Heavy equipment auctions present great opportunities for business owners to purchase good-quality, affordable machinery at an advantageous price point. In addition to significant cost savings compared to buying new equipment, you may also be eligible for potential tax benefits since the equipment is “new to you.”
Despite the financial advantage, there are risks to buying at an auction. However, if you do your research, you can mitigate the risks and feel confident in your purchase.
Here are ways to prepare for the upcoming heavy equipment auctions:
- Inspect the equipment
- Ensure a clear title
- Research and compare pricing
- Secure auction financing
- Understand the bidding process
Inspect the Equipment
Equipment at auctions are sold “as is” and “where is” but oftentimes offer online inspection reports. If a report is available, make sure you obtain a copy. You’ll want to note the age of the equipment and usage history (miles, hours of operation, terrain, etc.) and examine any pictures for damages or signs of wear and tear, especially if you can’t get to the site of the auction. If possible, you or a qualified mechanic should inspect the equipment firsthand. If you’re able to attend the event onsite, arrive early and evaluate the equipment’s condition.
Ensure a Clear Title
You will also want to verify that the equipment you are interested in has a clear title and that ownership can be transferred to you, lien free. Your equipment lender will also need proof of clear title to finance your purchase. Some auction companies guarantee a refund if liens are found on the equipment after you purchase. You need to ensure that this is true with the auction you attend. If these guarantees are not stated in their terms and conditions, we recommend reaching out to the auction house and asking for information on the current owner and lienholders. If liens exist, make sure that they will be removed when sold. This is also where an experienced finance company can help. A finance company with industry expertise may be able to assist you in confirming that you will be acquiring clear title to any used equipment you are purchasing.
Research and Compare Pricing
Before purchasing, you should search the current inventory online, compare similar items side-by-side and decide on maximum amounts that you are willing to pay for those items. Pay close attention to the options and specifications list for each piece of equipment. Options can significantly add to the purchase price and thus make side-by-side comparisons a little more difficult. Also, be aware that auction companies typically charge a buyer’s premium up to 10% of the purchase price. These premiums are fairly standard and could alter the amount you’re willing to bid.
If you want an easy way to keep track of your interests, most auction companies provide the ability to create an account on their site and add items to a watchlist. Once you finalize your purchase list, you’ll want to secure financing for the amount you’re expecting to spend.
Secure Auction Financing to Increase Your Buying Power
If you are looking at purchasing iron at an upcoming heavy equipment auction, whether you plan to bid online or onsite, you should get pre-approved for a used equipment loan. Most national sellers require the purchase amount to be paid in full before equipment can be released from the auction site. Instead of tying up your working capital for this, consider getting a letter of approval from an equipment financing company before attending the event.
Commercial Credit Group (CCG), for instance, can get you pre-approved for credit, which increases your company’s buying capacity and helps you put your equipment to work faster. We offer up to 100% financing with flexible terms and can customize your equipment loan to meet your business’s specific needs.*
Understand the Bidding Process for Onsite or Online Equipment Auctions
Attending an auction can be an exhilarating experience, especially your first time. Auctions can be extremely fast-paced and if not prepared, first time attendees as well as seasoned veterans can get caught up in bidding wars or can be easily overlooked in a large auction hall if you don’t understand the bidding process.
Whether you’re attending the auction in-person or online, we suggest reading the policies and familiarizing yourself with that specific auction’s bidding process. Typically, you will need to register online prior to auction day or when you arrive at the auction site. If you arrive early, you will be given time to inspect the equipment and find a good seat in the auction area. Be sure to check the auction calendar to verify the exact time and day that the equipment on which you are bidding goes up for sale. If you are interested in multiple pieces of equipment that are being auctioned at the same time, you may be able to place a proxy bid. If you appear in person you may also have a chance to meet with transportation companies to arrange for shipping of your purchased equipment after the event.
Keep in mind that there could be additional bidders from online equipment auctions. With the growth of technology and the COVID-19 pandemic, more and more buyers from around the country are utilizing the online portals to place bids which could intensify the competition. A good tip, set a maximum amount that you are willing to spend on a piece of equipment and don’t bid over that amount, regardless of the situation.
Have Fun!
Popular auctions held by Ritchie Bros., Yoder and Frey, Jeff Martin, and Alex Lyon & Son are approaching and will be here before you know it. Held in sunny Florida, these can serve as a nice getaway for construction business owners around the country. Most importantly, these heavy equipment auctions, along with others around the world, help businesses obtain the equipment they need in preparation for the busy months ahead. By following the steps above, you’ll be ready for the upcoming auction season, feel confident in your business decisions, and be able to enjoy yourself.
To secure financing, contact CCG. We have local experts in construction equipment financing that can meet with you in person before the event to discuss your options.
Download the FREE "Heavy Equipment Auction Checklist" to get prepared!
*All financing is subject to credit approval. All terms and conditions are subject to change due to credit profile and economic conditions. Interest charges and payments may be adjusted based on delivery date of the equipment and will be indexed to the date of approval. Additional down payment, security deposit or advance payments may be required.
