Of all the dire predictions about the farm land market, I think we can deduce one thing: the action is going to change. First, compare farmland with the red-hot fine art market.
And now, Bowley is naming names (and numbers) when it comes to the shadowy practice known as “enhanced hammer“.
Officially, if you consign an artwork to Christie’s, and it is hammered down for millions of dollars, then you owe the auction house a piece of the action — known as “seller’s commission”. In practice, however, the art world’s biggest rollers never pay seller’s commission. For big-ticket items, the auction house is entirely reliant, for its revenues, on the buyer’s premium — the difference between the hammer price and the actual price paid.
Increasingly, however, the hammer price has become completely meaningless. It used to give a pretty good indication of how much money the seller took home; no longer. Top clients, it turns out, aren’t just paying zero seller’s commission: they’re now paying a negative seller’s commission, and earning much if not all of buyer’s premium on top of the hammer price. [More]
"Enhanced hammer" would make a good pesticide name, BTW.
Anyhoo, I think the buyer fee that had been introduced in some parts of the country may be about to die a deserved death. And real estate agents may have to settle for more modest fees from all but clueless heirs who think they have to pay list price.
If the 80's are any foreshadowing, power is about to wander back to the land buyer, mostly becuase a lot of us will be scared to take on extra debt or part with cash. You'll be surprised I think how fast this transition will take effect, as it feeds on itself.
But I will also venture to forecast some of the greatest opportunities of our careers (or those younger than me, anyway) will not just knock, but hammer on the door. Those who have the courage and admittedly, inexperience could position themselves for the next ag boom.
And yes, there will be one.