On March 10, we sold 4,398 acres across four North Dakota counties for the Edson & Margaret Larson Foundation. The foundation provides educational scholarships to students throughout North Dakota. This auction sale was one of the largest in my career and in company history.
In our business, we take the land-selling portion of our job very seriously. Needless to say, I was anxious to see the results. It would prove to be a valuable test of the land market in our northern U.S. trade area.
In the cropland regions of this country, it’s not often you see almost 4,400 acres come to the market at one time, spread across multiple counties and offered in a format that allows both local operators and outside buyers a fair shot at it.
Large, multicounty offerings like this tend to draw attention, and they often expose the market for what it really is, not what we think it is.
The property
The land was spread across four east-central North Dakota counties in five distinct blocks: a section north of Mayville and 1,500 acres northeast of Clifford in Traill County, 900 acres west of Hatton in Steele County, a short section north of Valley City in Barnes County, and 750 acres west of Carrington in Wells County.
The Traill and Steele County land featured large, contiguous tracts with some of the better soils you will find in that part of the state. The Wells County land offered a mix of cropland and pasture that would fit into just about any operation. The Barnes County land added another layer with established wind tower income, something we are seeing more and more of across North Dakota.
The auction
We made the decision to offer the property on our online-only platform in three separate auctions. All told, we offered 21 separate tracts. A total of 3,089 acres in Traill and Steele counties sold at 10 a.m. in 16 tracts, 750 acres in Wells County sold at 1 p.m. in three tracts, and 559 acres north of Valley City sold at 3 p.m. in two tracts.
What made this auction especially interesting was that most of it was appraised two years ago. If you remember two years ago, we were coming off of, or close to, our all-time highs across the board in terms of the land market.
This appraisal, no doubt, referenced sales during the peaks of commodity prices seen in 2022. Commodity prices were stronger then, and there was a general sense that land values could keep pushing. It was a much different environment than we are in today. I knew it would be a push to meet those numbers.
When the dust settled, the auction grossed about $21.82 million, which was 99.68% of the cumulative appraisals completed two years ago — only about $70,000 off. What was interesting is how we got there.
The takeaway
Some tracts brought over 120% of the two-year-old appraisal, while others brought closer to 70% of that same appraisal. There was not a uniform result across the board, and that is probably the most important takeaway.
This auction reiterates what we have been seeing in the land market. There is still strong demand for land, regardless of quality. We had 168 registered bidders from six states. That tells you there still is plenty of interest and plenty of capital looking for a place to go.
But not all land is being treated the same. The best land on auction generally exceeded the appraisal numbers from a couple of years ago. Good soil, a good location and good access still bring strong competition. That has not changed.
On the other hand, the less desirable land brought less than the two-year-old appraisal. Buyers are still there, but they are more selective than they were a couple of years ago.
That pretty much sums up today’s land market. Good land is still bringing prices we saw a few years ago, and even more in some cases, while lower-quality land continues to pull back somewhat.
If there’s one thing this auction confirmed, it’s that we are not in a collapsing market, but we are not in the same market we were in two years ago either. It’s a more disciplined market.
Buyers are doing their homework and picking their spots, and they are not afraid to pass if something does not pencil out. And honestly, that is probably how it should be. It’s tough to see the future in poorer-quality land.