What to know before you hit that next equipment auction
What advice can you give both buyers and sellers as prime farm equipment auction season approaches?
Ritchie Bros. Auctioneers
Act now for the best deals
I doubt this the first time you’re hearing this, but there is likely to be a large surplus of used agricultural equipment on the market in Spring. This is driven by a couple of different factors.
First, equipment manufacturers have been aggressively trying to battle each other for market share, which is driving a lot of new equipment into buyer’s hands and forcing a large amount of used equipment into dealer lots, auctions and private sales.
Second, additional profit typically lends itself to producers trying to upgrade or grow their operations. Aggressive buying habits, combined with manufacturers wanting to increase market share, has resulted in this problem – or opportunity, as we like to call it. We saw inventory at Ritchie Bros. auction sales throughout Western Canada grow over the course of 2018.
If you are a buyer, take advantage of the largest amount of used equipment ever at auction sales, as there will be some “deals” based on sheer quantity.
Sales director at @RitchieBrosAg predicts there will be some good deals at auction sales in #westcdnag this year due to sheer quantity of used equipment. Tweet this
For sellers, be sure to partner with a company that can reach buyers outside your local region. Technology and ease of transport have made the agricultural equipment market more open than ever, but most online or “do-it-yourself” programs aren’t very well known or do not satisfy the depth of the market. In competitive times like these, you need a company with a proven track record of producing results and finding buyers.
Do your research before buying
Actually, while spring is still a big auction season, fall sales have become just as important for us since equipment dealers often want to reduce their inventory heading into winter. Our auction sales happen throughout the year with the exception of July and August.
On bigger stuff in the $100,000 to $200,000 and more price range, a buyer can save a lot of money at auction compared to buying through a dealership. The age of a piece of equipment matters of course, but the biggest factor is condition. People judge by outward appearance. Clean and shiny is important, and equipment that has been stored inside always sells for a bit more.
It’s important for buyers to do their research and that’s possible even in most consignment sales. The equipment comes from reputable dealers who can provide its history. Dealer financing isn’t available at auction sales, but other financing can easily be arranged.
Internet bidding has become a huge part of the auction business. About 30 per cent of our sales go to online bidders. It would be interesting to know how many times the back-up bidders were online as well.
Buyers want lots of pictures and lots of information on auction websites so they can make purchase decisions without ever seeing the equipment in person. Tweet this
It’s interesting to note that sometimes even local people bid online to save themselves time. And they can also bid anonymously.
Sellers, consult your accountant
One of the first steps for farmers thinking about having a farm sale should be talking to their accountant for financial and tax advice. Farmers will want to minimize tax implications, considering the large cash flow increase that an auction will produce.
An important aspect is choosing a good time for a farm sale. April, June and July are usually considered optimal months for a farm auction. We, as a company, try to avoid auctions in the busy farming months as farmers are focused on either putting the crop in or taking it off. The winter months can be a challenge due to the harsh realities of Mother Nature.
Another factor for sellers to be prepared for is that most buyers want to talk to the seller regarding their equipment. A lot of potential buyers feel they can get a lot of good information from the farmer who has owned, operated and serviced the equipment to be sold. The auction company doesn’t know the history of the equipment like the owner does. In some cases, a potential buyer will request that an independent mechanic examine a piece of equipment in advance of a sale.
Our company conducts on-farm, single dispersal auctions, so in turn, most potential buyers attend the farmer’s yard. Buyers will potentially form an opinion of the equipment based on how the farmyard is maintained. This can reflect how the equipment has been operated and serviced.
If buyers are planning on financing any purchases, it is important to have this arranged in advance of the auction. Most farmers factor in after-sale costs such as trucking, but it is wise to research this beforehand to avoid any surprises.
From an AgriSuccess article.
Be ready before you kick the tires. Call us at 1-800-510-6669 and get pre-approved now.