Our sale bills read 10% earnest money down day of sale, balance due at closing, and closing runs 30 to 45 days. Take the 113 acres we sold in Elk Township, Buena Vista, at $14,500 an acre last December. That is $1,638,500 in the purchase price, and 10% of that is roughly $164,000 in certified funds the day the gavel drops. There is no financing contingency. If the loan does not close, the earnest money is forfeited under our terms. The question is not whether you can bid. The question is whether you can pay.
Key Takeaways
- Our sale bills read 10% earnest money down day of sale, balance due at closing, and closing runs 30 to 45 days. On the 113 acres we sold in Elk Township, Buena Vista, at $14,500 an acre, that is roughly $164,000 in certified funds the day the gavel drops. There is no financing contingency.
- A lender cannot finalize a farm loan without an appraisal. An appraisal takes time to schedule and complete, the 30 to 45 day clock is running from sale day, and the two calendars do not always line up. That gap is what sinks buyers, not the loan approval itself.
- Get pre-approved with an ag lender before the auction. The lender needs the land, your financials, and your plan. Pre-approval is not a commitment. It is a confirmation that, if the numbers hold, the loan will close.
- FSA Direct Farm Ownership goes to a maximum of $600,000, terms up to 40 years, and offers up to 100% financing. The Down Payment Program puts 5% cash, FSA finances 45% to a maximum of $300,150, and the rest comes from a commercial lender, a private lender, or the seller.
- If you are buying with 1031 proceeds, the deadline is the earlier of 180 days or the tax return due date including extensions. For a November or December auction closing, that cuts the window to roughly 105 to 121 days unless the buyer files Form 4868.
Auction Terms: No Financing Contingency
A farm land auction is not a private treaty listing. There is no “subject to financing” clause, and no “if my loan falls through, I walk” exit. The auction terms are the terms. You bid, you win, you sign, you put down 10% earnest money, and you close on the 30 to 45 day schedule. The earnest money is non-refundable under our sale terms. A failed loan costs 10% of the purchase price. How bidding works at a farm land auction covers the mechanics. This post covers financing, because financing is what actually sinks buyers. Choosing between an absolute auction and a sealed bid changes how the price is set, but it does not change the earnest money terms.
If the financing is not confirmed, do not bid. Watch the sale, write down the price, and come back to the next one with a pre-approval in hand. A price you watched is free. A price you bid is 10% down.
The Appraisal Crunch
A lender cannot finalize a farm loan without an appraisal. Closing runs 30 to 45 days. An appraisal takes time to schedule and complete, the 30 to 45 day clock is running from sale day, and the two calendars do not always line up. That gap is what actually sinks buyers, not the loan approval itself. A buyer who orders the appraisal after the sale is already behind, and there is no contingency to fall back on. The 30 to 45 day close is the lender’s schedule, and the appraiser has to be in the room before the lender can finalize. If the appraisal is not ordered until the week after the sale, the closing is already late.
Pre-approval is not just a number. It is the lender’s commitment to move on the appraisal, the credit, and the closing within the 30 to 45 day window. Without pre-approval, the buyer is betting that the appraisal, the credit, and the closing will all happen on the auctioneer’s schedule. That is 10% of the purchase price at risk.
Get Pre-Approved Before Sale Day
Pre-approval is the step that separates a buyer who can close from a buyer who cannot. An ag lender reviews your financials, the land, and your plan, and gives you a number. That number tells you what you can bid, what you can afford, and whether the closing will happen on the 30 to 45 day schedule or not.
You go to an ag lender, a commercial lender, or both. You give them your financials: income, assets, debt, and the property you want to buy. They review the land, the CSR2, the soil series, the comp value, and your plan. They tell you what they will lend, at what rate, and on what terms. That is pre-approval. It is not a commitment. It is a confirmation that, if the numbers hold, the loan will close. Knowing the comp value before you set a number is part of the lender’s review, because the lender needs to see what similar ground in the county has sold for.
Do this before the auction. Not during. Not after. The auction day is the day to bid, not the day to find out whether you can afford the farm. The appraisal has to be ordered before the sale, because the 30 to 45 day clock is already running.
FSA and Beginning Farmer Programs
The USDA Farm Service Agency offers direct and guaranteed farm ownership and operating loans, including a specific program for beginning farmers. A beginning farmer is defined by FSA as a person who has not operated a farm for more than 10 years, substantially participates in the operation, and for farm ownership loans, does not own a farm greater than 30% of the average size farm in the county at time of application. If an entity, all members must be related by blood or marriage and all must be eligible beginning farmers. Direct farm ownership applicants must have participated in farm business operations at least three of the past ten years. The FSA fact sheet states the criteria.
The loan types and limits are specific. FSA farm ownership loans cover the types. The Down Payment Program puts 5% cash, FSA finances 45% to a maximum of $300,150, and the remaining balance comes from a commercial lender, a private lender, or the seller. It is the only FSA farm ownership loan that does not offer 100% financing. Direct Farm Ownership goes to a maximum of $600,000, terms up to 40 years, and offers up to 100% financing. The Microloan is $50,000 each for operating and farm ownership.
