Beat the Competition at Heavy Equipment Auctions – Mistakes to Dodge
When you need to add heavy machinery to your fleet, an auction might be the right way to go. Contractors and other business owners can find a huge selection of good-quality equipment at bargain prices compared to buying it from a dealership or the previous owner. However, buying heavy equipment at auction can be a lot different than buying through traditional channels or even standard consumer auctions.
For example, lots may be subject to a reserve price, which is the minimum amount a seller will accept for the machine in question. This means even if you are the highest bidder, you may not get the equipment if you don’t meet the reserve price. Depending on the auction house, you also may need to pay a buyer’s premium. This is a percentage of the final sale price that goes to the auctioneer to cover operational and administrative costs.
Knowing how to win an auction for heavy equipment means understanding these and many other details, as well as avoiding some of the most common errors inexperienced buyers make. If you want your auction day to be a successful one, one of the best bidding strategies is to watch out for these mistakes.
Pre-Bidding Prep: Research and Budgeting
It’s best not to walk into a heavy equipment auction blind — unless you like wasting your time and money. Reputable auction houses will list equipment on their websites ahead of the event, whether the auction is held online or in-person. This gives you a chance to look up the serial number of the machine you’re interested in, so you’ll know exactly what you’ll get.
Another important element of pre-auction prep is to set your “walk-away” price. This will help prevent getting caught up in the excitement of bidding and spending more than you’re willing to pay. Looking up the fair market value of the unit in question and comparing sale prices for comparable units at previous auctions can give you a good idea of what kind of ceiling you should set.
On-Site and Online Inspection Tactics
It’s always a good idea to inspect any equipment you’re interested in buying. If you have the opportunity to see it in person, you should look closely for any signs of premature wear, corrosion or broken components. If you can’t be there to look at it with your own eyes, it’s advisable to hire a third-party inspector to look at the unit on your behalf and provide a detailed report. It’s definitely preferable to finding out your new machine is a lemon after the fact.
Bidding Strategies That Win Without Overpaying
There’s an art to bidding on auctions. In many ways it’s like being at a poker table — how you bid can be just as important to winning as what you’re holding. For instance, you may want to try scaring off any other interested parties by placing what’s known as a jump bid. This is a bid that’s much higher than previous incremental bids. It can tell the competition that you’re serious and maybe force them out of the running. However, it can be risky if the other bidders are prepared to do the same.
If you’re participating in a timed online auction, you may be able to snipe the auction in the closing seconds. This means waiting for the final few moments before the auction closes and placing your maximum bid. Of course, this will only be successful if other bidders aren’t paying close enough attention or unwilling to go higher than you.
Common Mistakes Contractors Make
As exciting as it can be to win a heavy equipment auction, one slipup can turn that elation into heartbreak in a hurry. Some of the biggest mistakes contractors can make when buying at auction include:
- Forgetting about buyer’s premiums
- Failing to verify the title or lien releases prior to payment
- Not being aware of logistics costs and haul-out fees
- Neglecting to perform due diligence prior to the sale
Post-Auction Checklist: Pay, Pick Up, Profit
Something else to keep in mind when buying at auction is that payment and pick-up need to be handled as soon as possible. This is because leaving the equipment at the auction house beyond the specified grace period can lead to costly storage penalties. This is why you need to be prepared to pay as soon as you can and arrange for transport of your new machinery.
Bid Equip LLC is the Philadelphia area’s leading resource for heavy equipment auctions. We offer regular events featuring machines from leading manufacturers. To learn more about what we have to offer, reach out and speak to one of our representatives today.
