Broker Pat Karst thought the farm being auctioned late last month would be scooped up. The 98-acre plot was of decent quality, and the volunteer fire station in Arlington, Ind., where his firm was holding the sale, was packed with farmers.

Instead, the evening ended with the latest in a spate of failed auctions, after the top bidder dropped out far below the asking price. "The moral of the story is: unrealistic expectations from sellers and more caution on the side of the buyer," said Mr. Karst, who acknowledged...