Progressive Tender

Welcome And Listener Request

Devon Davidson 0:00

The Farmland Exchange, the official podcast of CLHBid.com. Expert insights on buying and selling farmland in Western Canada. Welcome to the Farmland Exchange, the official podcast of CLHBid.com, where we provide you with expert insights into the process of buying and selling farmland here in Western Canada. I'm Devon Davidson, your host and digital media strategist for CLHBid.com. If you haven't already, please take a minute to like, rate, and review the show on your podcast platform of choice. It helps us out and we greatly appreciate it.

Progressive Tender And The Big Claim

Devon Davidson 0:35

On today's episode, we're going to be talking about a sales method that is increasingly being discussed in farmland transactions, progressive tender. And here to help me that conversation is CEO of CLHBid.com, Roy Carter. Roy, thanks for being here. You're welcome. Thanks, Devon. And also our COO, Ryan Lang. Ryan, good to see you. Yeah, good to see you too, Devon. Ready to roll again? Ready for another one. Let's go. All right. So let's let's start the conversation off, guys, by setting the table. And what is progressive tender?

Roy Carter 1:02

Yeah, I guess I mean it's uh it's uh the term progressive tender, different people use different terms. It's basically um bid shopping, for lack of a better word in our mind. It's uh getting people to tender and then after the tenders are in, starting to call around and see if they'll move. And uh you know, we we call it bid shopping, which has been around forever. Uh most people see it as uh, you know, dirty, uh that you're kind of negotiating your bidding against yourself in that.

Speaker 1 1:36

Right.

Roy Carter 1:36

But it it's really come about um, you know, in the last uh four or five years, you probably see.

Ryan Lang 1:44

Yeah.

Roy Carter 1:44

You know, that what's happened is uh I think what's happened is the realtors see that um you know different price discovery uh forms are taking over for farmland.

Speaker 1 1:55

Yeah.

Roy Carter 1:56

And they don't realize that the reason for that is because farmland's so different than than urban setting.

Speaker 1 2:02

Right.

Roy Carter 2:02

So it's like, wow, let's get into the space, so why don't we just do a tender, get them, and then start calling around? Well, uh that's been around for a hundred years, right? That's why tender to a law firm doesn't work. Uh people don't trust it, uh, they don't engage, etc. But uh yeah, there's no, you know, there's no way that it's turned over to some third party or it's not turned over to uh programmers to devise a system to take people out of it. People are in it more than ever. Right. And anytime you engage people behind closed doors, um, that's problematic because people don't trust it then.

Devon Davidson 2:42

So who cares about the process typically, Roy? Is it always realtors? Do you law firms are doing it?

Roy Carter 2:47

Um you know it the trend started with realtors because uh single tender to a law firm has been around for hundreds of years. Right. And then um tender was is something you never heard of with real estate. But I think they saw the traction in farmland, and then uh it was like, oh, we need to get in that space. Um so realtors sort of trended there four or five years ago. Um, but you do see the odd law firm doing it as well, um, which maybe they did before behind closed doors. Well, we know they did kind of bid shopping, calling and that.

Speaker 1 3:23

Yep.

Roy Carter 3:24

Uh, but now it's more out there. They actually say um, you know, what what used to be hidden is now sort of they've unveiled that it's still just as uh greasy in that as ever. But they've sort of taken the cover off. And um, but definitely, you know, the odd law firm does it, uh, but definitely, you know, realtors I would say uh try and uh have the majority of the space.

Ryan Lang 3:46

Yeah, I'd say too, you know, even as the public's become more aware of you know these new ways to sell land or these innovative ways to sell land, I think people have even taken it upon themselves to try and carry out their own sort of tender. Yeah, exactly. And I mean that to me that carries a lot of risk for sure. You know, uh, you know, it's a little bit different when there's a law firm or or uh you know a realtor trying to do it. But I mean, when you start, you know, you've been farming all your life and you know farming, and then you you try to dip your toe into the water and try to do your own ongoing or or progressive tender. My my gosh, watch out or

Why Sellers And Realtors Use It

Speaker 2 4:23

be careful.

Devon Davidson 4:23

That's interesting. Do you think it's appealing to realtors or some of these people try to do it themselves, Ryan, um, because they're attempting to maximize value or because it allows them to maybe control the process? Like what's what's the appeal there, do you think?

