide to pay a little more if they desire.
"If after one or two weeks of being on Openn Negotiation, we have only shown one person over the property and one person has put a bid in and we've exhausted everyone else who we thought might be a contender, then we can go back to the seller and ask if they want to negotiate with that bidder.
"If there is only one bid, it can still be sold at any stage."
Online auctions of rural properties are common in the Eastern States but still a new concept in WA as only a handful of properties have gone up for auction online and even fewer have sold.
Mr Smith sold one of those properties last year, although it was much smaller than Arrowsmith.
"Two farmers ended up bidding on it and actually got off the header in the afternoon for the final bidding stage and sat at the kitchen table to take part in the auction," he said.
"One of the bidders stopped so I called him to see what was happening and he said he was out and then went back to harvesting.
"He said he was happy with the result, he didn't have to drive to town and it didn't take much time out of their day."
2020, the year that will be remembered as the world grappled with COVID-19, led to online livestock auctions seeing a rapid increase in WA, which Mr Smith believes will aid in making online rural property auctions more common in WA in the future.
"We haven't had the demand for (online auctions) previously and there is a lot more demand for farmland in the Eastern States, but after coming on the back of a good season (2019), low interest rates and good stock prices, I think we have seen the way online auctions worked for livestock last year, which put a floor in the WA market and then some," he said.
"The expected price compared to prices achieved for stock was huge.
"Farmers buy a lot of things online now, so they are starting to cotton on to online property auctions, but it's the same with in-person auctions, there needs to be demand for the property for the auction to be successful."
Rural properties in the Eastern States have sold via Openn Negotiation in the past and Openn Negotiation reported an increase in activity with rural properties since the pandemic.
For buyers:
Prospective buyers can register to observe/ bid in the Arrowsmith auction via the Openn Negotiation website.
Like traditional auctions, if the reserve price is not reached, the property will be passed in.
If a technical breakdown occurs, the auctioneer or agent must determine if such an event has happened and if a bidder/s are experiencing technical difficulties, the auctioneer/agent can extend the auction to close at a later date.
If the seller chooses to start the final bidding stage early, all qualified buyers are notified with at least 12 hours' notice.
For sellers:
The reserve price can be changed at any time during the campaign.
However, if the reserve price is met no changes can be made.
If the winning bid is above the reserve, sellers accept the highest bid.
Sellers are not allowed to make vendor bids or cause a bid to be made on their behalf.
Openn Negotiation offers buying opportunities with flexible terms to allow the largest possible number of buyers to take part on an even playing field.
Therefore, sellers cannot accept cash offers over offers which are subject to finance.
The online auction for Arrowsmith is live and at the time of writing, no bids had been made.
It will close on Monday, February 8, 2021.
- To see the online auction, search 113 Tomkins Road, Arrino, on the Openn Negotiation website at openn.com.au