Heavy equipment auctions that offer many items for sale are not very different from many other business endeavors; certain strategies are vital in order to be successful. At any type of auction, both the seller and the buyer establish separate strategies in the hope of being successful at this bidding setting. While sellers look for a method that will allow for getting the highest price for equipment being sold; buyers want a way that will be beneficial for purchasing at prices that are lower than the market value. Both parties can use different successful strategies at the same time.
Additionally, purchasing equipment at an auction requires well-rounded knowledge about the rules and rights as well as the obligations of a registered participant.
Following are some of the basic strategies for heavy equipment auctions:
- Observation – Try to attend any area commercial truck auctions to get a good grasp of what really happens at such sales locations. Observe not only how bids are placed, but the overall flow of the entire process as well.
- Financing – A buyer should establish good financing ahead of time so that the maximum amount that can be spent will be known. Payment of at least 10% of the successful bid amount is generally required to be paid on the day of the auction. This amount should be immediately available since most vendors do not want to wait for that deposit.
- Research – Conduct research on local prices of any desired trucks and establish a limit on the amount to be paid. It is easy to be persuaded with the intensity of a live auction; however, it is also important to be in control of one’s emotions, outbid all other competitors and have the winning bid without paying too much money for the equipment.
- Dummy Bidding – Know how to identify dummy bidding. When attending an auction, make sure that opposing offers are against people who are actually there to purchase equipment and not fraudulent participants.
- Late Bidding – Choose to become a late bidder. This means that as a participant, the amount to bid should be placed in the latter stages of the auction. When using this strategy, it is essential to look for an opportunity when the majority of the people who have been participating have dropped out and it is then possible to bid during the last few minutes, just prior to the falling of the hammer. This can be a successful strategy.
- Bidding Methods – Become familiar with bidding methods that are used by the caller, such as under-quoting. For an item with an estimated price of $290,000 or above; a budget of $300,000 may not be enough to win the auction. Consider an increment of between ten and twenty percent higher than the bidding price.
- English Strategy – This is a simple method of placing a small amount on an item that is just enough to outbid the competitors until the market value is reached and then stop. The biggest advantage of this game plan is to gain information by observing participants that drop out and the amount at which these competitors stop bidding.
For bidders who participate in a variety of heavy equipment auctions, certain strategies must be taken into consideration. It is essential that a bidder know the maximum value of any vehicle that is being sold to prevent falling into something called the winner’s curse, which usually happens when the declared winner pays more than the market price for an item. Once the market value is reached, participants should only bid cautiously. Understand the possible strategies that can be used at heavy equipment auctions as discussed above and leverage that advantage to placing the winning bid!