Ryan Lang 4:35

Well, I mean, like Roy kind of spoke to earlier, it it is an attempt. They obviously see what we're doing. Um, you know, auction has kind of become popular as well. So, you know, they see it as a as a way to move away from list, right? Um, of course, there's issues with list, and I I think they're trying to, you know, in one way, um, provide sellers or their sellers with an opportunity um, you know, to consider to maximize value. Um, you know, I guess on the other side of it, um, you know, there's a lot of issues. Uh, maybe we'll get into this later. Maybe I'm getting ahead of myself. But I mean, you know, they they really open themselves up to a lot of issues with the way they're carrying out these ongoing or progressive tenders, you know, one of those being, you know, collusion. Um, you really open things up because you know, people like to talk. Sure, they do. Um, you know, as a as a law firm here, obviously there's solicitor client privilege. Um, people like to talk. Usually, you know, a guy's been thinking about it for a while selling, and maybe they've decided to go down this route. Yeah, you know, you maybe you've had conversations back and forth with him, or depending on, you know, how good your relationship, where is the value, where you know, what's my number type thing. And yeah, and you know, once guys become aware of that and that gets out, I mean you're gonna have neighbors that are gonna say, Hey, you know what? I don't want this parcel, I'm gonna back off here. I'll give you an opportunity to to go here. And uh, you know, it doesn't lead to price discovery in the end, and it doesn't maximize value, right?

Collusion Risk When Time Drags

Roy Carter 6:07

So totally good points, Ryan. I know you know, I the first night of it, and this a process goes on for up to a month sometimes, right? You know, I've talked to people that have played for a while and then just say, screw it. But you know, the first night, uh, these guys don't watch hockey. Uh they're calling around to see who's on and who's high and what are you gonna do? Yeah, and I know one good example where um they went to better uh to bed uh together and bought. It's like, you know, we'll figure it out later. Yeah, but one of us is just gonna buy and then we'll figure out the split.

Devon Davidson 6:41

Interesting.

Roy Carter 6:41

And they, you know, the the that's it for the owner. Uh, you know, they start backing away and get tired of it. You better watch that, right? Because if you're on an exit, you can really get hurt, right?

Devon Davidson 6:53

Is that another draw for what we do at CLH is is the the shortened time frame, the fact that it only takes place over the course of an hour or two as opposed to a month? Like obviously there's more risk for collusion and and communication if you're doing this over a period of weeks and months. Um, but does that one hour time frame make price discovery more effective?

Ryan Lang 7:14

Yeah, you know, we we we believe so. And you know, over the last 10 years, obviously, you know, we've we've heard what um sellers and buyers, you know, appreciate in the in in in the process. Um one of those things was, you know, let's tighten it up because you know what, we got things to do. Um you know, we could be out in the land depending on what time of the year the sale is, things like that. So the one hour time slot, you know, some a lot of the feedback we've got is that one hour works well. Um people generally have a number in mind when they when they you know come to the table and and uh want to place bids. Um, you know, and and once that uh price is affirmed, I mean it everything goes from there, right?

Roy Carter 7:56

Yeah, I know good point. I mean, we're really a function of what didn't work. Yeah. And one was collusion, especially in at auctions, you know, and I'm sort of dating myself here, but I've stood in farmyards where, you know, all the neighbors are within 20 feet of each other, right? Holding babies or whatever, and uh relationships are lost and people don't put up their hands. And you ask people why you didn't bid, and it's because Joe was bidding.

Speaker 1 8:21

Right.

Roy Carter 8:21

And uh, you know, and then you take that to the theaters at bigger sales, and you you can see the stands, guys talking, sitting beside each other. So, you know, it was to combat collusion and that two-minute reset. Um, you know, we don't show who's on, they don't know who's on. Uh that fuse is running pretty tight. Yeah, but start doing this bid shopping with real estate, and these guys got all night to talk, and believe me, they figure it out. Yeah, it's like, you know, well, then if it's not you on, it's so-and-so on. And uh they just reverse engineer to figure out who's on. And then, you know, they get they get more solid as it goes, and they ended up they end up sort of controlling the show as opposed to the vendor, right?

Speaker 1 9:07

Right.

Roy Carter 9:08

Our whole goal is to put the pressure on the buyers, short fuse, don't let them collude. And uh, you know, even our on block trumps any collusion. Uh, but um it it it really compounds, like Ryan says, it really compounds the collusion. You know, I I think one of the big things they don't realize, uh they think we just sell farmland, right? Like a house in town, like it's one-dimensional, right? So all we got to do is, you know, just bid shop and we'll get it. What they don't realize is, you know, we go there, devise a sale plan, it might be five, six years, tax, yeah, uh packaging, you know, uh getting it right.

unknown 9:48

Yeah.

