Going Once...Going Twice...SOLDWritten By: Mary Sedor
Article Date: 11-01-2006
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Tips for getting the most from used equipment auctions.
Glued to your computer screen, you anxiously await the results of the auction for a 2006 skid-steer with low hours. You're the highest bidder but with seconds to go, you're out-bid.
All is not lost. From Ritchie Bros. Auctioneers to eBay, IronPlanet and Auctio, construction equipment auction companies abound. While some dealers may be hesitant to buy and sell equipment at auction, this outlet can be a great resource without encroaching on traditional channels.
If you're going to buy or sell equipment at auction, there are some key elements to keep in mind.
Maximum Exposure, Great Prices
As an equipment dealer, you're in the business of selling so you know what it takes to get the job done. Why bother going to an auction to sell equipment?
"When the economy is strong dealers use auctions as a source of supply for equipment if they know some of their customers need it and they don't have it themselves," says Denis Prevost, vice president of national accounts for Ritchie Bros. "And when times are soft, auctions are a great way to sell surplus equipment."
According to Prevost, it's a good time to sell used equipment.
"We're experiencing very strong used equipment pricing," says Prevost, "but there are indications that perhaps it is at its highest level right now and it might not go higher.
"The market is good but there's no guarantee it's going to stay this way. Interest rates are creeping up, housing starts have tapered off, and new equipment lead times are becoming more in line with demand - all of these factors in the economy point to stabilization of prices, and perhaps softening in some areas. Now's the time to sell if you have excess."
Canada-based Ritchie Bros. Auctioneers is by far the most well-known equipment auction company. The company has 110 offices including 33 auction-sites around the world. Last year Ritchie Bros. reported $2.09 billion in gross auction sales and more than 203,000 lots.
The company sells used and new equipment at auction. New equipment is typically from manufacturers, or surplus equipment from dealers and contractors.
Ritchie Bros. has expanded its auction options by adding Internet auctions in addition to its live auctions. Now a bidder can be living on an entirely different continent and participate in an auction. This enhanced geographic coverage contributes to higher prices, according to Prevost.
"When a dealer sells equipment, he has access to his home market," says Prevost. "Attracting buyers from outside the local area with auctions equates to higher prices because of higher demand."
Internet bidders take their cue from the people on-site as to the quality of the equipment.
"Our Internet bidders look to the on-site ‘breathers' as a validation of a certain price level on a machine because that person is there and has been able to inspect the equipment first-hand," says Prevost. "The virtual Internet bidder realizes the on-site bidder feels the value is at least up to that level, and therefore, will bid another increment or two above that.
"If the on-site bidder were not there, the Internet bidder wouldn't have the same price validation."
Just as Ritchie Bros. is a global marketplace, so, too, is eBay. At any given time, there are 26,000 construction items available on eBay. The company reports 193 million users, 50,000 categories and a presence in 31 countries.
Started in 1995, eBay has fast become an online marketplace for buying and selling almost anything. As the amount of construction equipment on the site began to increase, the company decided to create a separate construction division. The majority of equipment sold is light, although heavy used equipment also sells.
"We've gotten to the point where we sell 72 pieces of heavy equipment every day," says Danny Leffel, category manager, eBay Business. "The reason you see items selling at such good prices is because it's a marketplace where buyers and sellers can communicate."
According to Leffel, eBay's low-cost structure makes it a viable option for dealers and contractors. There is a $20 listing fee to put large equipment online plus a 1-percent commission of the final sale total with a maximum of $250.
"The inexpensive nature of using the site to sell large equipment makes it attractive for many sellers," he says.
Because the fees are low comparatively speaking, it's possible for both the buyer and the seller to get a great deal."
There is a growing perception in the industry that the Internet is a good place to sell equipment outside the local area, says Leffel.
"It's becoming more mainstream," he says. "Buyers and sellers are leveraging the power of the Internet to reach outside local markets."
Last November, United Rentals announced the launch of certified auctions on eBay. At the time of the announcement, Michael Kneeland, executive vice president of operations for United Rentals, explained that eBay was the best option for offering quality used equipment for sale.
"We are continually upgrading our equipment fleet to provide rental customers with the latest models to meet their needs," said Kneeland. "We regularly have a large inventory of used equipment that has been maintained by our technicians that we can offer to customers interested in making a capital purchase of this kind.
"eBay is the best method to make it widely available, using our United Rentals Certified Auctions."
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