Although online equipment sales were already commonplace prior to the COVID-19 pandemic, 2020 was a year for the record books says Mark Stock, president and co-owner of BigIron.
“Registrations shot through the roof in March, April and May when online was about the only place you could buy,” he says. “We experienced around 40% growth because of the extra auctions we picked up and that trend is already up over 50% moving into 2021.”
According to Stock, other factors that have contributed to increased buying activity include improved commodity prices, retirement sales and a surplus of used farm equipment.
“We saw a tremendous uptick in equipment values alongside the rise in commodity prices last fall,” he explains. “We also have several retirement sales already scheduled, some a year in advance, and expect to see sales of excess machinery that producers have held onto.”
For equipment financing companies like AgDirect, the surge in online sales contributed to a 75% increase in auction financing in 2020 compared to the previous year. AgDirect offers competitive loan and lease options for machinery purchased through traditional and online auctions, along with the same attractive interest rates for both new and used equipment.
Traditional vs. Online
When it comes to buying used equipment at a traditional auction versus an online sale there are various pros and cons to consider.
Traditional auctions allow potential buyers to examine the machinery up close and ask questions before bidding. At a local sale, buyers may have personal knowledge of the equipment’s servicing background and how well it was maintained and cared for.
In a live setting, buyers can also feel the satisfaction of shaking hands with the seller and going home with their purchase after placing the winning bid, but traditional auctions aren’t always convenient when factoring in time and travel.
In contrast, online auctions give buyers the freedom to shop for the best deal by narrowing their search and widening their geography from the convenience of their computer, tablet or smartphone.
“We started to see a shift toward online auctions between 2007 to 2009,” says Stock. “BigIron online auctions mirror traditional auctions by including pictures and videos of the equipment along with the owner’s name and phone number to help buyers feel just as confident with their bids.”
“With online auctions you don’t to worry about the weather or rely on the availability of the auctioneer, and bidding can take place 24 hours a day,” he adds.
Stock says online auctions also allow sellers to be more strategic in selling their equipment lines throughout the calendar year rather than at a one-day sale.
For example, a seller might start by listing their planter, sprayer or haying equipment in the first few months of the year before readying their combine or grain cart ahead of harvest.
“Do your due diligence before bidding online,” advises Stock. “Call the owner and ask questions, watch the video footage of the machinery when available and read the descriptions carefully. The most important thing is to focus on is whether the equipment will work for your operation at the price it is being sold.”
As the auction market has grown, equipment financing companies like AgDirect have responded with faster, streamlined services.
“At auction, payment is typically due the day of or within 48 hours of the sale,” explains Stock. “AgDirect has done a great job of catering to those lending needs.”
Producers planning to bid at an upcoming auction can benefit from a fast and simple application process that can be completed online, in person or over the phone.
Here’s how it works:
Step 1: The process beings by working with an AgDirect team member to complete an application. It’s a good idea to complete this step at least two days prior to the auction.
Step 2: A credit decision is returned to the applicant, typically within 2 hours.
Step 3: Once approved, the applicant is free to bid at auction. AgDirect will provide an auction approval letter if proof of financing is needed.
Step 4: Bill of sale is procured.
Step 5: Lien searchers are completed on the buyer and seller to ensure the equipment is free and clear of debt or other obligations.
Step 6: An AgDirect team member provides the required financing documents.
Step 7: Documents are reviewed, electronically signed and returned to AgDirect.
Step 8: Finally, funds are disbursed for the sale.
“Unlike financing an equipment purchase at the dealership, auction financing requires the completion of a lien search, but it’s a step we handle on behalf of our customers to protect their best interests,” says Aaron McWhirter, AgDirect auction and private party representative.
“Whether you’re looking to purchase equipment through a traditional auction or online, we can help you get the financing you need before the sale so you can bid with confidence,” he says. “In cases where financing is needed after a bid has been won, we can also offer auction financing as a refinancing option for purchases made within 90 days of the sale.”
Learn more about auction financing by locating your nearest AgDirect territory manager or contacting the AgDirect financing team at 888-525-9805.