Roy Carter 9:48

And uh they just think, okay, this is so they don't understand the layers to what we do. Um, and um, you know, it'd be similar. We've talked about the ophthalmologist. Yeah, it'd be uh similar to the optometrists thinking, hmm, those ophthalmologists are getting busy, those guys that went to school for 20 years are a doctor and all that. Yeah, um, maybe I'll just start doing this. Well, they don't even know what he does, right? And they can't legally do it. Um, so they're kind of trying to play in a sandbox that uh they're not equipped to play. Exactly. Yeah, yeah.

Ryan Lang 10:23

Well, yeah, I think the biggest takeaway there is we're not one-dimensional, right? Yeah, totally. You know, yeah, yeah.

Trust Problems Behind Closed Doors

Devon Davidson 10:28

Is there any more trust in the process when it's carried out by a law firm? Like, you know, you said it's more realtors doing progressive tender, um, but is there more trust in that process, or do buyers still just view it for what it is?

Roy Carter 10:39

I think the reason it it and tender ended up at a law firm to start with, because of that stakeholder idea, and get it away from the owner himself. And kind of what we talked about in another podcast, you know, probably the last guy you should actually trust on the value of land is the guy that owned it. Um so uh, you know, get it away from him, put it in some sort of professional third party. Um, but it's problems like we've talked about in other podcasts. Giving it to a realtor, I don't uh to me, uh the owner might as well do it. I don't think there's any more confidence getting a call from realtor at seven at night that just say, hey Joe, are you moving?

Speaker 1 11:22

Yeah.

Roy Carter 11:22

Than if the owner called. Uh they know that it's all being bid chopped, and uh so I don't I you know, yeah, I don't see it. There's no comfort there.

Devon Davidson 11:33

Okay. Ryan, how do you think the buyers perceive that process? Like, um do they keep participating for fear of missing out, or they eventually they get burned once or twice and they're just kind of out?

Ryan Lang 11:43

Uh, you know, I I mean I think everyone approaches uh a progressive tender, um, just like a sealed tender to a law firm. I mean, everyone's cautious, you know, there's a a curtain that uh you can't see behind, and like we alluded to earlier, you you don't exactly know what's going on uh behind closed doors. So I mean, from from a buyer standpoint, you know, I always try to put myself in in both the seller and buyer shoes, depending on what we're we're looking at or considering. And I I mean, if I put myself in those shoes, would I feel comfortable with the process? I don't know, probably not. Yeah, you know, I wouldn't be a hundred percent confident in the process. And and like it, like Roy alluded to earlier, um, the reason we started was to address a lot of those shortcomings with with systems like that.

Devon Davidson 12:29

Are there any differences between whether it's carried out between a law firm or a realtor? Or is it just it's the same process, different, different shot?

Roy Carter 12:35

Uh, pretty much the same. You know, I've seen law firms go on for days as well.

Speaker 1 12:40

Yeah.

Roy Carter 12:41

I probably haven't heard the month scenario that I've heard with some real estate firms, but it's pretty much the same bid shopping as bid shopping. And uh, you know, it's calling around and um trying to shorten that list and see who who will move.

Devon Davidson 12:56

Uh Roy, some of the progressive tenders have a seller's ask price attached with a provisio that um if the ask is not met, the hybrid will be called. Can you talk about that a little bit and how it works?

Roy Carter 13:07

Yeah, and I mean some of them advertise by doing that, the seller sets the price. Well, in whose world is who's gonna believe that where the seller sets a price? That doesn't exist. It doesn't work, yeah. Um property's worth what the you know highest bidder is willing to pay for it.

Speaker 1 13:28

That's right.

Roy Carter 13:29

So, you know, when they say you're high, and then they call you and they say, you know, you're the highest person in the world on this. Nobody's willing to go higher. But are you stupid enough to go higher? I mean, what would you do? I mean, really?

Speaker 1 13:43

Yeah.

Roy Carter 13:43

Uh I mean, that's it, man. Uh there's nobody higher. Where are you going? Uh, but uh, and but and try and flush that one out. I mean, the average farmers uh uh smarter than that. You know, I always get intrigued. I know some of you guys are heading to the egg show tomorrow in Grand Prairie. Uh I always get intrigued with these farmers. These financial planners will be at the egg shows, you know, and uh uh definitely there's good financial planners, but you know, some of them show up in their 15 or 20-year-old car, set up a booth, and they purport to sit there and give advice to these big farmers that are you know big, big, big. This is big business, right? Yep, and it's kind of you gotta scratch your head that uh these guys are running a bigger show than you ever dreamt of.

