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I Got BURNED! | 5 Mistakes I Made Buying Equipment on Auction

Tags :  auction  |  used-equipment  | 

 

Buying Used Equipment on Auction

With the record level of demand that we see right now for machinery, we bought a limited number of machines, maybe 50 or 60 or so in the last year off of auctions. And I've had a couple of surprises. I'm going to walk you around some of these machines here this morning, show you the tractors. We buy machines in one of two main places. One of them is repossession auctions. Now these are generally dealership only auctions, where we have a good thorough description of the machine from a third party company who inspects it. But oftentimes they miss things, right? Or something seems to work properly when they put the key in the ignition, when it gets here though sometimes it's a different story. I've had some surprises here probably about one in five of these machines is not what it was made out to be.

 

Plugged Fuel Filter

So here we have a BX1880, nice looking tractor, really low hours, just over a hundred or so. But when you put the key in the ignition here and you turn it over, she starts, we'll glow her here for a couple of seconds. There we go. The fuel filters are plugged. So yes, does it start? Does it run? Is it all of these things? Is it wonderful? Sure, bid your maximum, but overlook the fact that if you stick your head down there and you look underneath the floorboards, you could see a fuel filter that is so plugged up. It's really dark around the filtering element and is starving the thing for fuel. So not a big deal. These are cheap filters. We're going to run it through the shop here and get it cleaned up. But in a description on an auction for a machine like this, you can kind of get some surprises with this sort of thing.

 

Not as Pretty as the Picture

This machine here is another repossession. Now this is a B2920, a highly sought after tractor, because this is right before emissions started rolling in and you can no longer get a tractor with this amount of horsepower on this small of a frame. So this is one I really ran after hard. Now with a little bit more hours on it, you're going to see a little bit more in terms of paint fading in some areas of the machine. And those things are hard to pick up in digital pictures. A lot of times, I would say, when we take photos of machinery it looks better in the picture than it does in real life. And small differences, like the shade of orange between the loader and the hood are hard to pick up. In fact, it might be hard to see on video even. The other thing that we found here too, is this, the battery's dead. No, not a big deal, but that's a hundred dollars of additional expense into this machine. And if you're looking at something as a good value or as me for a machine that I'm looking to resell here ultimately, it's a little bit more money that gets driven into the cost of that unit. So some things you want to watch out for, don't necessarily trust a pretty picture on the condition of something and always be aware of those hidden mechanical things that you might find when a machine arrives.

 

Pictures Don't Show All Sides

Now, while I buy most of my machines off of these repossession auctions, public sales are another place that you can buy equipment, right? We may have bid against one of you periodically if you go to these kinds of places. Those machines, I would say 50% or more of what comes off of a public sale has usually got something in it that's a little unexpected. There's a reason why many of those machines are there. This Case tractor is no exception. Again, that color thing that we were talking about earlier, you've got a color differentiation here between the tractor, the loader, but even the skid steer quick coupler down here on the end that may actually be off a Mahindra judging by the shade of red. Also found something funny over here on the loader valve. Over on the side the valve is tack welded onto the side of the machine, and I'm not exactly sure what's going on there. Now we bought this thing at a great price, and it's going to sell for a good price here for a 50 horsepower tractor, but you're going to find some of these kinds of surprises, right? The amount of pictures and stuff that we had buying this machine off of an auction where we're looking at mostly just the side profile of the machine, or maybe one or two around the front, if we're lucky, never really give you a full picture of all the things that you might discover when it comes to things like possibly a Mahindra skid steer coupler, and a valve with kind of, they call it a unique mounting.

 

Descriptions Often Do Not Include Cosmetic Issues

Now this one, I would classify it as a winner, BX23S tractor, loader, backhoe, mower, highly desirable tractor with just over 200 hours on it. You'd think it's got everything going for it. We haven't taken it through the shop and washed it up yet. But at the end of the day, this will be a sharp looking used tractor. But one thing that even you probably can't quite see, there's a large dent right here in the front of the hood. Dents like this, especially when they paint around them, isn't messed up at all, are really hard to pick up on when you're looking at digital photos. When people type up descriptions and stuff for auction machines, they're not going through and looking for these kinds of things. They're going to put the key in the machine, make sure it starts and that everything functions, but cosmetic stuff like this is very rarely found in any kind of description and is easily overlooked. We've had quite a bit of success of popping these things out again. I'll probably give that a shot with this one here eventually, but you got to watch in this kind of stuff. They may not come out completely clean and you might up with a unexpected cosmetic blemish, if you don't see an auction unit in person before you buy.

 

What Type of Ballast

Next up is this Kubota L3301 with about 800 hours on it. Now not a bad looking tractor, but again, there's going to be some surprises in every one of these machines. In the case of this one, that surprise was hidden inside the tires. This tractor came from a Southern state somewhere, and it is not atypical in those Southern states to sometimes see tires filled with water. Now we don't ever do that up here in Northern climates, right? We're going to use weights or antifreeze or beet juice or some kind of solution in there that's not going to freeze in our cold temperatures. But once this tractor was parked up here in Pennsylvania, here through this frigid January that we have just had. We had a big old block of ice in the bottom of these tires. And when you start driving the machine around, creates a little bit of a rattle in the backend. Let's call it that. Now our shop has gone through and taken that water out and replaced it with the proper antifreeze. It should be in the back of the tractor for it to live up here. But that's something you're never going to pick up on, right? Somebody's just going to call out, "Oh yeah, it's got ballast in the back tires," but is it water and water obviously comes along with basically no expense where adding something like beet juice could add 6, $800 to the cost of a tractor like this. That's a fairly expensive ballast material and there's a lot of value tied up in those as well. So those details matter as simple as something as do I have water or beet juice in the back of the tires. 

 

The Used Equipment Market

So those are some of the surprises that I had from my recent auction purchases. Maybe some things that you want to keep in mind kind of keeping an eye out for whether you're looking for a machine on auction or you're buying a used tractor, couple tips, maybe some things that you want to watch out for. I can tell you here, especially through these last two years through the pandemic auction values for equipment are out of control. The prices that we are paying for some of these machines are definitely significantly inflated while pricing of new equipment has not gone up really all that much. There has been some increase. It has not been extreme. I would classify the auction values of tractors as increasing in an extreme amount. They have gone up a lot from their pre-pandemic pricing. And I think a lot of that is simply driven by availability. If you're looking at that machine right there, you can take it home today, where there's some unknowns out there on how fast you might be able to get a new piece of equipment home. Another thing I would want to watch out for too is buying construction equipment, skid steers, excavators, track loaders. You will pay more money for a used piece of equipment with six and 800 hours on it on an auction right now, than you will pay for a brand new one. The pricing in the market is out of control and completely broken right now. And unless you absolutely must have that machine, I would really caution against buying something out of any of those settings. The bidding wars that we're seeing and the values that some of these machines are bringing are just unbelievable, even to us. It's just absolutely incredible. We're seeing some of these lead times close down now on new equipment. So call us in early here. Plan ahead for your needs. Get yourself in line for those new machines that are coming in regularly. We're going to be able to get you fixed up here quickly and hopefully not have you make some kind of bad purchase. 

 

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