Mike Bailey’s father purchased the farm with 39 acres in 1959 for $9500. County Road 8, the diagonal, curving road between Middlebury and Bristol Indiana, was still a dirt road. As so often happens, the investment in real estate proved prudent- in the extreme.
The Bailey farm is located just west of the well-known Bonneyville Mill in the countryside. Nestled between the Little Elkhart River and County Road 8, the buildings aged as farm buildings do, more or less gracefully.
Bud Bailey, Mike’s father, was the fourth owner of the house. It had been owned previously by the Mauck family, who are well-known in the Bonneyville area and the Maudlins. Prior even to that, a rail line had run through the back of the property from Michigan City to Angola. Mike recalls, “I think it cost a nickel or a dime to ride the train.”
The Bailey family remodeled the farm house in 1968 and later added a barn which they had moved from another site to this one. It was in the 1960’s when the county paved the road and in the 70’s the Baileys grew buckwheat for the still operating Bonneyville Mill. After Bonneyville became a county park in 1986, the Bailey farm became a visiting site for sightseers at the mill.
When the Baileys ceased growing wheat for the mill, young Mike Bailey started a tree nursery on the Bailey farm by digging up seedlings in neighboring woods. The scores of pine trees still on the property bear evidence to Mike’s enterprise.
Bright Star Enters the Picture
In 1999, Mike purchased 5 acres beside the farm which had a mobile home on it, bringing the land under Bailey ownership in the neighborhood to 44 acres.
It was in 2013, with real estate prices just coming out of the pits of the 2008 recession, when Mike Bailey inherited part of the farm and bought out his siblings from their inherited land, thereby assuming ownership of the entire 44-acre Bailey farm including the two older houses and a few older barns- with the exception of a life-estate he granted to his step-mother on the old farm house. Mike granted this life estate to honor his late father’s wishes.
In March 2021 the step-mother moved to assisted living, the house was empty, and it was time for Mike Bailey to make a decision. He was getting his hair cut at the Electric Pineapple in Bristol when someone mentioned that Bright Star had sold a farmhouse for top dollar in the Bristol area.
Mike had also been in conversations with his neighboring landowner, Dave Fore, about selling his land, how to do it, and so forth. Mr. Fore also mentioned Bright Star.
So Mike called us at Bright Star. Nathan Lehman, one of our auctioneers, soon called him back and they set up a meeting.
Preparing for a Successful Auction
Nate met with him and tried to get an understanding of Mike’s situation and what he wanted to do. He wrote out a proposal and an estimated selling price for him too. Nate told him he estimates the farm would sell between $915,000 and $960,000.
Mike decided to grab the bear by the ears and do it. Furthermore, Mike elected to have us sell all this real estate absolute, meaning there was no reserve and it would sell for whatever the high bid was. This of course, introduces an element of risk (there’s no safety net!). However, it also usually brings more interest and higher prices. Mike understood this, didn’t have any loans on the property, and decided to sell absolute. The auction was scheduled for June 15th.
Now it was time for Bright Star to get to work. Nate got a timber buyer onto the property to give a rough assessment of the timber value to prospective buyers, he loaned Mike our skid steer and mower so Mike could mow the paths around the property, hired a soil consultant to do soil tests on the bare ground so we had an idea of how good the ground was for septic, and spoke with the officials at Elkhart County to see what our possibilities were for offering the land in separate tracts while still leaving all the tracts buildable.
In the marketing department, we sent our staff drone photographer out to shoot the property from the air and take photos of the buildings.
We created graphics of the proposed parcels on the land, created and printed fliers, had our online techs place the auction on our website, and put the property on the mls, which feeds Zillow, Trulia, and many other third-party sites. Then we ran ads in Die Blatt, the Goshen News, the Elkhart Truth, Michiana Showcase, the People’s Exchange, and the Trade Express. We also sent out over a thousand large, color postcards to mailboxes locally.
Black Anvil Media, who runs our digital platforms, ran boosts with videos on facebook and other online platforms as well.
Nate’s phone began to ring.
An Unusual Response
The plan was to hold the auction at the Bright Star Auction Center here at the home office. Metropolitan Title, a local title company we appreciate for their service, agreed to bring pizza for all the auction attendees.
Auction Day arrived. Dave McMillan, our local logistics man, put out Auction Today signs for a final reminder.
We set up the Auction Center with seating, projectors that showed pictures of the real estate and the current price, blank purchase agreements out for inspection, and soil test results.
The auction was set to start at 5 pm. A few bidders began trickling in soon after 4 pm.
At about 4:40, the floodgates opened. Wayne Nisley, one of our accountants and a real estate broker in our office, had been registering buyers by himself. We quickly put two more men on the task to help him and still had to delay the auction by a few minutes in order to get everyone registered. There ended up being 60 registered bidders, which is almost unheard of for a local land auction.
A Million Dollar Moment
We started the auction by offering the 3 parcels on the north side including the buildings via the ‘traditional’ Iowa multi-par method, which takes a bit longer but gives buyers a lot of flexibility to put together different parcels.
We offered the entirety on the north side of the road first. Bidding was strong and landed at $700,000. Then we held the bid and allowed other bidders to bid on combinations. There was some very active bidding on different combinations which pushed the total higher. When the gavel dropped about 45 minutes later, the north side of the road with 32 acres and the buildings sold for $781,000.
Then we went to the bare ground on the south side. This was nice land with some good-looking probable building sites on it. Soil test results had come back good for septic systems.
We used a different method to sell these pieces. We sold the land by the acre. The winning bidder could then take whichever pieces he wanted and just multiply by the number of acres he chose. For example, if the winning bid is $10,000 and the bidder takes a 3-acre piece and a two-acre piece, his purchase price would be $50,000. Whatever the winning bidder picks is off the board and no one else can take that parcel. This puts the first high bidder in control.
Things livened up even more once the bidding opened on this nice land. Jesse, one of our ringmen, found an opening bid of $15,000 per acre, and it quickly climbed from there. Ringmen Ryan, Wayne, Nate and Bronson commenced hollering. The winning bid ended up being $29,000 per acre. The top bidder elected to take parcels 4,6 and 7. This was 8.66 acres for $251,140.
Parcel Five was still left. This one had a steeper hill coming in from the road, which (we assume) is why they didn’t take that one right away. So we sold parcel 5 by the acre. This ended up at $23,000 per acre leaving us with an average of $27,400 on the bare ground on the south side of the road, a total on the south side of $329,395.
This put the grand total selling price of the Bailey farm to $1,110,395. Mike Bailey is ecstatic.
After the auction, our team of brokers swung into action to get the purchase agreements written up, and we extended congratulations to Mike Bailey, who has been richly rewarded for investing in American land. The next day, Nate put the purchase agreements together with the title orders and got titlework going. His next task is to get the property surveyed off as it was sold now, work with the banks and appraisers that are involved, and get the real estate to the closing table.
By Loren Beachy
Have a question about a potential auction? Reach out to us at (574) 825-0704.