Speaker 1 14:33

Yeah.

Roy Carter 14:33

And that's where you know they get a call from a realtor and it's like, yeah, like we've we've rung you out, there's nobody else there, but you want to keep going? Yeah, and it's probably not, right? I'm not gonna shoot myself in the head, right? Yeah, that's right.

Tender By Auction And Parcel Strategy

Devon Davidson 14:48

Okay, Ryan, one thing we wanted to cover here was um tender by auction, and it's something that we've seen a little bit in the marketplace. Um how does that differ from from progressive tender and from what CLH bid does? And are there differences in in the packaging of the land as well?

Ryan Lang 15:05

Yeah, I mean, you know, we've we've seen and we've heard from you know people at obviously at trade shows, that's that's a question that uh does get uh brought up to us. And and to me, the way I look at it is tender and auction, two different things, right? Yeah. Um the way I see it, uh, when I hear tender by auction, I just think progressive tender or ongoing tender, um, tender by auction, whatever you want to call it, right?

Devon Davidson 15:29

It's we can just make up words and call it things, sure.

Ryan Lang 15:31

Well, yeah, yeah. Um so to me that's that's a uh progressive progressive tender system. Um, you know, with that being said, if you if you watch that system, you know, bidders, you know how many people you're bidding against, and there's usually uh a bidder identification number. Okay. Um, right. So I mean, is it tender or where you know people are supposed to re remain anonymous? I don't think so, right? Not necessarily. I don't know. It's it's it's a hybrid system. Um but you know, when it comes to parceling and and things like that, what we see on a lot of those or those platforms, I guess if you want to call it that, um we see a lot of it go up as as one parcel. Um whereas, you know, CLH bid, for example, um we take a look at things and and when it comes to parceling, we're obviously putting things strategically together to maximize value for the sellers. That's the whole goal at the end of the day, is is to maximize value, right, for our sellers. Um so parceling is important. That's obviously one of the things that we offer and we do take a look at um coming from farming backgrounds. You know, we understand, you know, how things should generally fit together, how we're gonna fit the pieces together, right? Yeah, just based on you know outland utilization and things like that, whether you're grazing cattle or uh, you know, um planting crops, things, things like that. Yeah.

Roy Carter 16:56

No, good points. You know, uh another point I think, you know, if the if the farmer is getting, you know, the realtor to do it or they're working together, that's a one-shot deal for them, right? They don't have to worry. Um, you know, they I don't think they worry about credibility so much. No. It's like a one-shot deal, and uh it's a different deal than you know, CLH bid. You know, we sell hundreds and hundreds of farms. Uh uh credibility and uh what you did on your last sale and the last few hundred or everything. So um it's not a case of okay, let's sell our morals, let's compromise here. Uh, you know, let's let a guy bid back or whatever. You know, we've we've had those questions. And if you were doing a one-shot deal, you know, we've been asked, let me bid, and if I end up getting caught high, I'll pay you half your commission. And it was like, no. And their answer is like, well, it's a big number, and it's like, no, it's our credibility, right? But and what happens is on these, you know, a realtor might do one progressive tender a year or maybe one every three years, but it's him and the farmer, and I don't think the rules are the same. Yeah, uh, because they're you know, it's a one-shot deal, and uh we want to get this money, and sometimes they let their guard down on ethics. You know, even the jury's out on bid shopping if it's legal or not. You know, courts have said there's a duty if you're tendering uh to treat people fairly. And uh definitely people tendering have been sued over it and uh and got judgments against them.

Speaker 1 18:40

Right.

Roy Carter 18:40

And the court hasn't really clarified if just bid shopping uh allows you to get tagged, but in my in, you know, from what I see, bid shopping, that's not treating people fairly in in certain cases. There's people don't get the phone call, you know. Uh may well be the guy that was high, the other guys get phone calls and he's left off because the guy doesn't like him, right? So it's a totally different game. And as soon as you get allow people to take over behind closed doors, um, you lose trust. Whereas in our situation, when we have a sale, it's hands off. I mean, we have no control. It's we have uh our own in-house programmers, and it's all you know, computing uh generated. Uh there is no nobody has to talk, it's done. And if you're high, you're high and you get a notice, right?

Speaker 1 19:33

Yeah, yeah.

