If you’re looking for the next good bargain, you might want to check out an auction. Bidders can buy just about anything at a good sale: construction equipment, art work, jewelry, and even the basketball with which Wilt Chamberlain scored 100 points.
“You can even buy space on the next NASA rocket launching,” said Greg Forke of Signature Auctions, based in Lincoln, NE.
Forke’s assessment of the auction business was exemplified when a thousand registrants at a new Ritchie Brothers’ facility in Morris, IL, spent $14 million in 10 hours. Used construction equipment poured across the auction ramp as smoothly as molten iron, changing ownership at the rate of 100 sales per hour. Three dozen truck tractors sold in a depressed market, some at prices so low, the auctioneer chided his early morning audience by saying, “These are goin’ so cheap, fellows; ya’ oughta’ buy one for your son-in-law … get off that couch.”
While one won’t find a painting by Rembrandt or that 100-point basketball at a construction auction, there are plenty of good deals to be found.
Unlike the ostentatious auctions held at Sotheby’s or Christie’s, buyers and sellers at construction equipment auctions pull on their jeans and overalls and show up with plenty of mud on their boots from a hard day’s work.
But don’t let this casual dress be an indication of window-shopping — these bidders are serious about equipment. The professional sales staff of the auctioneering firms treat them like millionaires, which a lot of them are, being owners or partners in dealerships or companies buying and selling heavy equipment.
At Ritchie’s Morris auction more than a third of 1,000-plus registrants spent an average of $39,000 with the flick of their registration catalog.
Auction Tips
Don’t do business with rip-off artists, warns Mike Hunyady of Hunyady Auction Company. Potential buyers should do some research by attending a few auctions to become familiar with the procedures.
• The buyer must beware that auctions that are not advertised that are not absolute or unreserved are considered to be with reserved as stated in the uniform commercial code. Some action companies many even allow owners to bid on their own equipment to support the price or buy them back. The uninformed auction attendees may be duped into bidding against the owner, when in turn creates a fraudulent price.
• An auction is a good place to find values, but it’s important for bidders to know their stuff: the fair market value of equipment, the number of hours on a machine, etc.
• Most auctions are conducted on an as-is basis — buyers should take the time to inspect their targeted purchases. Drive it. Try it out.
• Registrants for an auction should arrive with a valid driver’s license or some form of identification and evidence of their ability to pay.
• Registrants should arrange to have a letter of guarantee from a bank or credit union that gives the buyer a line of credit to a specific amount cash deposit or other form of payment ability. Successful bidders must pay for their purchases or arrange for financing before they remove the equipment.
• Although equipment is sold as-is, buyers should insist on receiving a clear title or registration on whatever they buy.
Valuable Function
Equipment auctions serve a valuable function for the construction industry, much like the stock markets perform for keeping equity investments liquid.
“Auctions aren’t like they used to be,” said Jack Lyon at Alex Lyon & Son, “when the sale was initiated by a business closing or a retirement. Today, auctions are more like a supermarket for equipment. If you need a bulldozer for a project, you can’t wait a year for the manufacturer to make delivery. So, you go out and buy one at auction.”
One of the reasons an auction company like Ritchie Brothers has grown at the compound rate of 15 percent a year is that they perform a valuable service, as do the other auction firms, creating a market that provides liquidity for the owners of used and surplus heavy equipment.
For a major construction project several million dollars may be invested in equipment necessary to complete a project. A new major league ballpark may take several years to complete. When the job is finished, part of the contractor’s profit is tied up in equipment, which can be sold at auction.
Auction companies keep construction equipment working for decades under different owners.
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