Farm machinery auctions present cost-saving opportunities to purchase quality used equipment. As with any major investment, preparation, research and planning are key to mitigating potential risks and ensuring you feel confident in your decision-making.
AgDirect offers competitive finance and lease options for equipment purchases made at auction – both traditional and online. Chris Richardson, AgDirect auction and private party representative, shares his insights on how to prepare for your next farm machinery sale.
What are the advantages and disadvantages of buying used equipment at auction?
The main advantages of purchasing equipment at auction include affordable pricing on a machine due to bidding flexibility, no high-pressure sales tactics and a wide selection of equipment that is not always limited to one manufacturer or brand.
One of the disadvantages of buying equipment at auction, however, is that the transaction is treated as an “as-is” sale. Depending on the location and information provided at the sale, you may not have the ability to inspect or test out the equipment before committing to a purchase, or there may be some uncertainty about the quality or previous service record of the machine if details are not disclosed.
What are some of the considerations for different auction types?
Online auctions are becoming increasingly popular but there are plenty of onsite auctions which allow bidders to view the equipment in person before they bid. Both online and in person auctions occur because of retirement sales, dealer reductions and traditional consignment sales and there are bargains to be found at each.
How do you advise producers to prepare for auction?
The best thing you can do is speak to your auction representative to find out the history of the equipment and ask for photographs or videos to help determine the machine’s condition and quality. If possible, speak directly with the equipment owner and ask questions.
Your local dealership may be able to pull up the unit’s service history to see what kind of maintenance the previous owner completed in the past.
It’s also helpful to research asset values and recent auction results. Finally, don’t forget to factor in transportation costs. The cost to transport an item can sometimes exceed the price paid for the equipment.
How do you advise producers to financially plan for bidding on used equipment at auction?
Producers who call AgDirect at least a week in advance are most successful with financial planning and can inform the auction company that they are approved. This will prevent any limitations of a max bid that some auctions have if no prior lending approval is in place. Our experienced AgDirect team will help guide you through the financing process.
What advice can you offer to producers making used equipment purchases at auction this year?
Prices are trending upward in auction sales so it is best to get preapproved for the most you would be willing to spend. Machinery is being sold very quickly so be on the lookout for potential purchases. Always research the history of the equipment with a local dealer or auction company to ensure the equipment meets your needs.
Learn more about auction trends and the steps for financing or get started with an auction financing application today by applying online, locating your nearest AgDirect territory manager or contacting the AgDirect financing team at 888-525-9805.