Farmland owners with land to rent, meet potential tenants in your area and seal a deal. That is the matchmaking concept behind FarmRenter.com, a new electronic land rental auction system.
“Renting land can be a painful process,” said Heather Slifka, FarmRenter’s U.S. director. “Landowners need to search for quality tenants. Then, there is often an in-person process to negotiate a rental price. FarmRenter.com helps take that away by making the process more transparent and fair for both parties. The renter gets a truer idea of the quality of the land they are bidding on, and the landlord gains access to a large network of potential tenants while gaining a clear picture of a bidder’s capacity as a farmer.”
FarmRenter.com is a joint venture between farmers, landowners and agriculture specialists, and is a sister site to Renterra.ca, a similar platform in Canada. Lyndon Lisitza, founder and managing director, created the site in 2012. Today, Renterra.ca has 5,000 active users: 500 are landowners using online auctions to rent 40 to 100,000 acres to the highest bidder.
“It was clear this type of service would be beneficial in the U.S., where landowners and farmers also face lack of price transparency and spend a lot of time and effort in negotiations. Quite often, you find farmers don’t know what land is available for rent,” Lisitza said. “U.S. farmers rent about 350 million acres. Of those, 80% are owned by nonfarming landlords. We can help connect them to potential tenants.”
Lisitza said farmers create a free online profile where they set preferences for location and crop type. They can be notified about any auctions in their area with the option to bid. Bidders are assigned random numbers for auctions to protect the privacy of the users and prevent any bias that could affect outcomes.
Farm owners with land to rent register for free with their legal land description and a dollar-per-acre price. The information goes into a mapping database. Owners only pay an auction fee equal to 4% of the total transaction if an agreement is reached with a renter.
Owners have two auction options. One is similar to eBay, with an ascending auction that may offer a “rent now” price predetermined by the owner. The other choice is a sealed bid auction that has criteria beyond just price. Bidders can provide additional details about their operation, such as farm structure and land stewardship, that the landowner may want to take into consideration.
Auctions are conducted in real time. As soon as a listing is posted, notifications are sent out via email or SMS (short message service) to farmers within the specified area. In minutes, an owner can immediately begin to receive bids via mobile phone or computer.
Once an auction is complete, a winning bidder is subject to completion, review and acceptance of a renter profile. This provides landowners an opportunity to ensure the person is a good fit for their land. FarmRenter.com steps aside once an agreement is under way. Each owner sets his or her own terms and conditions, and is encouraged to use legal counsel to complete agreements.
While only in existence since December 2017, FarmRenter.com’s intent is to roll out the site in every agricultural state by this summer. Organizers first focused on marketing in states with the highest population of farmland and renters: Illinois, Indiana, Iowa, Minnesota and Nebraska. They have since expanded to the Dakotas, Kansas, Kentucky and Ohio.
“Membership sign-up is steady, with 100 to 150 new users per day, predominantly potential renters. Our focus is to increase the size of our network to 10,000 or more renters by September,” Slifka said. “We want to hit the fall rental season running with adequate auctions and bidders.”
In addition to farm owners, the site is available for land-management companies, realtors, funds or others interested in simplifying and reducing time spent on the land rental process.
“Our goal is to provide price discovery and adequate competition,” Lisitza explained. “Based on sign-ups so far, we believe that is proof the U.S. is ready for this type of system. As more farmers want to expand their operations, FarmRenter.com provides a new way to do that.”