Buying heavy equipment brand new can be expensive. That is why an increasingly large number of Canadian business owners are getting their compactors, drills, cranes, and excavators from heavy equipment auctions.
Yet, some business owners are still apprehensive of auctions, having heard horror stories of buyers getting stuck with lemons. Understanding how equipment auctions work and completing your due diligence can certainly minimize buyer’s remorse.
With the right preparation, you will find that equipment auctions are some of the best opportunities to secure excellent and reliable assets at a fraction of their original cost.
First Capital Leasing specializes in auction leasing in Calgary and Alberta. Our flexible equipment leasing and financing solutions provide you with the capital to procure every asset you need at auction.
The process of getting the best deal for your money at an equipment auction begins days if not weeks before the actual event. Researching your sellers and the items on auction in advance can help you separate the wheat from the chaff and make your decisions more focused come auction day.
The last thing you would want to do is to let your emotions or gut feelings dictate your equipment purchase. This is how buyers end up with clunkers and a smaller bank account.
Your pre-auction due diligence includes:
Determining the reliability of the auction: Heavy equipment auctions are extremely popular around Calgary and across Alberta. However, not all auction companies carry the same pristine reputation. Verifying their company records and financial reports can be a good way to gauge the reliability of these companies. The logic is that you are less likely to get a defective item at an auction hosted by a trusted company.
Determining the reliability of the seller: Are you looking for a used baler and one of the sellers is auctioning exactly what you need? Make sure the seller is trustworthy before buying from them. You can research a seller’s credibility by going through their customer reviews and testimonials.
Researching the reliability of the auctioned assets: Sellers will only tell you good things about their products. That does not mean that what they are selling you is in perfect condition. Always ask the seller to back up their claims with maintenance history records and specs sheets. You can even check the vehicle identification number (VIN) online to confirm the equipment’s ownership records.
Lastly, you may want to make sure the equipment has a clear title and does not have an outstanding lien.
Researching the value of the auctioned assets: Your seller may be auctioning a good product, but are they pricing it fairly? Look at the market price of comparable equipment from other auctions, private sales, and even dealerships. This will allow you to determine whether the seller is asking for a reasonable price or too much. Conversely, a deal that seems to be good to be true should raise suspicions as well.
Knowing the market prices also lets you set an informed bidding range.
Doing your homework is only half the story. You may have identified a machine in mint condition sold by a reputable auctioneer, but you are also competing against a dozen people for it. How do you make sure it is yours by the end of the day?
You probably cannot, but neither should you. Participating at an auction is an exercise in restraint; it is about correctly estimating the value of a used item and not paying a dollar more. A smart buyer knows that they can always try their luck in the next auction.
If you insist on going home with something in tow, consider equipment leasing instead of auction leasing. Equipment leasing can be a financially manageable means of procuring state-of-the-art heavy equipment and will beat a bad auction deal every time.
Auctions can be both scary and exciting at the same time. It is scary because landing on faulty equipment is not outside the realm of possibility. But hundreds of business owners flock to auctions because the prospect of finding a diamond in the rough at a bargain price is just too alluring.
Avoid buyer’s remorse by researching the auction company, the sellers, the equipment on auction, and market prices in advance. Such knowledge can help you distinguish the good deals from the bad and determine how much you should be paying for them. But perhaps the most important lesson is to leave your impulses at the door; overpaying for an auction item, no matter its condition, is rarely a good idea. There is always next time.
Does the idea of shopping at an auction excite you? Get your auction leasing approved at First Capital Leasing. As a leading equipment leasing and financing firm serving Calgary and Alberta, we are committed to providing you with access to any equipment your business needs to thrive. Call us at 403-255-5508 or fill out the online contact form to explore your leasing and financing options.
Q: Are there auction fees I need to be aware of?
A: Yes. If you buy a piece of equipment at auction, you will likely also need to pay taxes, a buyer’s fee, and a registration fee.
Q: Can I get financing directly from the auction house?
A: This is not always possible. That is why bidders obtain loans or financing or leasing agreements from equipment financing companies like First Capital Leasing.
Q: What is a reserved or unreserved auction?
A: Auctions can be reserved or unreserved. A reserved auction means that items will not be sold to bidders unless they reach a baseline price (the reserve price). An unreserved auction means that there are no minimum bids and that every item is sold to the highest bid.
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