The Down Payment Program requires coordinating FSA with a second lender or the seller on the remaining balance. Doing that inside a 30 to 45 day close, where the earnest money is already gone, is hard. A beginning farmer should be talking to FSA months before the sale, not the week of, and the coordination has to be set before the gavel drops. The program also lets a retiring farmer transfer land to the next generation, which matters to the seller audience as much as the buyer. If you are a seller and your ground is going to a beginning farmer, the Down Payment Program is the tool that makes the sale possible, and it has to be set up before the sale, not after.
How 1031 Money Changes the Math
If you are buying with proceeds from a 1031 exchange, the money you are bringing to the table is larger than a buyer who paid the tax at closing. You are not handing a chunk of the proceeds to the IRS, so the full amount is available for the purchase. That is more net proceeds than a buyer who paid the tax would have. It is not more buying power than a cash buyer with the same money. It is the tax that was deferred, and it is real money in the bid.
The 1031 has a deadline that the auction has to fit inside. The deadline is the earlier of 180 days or the tax return due date including extensions. For a November or December auction closing, that cuts the window to roughly 105 to 121 days unless the buyer files Form 4868. Filing the extension restores the full 180 days, and it is automatic, no approval and no reason required. If you are a 1031 buyer bidding on a November or December auction, the closing has to happen within the 105 to 121 day window, and the lender and the QI need to know that window before the gavel drops. The 1031 guide covers the full mechanics.
The Six Auctions and What Each One Means for Financing
The current slate has six auctions, and each one is a financing question as much as a bidding question.
November 4, Emmet County. 1,302 cropland acres in 13 tracts across Ellsworth and Lincoln Townships. Thirteen tracts sold by buyer’s choice means a bidder can walk out with one tract or six, and the pre-approval has to cover the range before the sale, not after. If the pre-approval is for a single tract and the bidder takes four, the loan does not cover the gap. The pre-approval has to be structured for the range, not the average. Why a farm is offered in tracts covers the strategy. The financing question is the buyer’s side of that strategy.
The other five: September 24, Buena Vista County, 218.50 acres in Scott Township. September 30, Sioux County, 147 acres in Holland and Lynn Townships. November 5, Palo Alto County, 158.77 surveyed acres in Vernon Township. November 6, Clay County, 75.7 acres in Lone Tree Township. November 11, Cherokee County, 153.15 acres in Sheridan Township. The full auction calendar is here.
The timing point: every sale after roughly October 17 puts a 1031 buyer into the shortened-window trap. The tax return due date for 2026 is April 15, 2027. Any auction closing after October 17 has the 180-day window cut to roughly 105 to 121 days unless the buyer files Form 4868. That is not a 1031 problem. It is a financing problem, because the 105 to 121 day window is the window the lender has to close in, and the appraisal has to happen inside that window too.
What This Means for Your Farm
If you are buying a farm at auction, get the financing confirmed before you bid. The auction does not wait for your loan. A pre-approval is the safest way to bid, because it tells you what you can afford before the sale. A free farm evaluation gives you the comp value before you set a bid number, and the number is worth knowing before the gavel drops.
If you are a beginning farmer, talk to FSA months before the sale. The Down Payment Program requires coordinating FSA with a second lender or the seller on the remaining balance, and that coordination has to be set before the sale, not after. If you are a retiring seller and your ground is going to a beginning farmer, the Down Payment Program is the tool that makes the sale possible, and it has to be set up before the sale, not after.
Frequently Asked Questions
Can I get financing after the auction if I win the bid?
You can try, but the auction terms do not let you walk if the loan falls through. You have to close on the 30 to 45 day schedule, and the earnest money is non-refundable under our terms. If the loan does not close, you lose 10% of the purchase price. The safer path is pre-approval before the sale, because pre-approval tells you what you can afford before the bid, not after.
What happens to my earnest money if I do not close?
The earnest money is non-refundable under our terms. It is 10% of the purchase price, due on the day the gavel drops, and it is at risk if you do not close. The exact terms vary by auction, but the general rule is that the earnest money is a binding commitment, and it is not returned if you walk. Read the auction terms before you bid.
Can I use FSA financing to buy a farm at auction?
You can, but the Down Payment Program requires coordinating FSA with a second lender or the seller on the remaining balance, and doing that inside a 30 to 45 day close, where the earnest money is already gone, is hard. Direct Farm Ownership goes to $600,000 with terms up to 40 years and offers up to 100% financing. If you are a beginning farmer, talk to FSA months before the sale, not the week of. The coordination has to be set before the sale, not after.
Do I need a pre-approval to bid at an auction?
You do not need a pre-approval to bid. You can bid with cash, with a verbal commitment from a lender, or with no financing in place. But if you are not pre-approved, you are betting that the financing will close in time, and the earnest money is at risk if it does not. A pre-approval is the safest way to bid, because it tells you what you can afford before the sale, and it keeps 10% of the purchase price out of the question.