Devon Davidson 19:34

Hard to prove that though, too, Roy, right? When there's bid shopping or collusion that like, you know, if if the courts are saying there has to be a fair process to everyone that's that's on, uh really hard to prove that in the end.

Roy Carter 19:43

Oh yeah, no, it is. You need to take one of the paralegos for lunch or drinks or something, and what really went on there, right? But uh yeah, is there leaks sometimes? Totally. And do we know what's happened? Totally, right? Yeah, uh, but uh generally they're not too worried about it. It's a one-shot deal and it's uh let's keep it to ourselves and let's jam some people here over the next month, right?

Devon Davidson 20:08

Yeah.

Marketing Reach Beyond The Local Area

Devon Davidson 20:09

The other thing I want to talk about here too, Ryan, was marketing, how how we differ in our marketing and how progressive tender um approaches that. So I think would you say that progressive tender is generally a local or a regional approach?

Ryan Lang 20:20

Yeah, I mean that's that's often what we see, and and same with law firms who are trying to wade in those waters as well. That's that again is is very regional. And you know, if if you've seen, you know, happen to come across an advertisement um from one of those agencies, it's very minimal. I mean, you might see it once on Instagram um or or things like that, whereas you know, we're of the uh the vision or the view that you know you have one opportunity, you know, to to sell a lifetime of work, right? Yeah um you want to get it right, and and we understand that. And a part of getting it right is you know reaching all potential interested parties that may be interested in acquiring said parcels, right? So um, I mean we we we invest uh a lot into into the marketing uh side of our our uh campaigns. Um and we believe it does return value in the end uh for our sellers that we work with. Yeah.

Devon Davidson 21:18

Yeah, we've had lots of positive feedback, Keroy. I just you'll pass along some of those comments every once in a while from the sellers, and generally they're quite happy with the approach we've taken.

Roy Carter 21:26

Yeah, I would I would say more than generally 98%. Yeah, it's people are shocked by the effort that, but we've got the right team, and you bet.

Ryan Lang 21:38

Yeah, and I and I mean we're not just regional as as many people know, right? I mean, we're right through Manitoba, Saskatchewan, Alberta, BC. Yeah. Um, you know, when I I talk to people, uh a lot of the common theme that I hear is oh, I've seen your your vans, right? We've got 50 vans across across Western Canada. So that uh I mean it draws does draw a lot of attention. I mean, obviously doing what we do here over the last 10 years, we've we've built a brand that that people recognize and trust, right?

Devon Davidson 22:06

So it's fair to say that that that sort of reach and marketing power is is really helpful for specific sales too. Like if we have something where there might be appeal to buyers across Western Canada or internationally.

Roy Carter 22:18

Yeah, totally. You know, not the one quarter type deal. Obviously, internationally is you know, we got foreign ownership, uh, except for BC. Yeah. Um, but um for sure, especially the bigger blocks, uh, you know, where people are looking to set up a son or daughter or something. Yeah, um, they'll take equity out of high-priced land or pivot land or irrigated stuff and set them up. So the borders are gone. So definitely that's totally changed. Moving cattle, uh, cattle prices, they'll move right across Western Canada.

Speaker 1 22:52

Yeah.

Roy Carter 22:52

It's a game changer there. And yeah, the farm deal where the old newspaper and the buyer was within 15 miles, long gone are those days.

Devon Davidson 23:01

Yeah, and I bring it up too, because I think that we're we're equipped to deal with a range of sales, right? Whether it is the single quarter, as you said, or if it is, you know, 30 quarters or a large ranch in BC.

Roy Carter 23:12

Yeah, totally. Yeah.

Final Word And How To Connect

Devon Davidson 23:15

All right, guys. Uh anything else you want to cover for progressive tender? Don't do it. Don't do it. Okay, fair enough. Ryan, anything else? No, well said. Well said. Okay. Well, thanks guys for your time today. Really appreciate it. It was a good show.

Roy Carter 23:29

Thanks a lot, thanks, Devon.

Devon Davidson 23:30

Okay. All right, everybody, thanks for tuning in. We do appreciate you uh supporting the show. Um, as I mentioned at the top, if you haven't already, take a minute to uh leave a five-star review on your podcast platform of choice. Helps us out, and we do appreciate it. If you have questions or there's topics you'd like us to cover, uh send us an email, info at clbid.com, or give us a phone call at 866 263 7480. If you are interested in selling farmland as well, we'd love to have a conversation with you. That's going to do it for now. Thanks for tuning in. I hope this has been a positive exchange for you. Take care.