Tips for Buying Equipment at an Auction

Background

If a company is looking to add to its equipment fleet in 2016, auctions offer a great way to buy the machines it may need. With hundreds of events held worldwide and equipment options brought in from all over the globe, potential buyers are sure to find the right fit for their operations.

When looking to purchase equipment through an auction, first things first — research. This involves researching both the marketplace, whether that’s online or in person, as well as the machine a buyer is interested in.
“Do your homework in advance and bid or buy from a name-brand marketplace,” says Jeff Jeter, President of IronPlanet. “Buying online or onsite, bidders should look for a marketplace that provides guaranteed inspection reports detailing everything about the equipment. Inspection reports should be so thorough, like our IronClad Assurance reports, that a buyer feels confident in the purchase even though they aren’t personally kicking the tires.”

Aside from researching the machine’s features and history, buyers should be sure to check out pricing for that piece of equipment and decide a price that’s he or she is comfortable spending.

“Be sure to research historical pricing,” says Terry Dolan, President (United States and Latin America), Ritchie Bros. “Find out what similar items have sold for in the past, so you know what price range the piece you’re interested in might go for. Determine how much you are willing to pay before you bid.”

After researching the equipment, next up would be to secure financing for the potential purchase. Some auction companies may even offer their own financing plans. For example, Ritchie Bros. offers up to 100 percent financing through Ritchie Bros. Financial Services.

“Once you know a price range, make sure you have enough funds to cover your purchase, shipping, etc.,” says Dolan. “Rather than using your company’s working capital, consider financing your auction purchase. Save your cash to run your business and pay for your equipment in low monthly installments. In many cases, you can submit a pre-approval application before you bid.”

Finally, a potential buyer should be sure to give themselves plenty of time on auction day. It’s important to understand the bidding process and ask for assistance, if needed, before the auction starts.

“Follow the auction to get comfortable with the process before you bid,” says Dolan. “And remember, you can never be too early for an auction, only too late! Check the schedule and make sure you arrive in time.”

Equipment Trends

So what’s selling among utility construction contractors? Dolan and Jeter both point out popular items from their respective auctions.

“In terms of trends for the utility construction market, there has been a shift for many contractors from traditional rubber-tired backhoes to mini excavators,” says Dolan. “Mini excavators have more applications and are much easier to transport. As such, there are more being produced by OEMs and we have seen more coming to auction. At our recent five-day, Orlando, Fla., auction in February, we sold more than 100 mini excavators.”

Jeter adds, “We’re seeing fairly high volumes of later model equipment flowing through our disposition marketplace. For example, at our recent Cat Auction Services Sale in Kissimmee, Fla., we sold a one-mile lineup of mid-size excavators, which included Cat 320s to 336s with average years of manufacture between 2012 and 2013. Several sellers of this later model gear were from oil- and gas-related contractors with a majority of the buyer base made up of construction and excavation contractors.”

With contractors gaining more work in some sectors and others experiencing slowdowns, the auction marketplace is expected to remain busy. Used equipment certainly has its advantages and buyers are taking notice.

“Auctions and online marketplaces for buying and selling used construction equipment and trucks continue to gain popularity,” says Jeter. “Supply should trend up as end-users look to upgrade their fleets, dealers and rentals companies rollout their rental fleets and depressed markets like the oil and gas and mining segments look to liquidate and reduce their fleets. Demand and price performance should be steady with relatively strong domestic activity with continued strength in housing starts, infrastructure activity and improvements across many domestic sectors.”

Pam Kleineke is Managing Editor of Utility Contractor.

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