Worst May Be Over : State’s Farm Crisis: Auction Has Rainbow

FRESNO — An auction was held here Saturday by the Bank of America to sell off 13 pieces of foreclosed farmland, and when all the bidding and buying was done, the farmers present wanted to talk most about rainbows.

Auctions of foreclosed farms are by nature depressing, and in the harder-hit farm states to the east they have brought some dreadful new images to the American landscape. In Anadarko, Okla., last summer, a 39-year-old farmer returned from the auction of his farm, killed his wife and two children, set his farmhouse ablaze and then took his own life. In Georgia last winter, a farmer forestalled a foreclosure auction by shooting himself 20 minutes before it was to begin.

And yet after the auction here, many of the farmers stood in a light afternoon sprinkle and talked happily about the hints of impending recovery foretold by the hour of trading in failed farmland.

224 Show Up With Money

They cited as evidence the fact that 224 prospective buyers had showed up with the mandatory $10,000 in earnest money, and that bids in several cases crept close to the appraised value--and for one parcel, actually exceeded it by $40,000.

“I’m excited,” Ed Peelman, who sells agricultural real estate, said as he mingled with farmers afterward in the hotel parking lot. “We have got $50 million in listings, and this means we are now going to be able to sell some ranches.

“I think the indication here is that things have bottomed out.”

Bank of America--saddled with troubles of its own and eager to find a way to move $115 million worth of California farmland that it owns by way of foreclosure--had offered each of the 13 properties for sale at a minimum of 60% of their appraised value. It was the first time the bank had attempted to rid itself of a batch of farm property through a public auction, and bank officials described the effort as something of a trial run.

Dennis Prindiville, who farms 300 acres of orchards, said he had attended the auction not as a bidder but rather as a “landowner, hoping that my land was not going to lose value.”

In other words, he had come hoping that prices exceeded the minimum 60% bid as often as possible. Earlier in the week, farmers and real estate peddlers speculated that the auction might produce such uniformly low prices that the worth of all agricultural property in the San Joaquin Valley would suffer.

Prindiville said the prices alleviated that concern. “I was impressed that most of the land sold at good prices, and I was also impressed that some didn’t sell at all. This tells me good land has a value.

“Farmers who have got good land can now believe it is still worth something, and the banks should recognize, too, and stop treating farm loans as second- and third-class clientele.”

Clapping, Whistling

The auction was conducted by Kennedy-Wilson Inc., a large Santa Monica firm that puts a lot of show into its efforts. While the auctioneer intoned the traditional hubba-dubba-dubba litany of his trade, “assistants” in blue blazers moved among the bidders, pumping their arms, clapping their hands, whistling and cajoling: “Come on. It’s only money, your money. Har har. “

There were a handful of serious bidding wars, each of which ended with applause from the crowd. Successful bidders, some breathless, having committed themselves to six-figure purchases, were ushered immediately into a nearby “escrow room” to encounter the grim realism of paper work necessary to such commitments.

When it was finished, 10 of the parcels had been sold for a total of $2.5 million, with prices ranging from $95,000 to $590,000.

3 Parcels Unsold

Bank of America ended up with three of the pieces still on its hands after no one was willing to meet minimum bids, but the farmer-analysts saw this as a good sign, too, saying only marginal land that should be taken out of production anyway was not bid upon.

Bank of America officials chose to take a guarded approach in their assessment of the auction. Nine more properties are to be put up for sale at a Sacramento auction today, and only after that will patterns be clear, they said.

Representatives of Kennedy-Wilson offered a more aggressive outlook. William R. Stevenson, president of the firm, said that nearly 4,000 inquiries about the properties had been made after his firm advertised the auctions in the United States and in English-language newspapers abroad. “My guess,” he said, “is that there is some optimism returning, a feeling that things have bottomed out.”

The largest bid was made by a partnership of four farmers who, after a furious competition, won the right to pay $590,000 for a 150-acre spread appraised at $40,000 less than their price.

“Because of the conditions of the crops, I felt we paid a fair price for it,” said Harold Brockman, 40. His face was still glowing pink from the rush of the bidding. After his bid had finally won out, Brockman’s wife, her face flushed as well, had lowered her head in her arms.

Had the excitement of the auction driven up the price? he was asked.

‘A Maximum Bid’

“It doesn’t if you have a maximum bid and stick to it,” he said.

And did he exceed his maximum bid?

“By just a little.”

Brockman said he had sympathy for the farmers who had lost their land on the attractive spread of almond trees and vineyards just south of Raisin City.

“These auctions are very unfortunate,” he said, “for the people who just came out of a negative cycle.”

That cycle, he said, now appears to be reversing itself.

Most of the farms sold were parcels of land purchased at a time of expansion, in the heady days of the late 1970s. Few had homes on them; most were pieces of larger holdings, not family farms.

But for the farmer-owners, that didn’t relieve the sting of losing a piece of their enterprise. Ted Locke, who owned one piece of land offered for sale, didn’t think he could stomach attending the auction. “I just didn’t want to do that,” he said.

He was less optimistic about the auction’s message for the future than most. Outside the hotel hosting the auction, optimism also was hard to come by. Earlier in the morning, a half-dozen farmers had parked their tractors in a vacant lot a few blocks from the hotel for a “farm rally.”

Plight of Farmers

The vehicles were decorated with American flags, banners from Midwest farm states and signs with angry messages printed with felt-tip pens.

Organizers said the rally was not intended as a direct protest of the auction, but rather was an attempt to take advantage of it and seize some publicity for the plight of the nation’s farmers.

The rally and subsequent mile-long convoy past the hotel attracted nearly as many reporters as farmers, a desultory turnout blamed, in part, on rainy weather that threatened the last of this year’s harvest.

Nonetheless, the few farmers and sympathizers who did show up had spirit, and a message.

“Every 4 1/2 minutes, another American farmer is forced off the land,” said a sign draped across one tractor. Steady rain soon reduced the message to running ink.