| How to Buy Equipment At Auction |
|
|
| Written by Michael J. Hunyady | |
| Sunday, 03 June 2007 | |
|
Page 1 of 2 Construction Business Owner, January 2007 Today's auction arena provides contractors with the finest selection of used equipment, rolling stock, tools and materials ever known. Outstanding bargains on rudimentary and hard-to-find equipment exist in this dynamic and blossoming industry. Equipment of all sizes, types, vintages and conditions are sold in this popular secondary market. Savvy and prudent equipment buyers are building and supplementing their fleets while saving untold dollars. Hundreds of auction companies offer thousands of products weekly all over the booming domestic market, as well as the growing international auctions. The auction method also contains the elements of mystique, psyche, intimidation, unscrupulous players and unsavory terms that can adversely affect the experience. Buying a "pig-in-a-poke," buyer's remorse or illegitimate practices can be very real possibilities for the uneducated bidder. Preparation and understanding will hone the necessary skills to gain the best from this forum while containing costs and not wasting time. Some auction buyers will make this a lifelong endeavor, while for others it will be on an as-needed basis. No matter the frequency, the successful auction buyer must consider and understand the following:
Please understand that scenarios and situations are endless in this ancient but still developing industry that is sometimes loosely regulated. However, we will explore some basic issues and background that influence civilizations purest economic form when properly conducted and attended. The Auction Method Webster defines the word auction as, "A public sale of items to the highest bidder." Simple enough? Not really! The auction we know today can be manipulated and adjusted into a fairly complex offering that may have various pitfalls for the potential buyer. It may not be "public" as in closed dealer auctions, and the development of the "highest bidder" may have varying connotations. The type of auction most familiar to contractors is the traditional style of items being sold in lots via a bid caller, the auctioneer. There are other types: silent, blind, Dutch, sealed bid, etc. A "lot" could be one hydraulic excavator or one thousand pieces of drill steel. They will be identified by lot number and description in the sale day catalog with a corresponding number on the items itself. This approach from a functional standpoint is fairly uniform in the industry. What is not uniform is the style in which it is executed, notably "with reserve" or "absolute." The Uniform Commercial Code, the law regulating commercial transactions accepted by most states, indicates: "An auction is with reserve unless the goods are in explicit terms put up without reserve...." The terms "absolute" and "without reserve" are synonymous. The National Auctioneers Association defines the term "absolute" as: "An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve." Let the buyer beware that if an auction is not specifically advertised absolute and without reserve or minimum, it in fact is. Compounding this problem, unscrupulous auction companies may start the bidding themselves, allow "shills" or "plants" in the crowd or permit owners to bid on their own equipment. Legitimate, unknowing and un-condoning auctioneers may fall victim to a dishonest seller's attempt to have his equipment bid on to enhance the selling price. When an auction is not absolute, it is with reserve and goods are sold "subject to owner's confirmation." If a reserve or upset price is not met, he cannot say "sold," he must "pass." To have a shill in the crowd, for the auctioneer to run the bid or allow the owner to bid unbeknownst to the crowd is illegal, unethical and unfair. The wise auction attendee should understand and be aware of these possibilities. Goods sold at auction are generally sold "as-is," "where-is" without any warranty express or implied. Auctioneers do not warrant fitness for a particular purpose, but do and must warrant good title without liens or encumbrances. In certain instances, creditors are given the right to bid to the level that they are owed in a default situation. This is called credit bidding and is provided for by law. Debt and true value are two different things and should be considered when attending these auctions. The auction method, when legitimately and professionally conducted, provides a pure forum to establish selling price through competitive bidding by bona fide purchasers of the goods. It is not, and should not be, a preconceived notion of outcome. Every auction is different and unique. Varying results occur on any given day, in any given location for any multitude of causes and factors. Auctioneers Auctioneers and auction companies can be so diverse it may be difficult to say they are in the same business. One may exude total professionalism complimented with unconditional integrity, product knowledge and great service. Another may be rude and dishonest and know nothing about the goods to be sold. However this doesn't mean that the potential buyer cannot find a bargain at auctions conducted by either, although the shear aggravation and disappointment may preclude the latter. Many states require an auctioneer/auction company to be licensed. This license is backed with training, testing, bonding and continuing education. States with licensing requirements have an auctioneer board available with which to wage complaints. The intentions of an auctioneer may be indicated by the quality and truth of their advertising, affiliation with professional trade associations, a visit to their website and references from other auction attendees. An auctioneer's ability to provide quality auctions is the most important part of their reputation. Some are better than others from a geographical and product type standpoint. Before the equipment buyer ventures to an auction, considerations should be given to the quality and level of the auctioneer. This information weighed with travel time, cost of doing business and true need of the available equipment needs to be considered before investing time and effort. Remember, the quality of an auctioneer is not only measured in their ability to melodiously call bids. It's also measured in the quality of their understanding of strategy, logistics and their staff. The proper staff should provide parking, short registration lines, informative catalogs, sale site comfort needs, understandable order of sale, security, quick payout, loadout and many more value added details.
   |
