The Midwest farmland market may finally be cooling off, but what does that mean for sellers?

Farmland values in Iowa declined for the first time in five years, according to a Benchmark Farm Value Trends Report issued last July by Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit. Iowa farmland values show an average decline of 2.4% for both the past six and 12 months, according to the report.

“The combination of higher interest rates and tighter margins for grain producers is having an impact on cropland values,” says Tim Koch, FCSAmerica executive vice president of business development.

It’s the same story in neighboring states. Values for Illinois land rated excellent and good quality are off 5%, while values for average and fair quality land are off 8% to 10%, according to a midyear survey from the Illinois Society of Professional Farm Managers and Rural Appraisers. Cash rents are expected to decline 7% to 9% in 2025, or about $25 per acre.  

But Elizabeth Strom, a farm manager and real estate broker with Murray Wise Associates, says there are some tried-and-true lessons sellers can follow to get the best price when it’s time to sell farm ground.

1. Know the lease and ownership status on your farm. Is the lease oral or written? Is it still valid? Was it written then rolled over to oral?

“Farmland without a lease will always sell better because farmers want to farm what they buy,” Strom says. Make sure you have all ownership parties on board, and verify information through the title.

Know that termination dates can be different for written or oral leases, and they vary by state. In Illinois, lease termination is four months before the end of the lease. Oral leases for this year end Feb. 28. If the lease is in writing, it ends whenever the lease states, such as Feb. 28, Dec. 1 or Dec. 31. In Iowa, lease termination has to happen on or before Sept. 1. Indiana’s termination deadline is three months before the end of the lease term. 

One more thing to check: Is there a wind or solar lease on the property? Are you still in the option period? Strom has seen situations where children inherit farmland from their parents and don’t know their parents signed a wind/solar lease.

2. Know agricultural trends. Sellers need to be aware if there was a wet spring or a dry summer, whether planting was delayed or replant was required. Pay attention to yield prospects and commodity markets, and understand interest rates and how they affect agriculture. Watch local sales, but make sure they’re comparable with your ground.

“Just because a farm sold for $20,000 down the road doesn’t mean yours will,” Strom says. “A lot of counties change dramatically.”

And remember that ag is a relationship-based business. If you don’t know the players, including potential farmer buyers and absentee landowner investors, hire someone who does.

3. Get the timing right. Generally, the best time to sell farms is outside the growing season because that’s when the most money is in the market. Strom saw some land moving in August and, in those cases, she recommends giving a rent credit.

“Think of the buyer’s perspective and what might make it more enticing for them,” she says. “Farmer buyers that close in July won’t get their first income for over a year.”

4. Consider dividing the property. If you’re in an area with more small farmers than large, make tracts smaller. If there are larger players, make them bigger. Separate the recreational ground from tillable acres.

“But make sure you visit the property and ensure there’s access, like a culvert for a drive,” Strom says. “If not, can we put one in? If it’s on a state highway, you’ll have some hoops to jump through.”

Murray Wise is one of a handful of organizations that uses a multi-parcel method of selling, which is different from typical bidder’s choice. In multi-parcel, they divide the property into a lot of smaller tracts, then buyers can put combinations together and bid on what they want, where the highest-value combination wins.

Strom admits it’s a little bit of a puzzle and it works best in live auctions, where they can gauge the audience and stop to explain things. “The positive is that they can tell us how they like to buy it instead of us telling them how to buy it,” she says.

5. Call a professional. Especially in a tougher market, you’ll see the difference in working with a professional farmland real estate agent, Strom says. Selling farmland is not like selling a house, she adds — you’re selling a high-value asset, and you only get one chance. Find someone who understands the local market but has national contacts, and make sure they’re professionals who excel at marketing.

More land on the market

Strom says they have a lot more sales lined up for this fall than they did a year ago. Why? She suspects it’s based on uncertainty.

“Nobody has a great feel for what’s going to happen in the future with the election. So, if it’s good now, go ahead and sell. That’s why people are going ahead with some August auctions,” she says. Her firm saw more sales than usual over the summer, as folks pushed farmland into the market.

But she says those sales did well. And if there were two people who pushed it, they saw really big numbers on those auctions. Although it has softened since the summer, she says the market still is strong. In the instances where ground has stayed in the market longer, it may have been due to unrealistic seller expectations — and based on past sales, that’s easy to do.