The rules for successfully completing a 1031 exchange can sometimes result in a very unique auction. That was the case Monday July 20 when 195 acres of high-quality farmland went to the auction.
1. The auction was conducted entirely online.
2. The auction was marketed over a very short period of time, reducing the opportunity for potential buyers to arrange financing.
3. Even more constricting, closing was just three days after the completion of the auction. Because of this requirement and the inability of many buyers to arrange financing ahead of the auction due to the short marketing period, the success of the auction was in high doubt.
So why the tight closing date? That was due to the a reverse 1031 Tax-Deferred Exchange being conducted by the owner of the farm. Time was running out on completing the sale of the farm to qualify for the purchase of the land made earlier by the farm owner.
The Farm: 195 acres located in two non-adjacent tracts on the northeast and southeast side of Mansfield, Ill., in Piatt County. Tract 1 consisted of 115 total acres with 111.5 acres tillable. The soils carried a rating of 140.5 with 147 maximum per Illinois Bulletin 811. It sold for $10,900 per acre.
Tract 2 was 80 acres with 78.5 acres tillable. It's soils had a PI of 139.1. It brought $10,225 per acre.
The resulting prices reflect relatively strong demand, under the circumstances. There were 17 registered cash buyers who participated in the online auction.
Handling the auction was Jerry Wallace, Wallace Land Company, Fisher, Ill., 217-897-1100.
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