Navigating Today’s Equipment Marketplace

by Paul Hendrix September/October 2011
When it comes to reselling equipment, no matter how much research you do or how prepared you are, ultimately it’s the marketplace that determines the outcome of the sale. Understanding the marketplace, effective marketing strategies and the flexibility of your business all contribute to the success of liquidating equipment … both today and in years to come.

In today’s economic environment, it’s increasingly more difficult to re-market and liquidate equipment than in years past. The marketplace has changed significantly and so have the equipment needs of professionals. These changes are affecting everyone across the board from individuals and contractors to asset-based lenders. And, when it comes to re-marketing, sellers have been asking themselves and their colleagues what the best avenue is to sell equipment to get the best return on their investment.

Before you begin searching for options to help with the liquidation, the most important step is evaluating the equipment to see what types of assets you currently possess. If you have a wide variety of items, you can spread the risk around, especially with the volatility of the marketplace and the economy. For example, take your garden variety of items such as loaders, dozers and other smaller construction equipment. They are relatively easy to sell because of their versatility and popularity, which makes it easy to predict what your return will be on assets of that caliber. It is fairly easy to locate recent auction data for like-kind assets so you can see what buyers are willing to pay and thereby forecast your return. You can also try different options with little to no risk to see what sales channel works best for you.

Auctions, wholesale, retail, dealers and other means are all viable ways to reduce your inventory. However, the real challenge comes when you have highly specialized equipment that appeals to a much smaller audience or a particular market segment takes a nosedive and you are left with a surplus of specialized and highly expensive equipment. In the asset-based lending industry, this dilemma is common in today’s economic landscape. Because of the abundance of these pieces and their high price tags, lenders are having a hard time finding the right groups to market them to in order to recoup some of their initial investment. Trying to sell these items through traditional channels may not be the right scenario. In order to combat these challenges, it’s important to develop and maintain client lists that deal in specific categories and industries. By having these networks and client lists, it makes marketing the specialized items easier and less time consuming due to the existing interests of these groups.

Options Are Meant to Be Explored
Now that you have looked at your assets and categorized them, it’s time to explore your options. If the market is hot, you can expect a decent price for your item. Also, scarcity in the marketplace can have an impact and drive up the price. And at times, creativity comes into play, so be prepared to think outside the sales box.

Auctions are a great way to get the highest values for your products and are equally successful at selling common types of equipment as well as the more exotic, highly specialized items. A little friendly competition among bidding buyers makes the selling price climb higher and higher. However, not all online auction companies are the same. Companies like IronPlanet host weekly active auctions where everything is going to be sold that day. There is a sense of urgency, and if you don’t bid on it immediately, the item will be gone. Other online auctions are passive, such as asset recovery auctions where all types of items are thrown together and remain up on the auction block until they sell. Those auctions may run for a week or two with nothing to drive traffic to the auction site or anything that establishes a sense of urgency. Both of those factors combined doesn’t help your equipment sell in a timely manner or at all. Quite often the assets languish on those sites, getting little or no attention from any real buyers.

Another option is to sell the equipment at wholesale. This option typically doesn’t yield the best return as wholesalers purchase the equipment low and then turn around and sell it at much higher prices for their own personal profit.

Selling Equipment at an Online Auction Has Its Advantages
There are many advantages to selling equipment through various channels, but with online auctions, the advantages far exceed other methods. Whether the market is up or down, online auctions provide cost savings in a number of ways, making lenders and sellers very happy.

A significant advantage is access to inspection reports. Some companies offer them; some don’t. Some even post results from inspections conducted by the seller, which presents a serious credibility issue. Inspection reports are vital to the sale of the equipment, especially if you are hoping to maximize your return. Companies like ours not only conduct the inspections, but they guarantee them as well. The inspections not only take the guess work and uncertainty out of the buying process, but they also provide buyers with the confidence to bid up to and beyond fair market prices. Detailed inspections can also help lenders establish whether or not an asset meets lease return conditions.

When you are dealing with asset managers, liquidating excess equipment is essential and money is everything. The ebb and flow of the marketplace decides how much money will be recouped and how much could be lost. By utilizing online auctions, there is no cost associated with shipping the equipment to an auction site because of the virtual nature of the auctions. Not having to move a machine could be very financially beneficial compared to transporting it. Wherever the equipment is, online auctions can sell it from there. However, if you must transport your machinery, do some research first, especially if you don’t transport equipment on a regular basis and don’t understand transportation rates. For this reason alone online auctions have consistently grown in popularity as they have prevented sellers from paying more than they should and have eliminated the hassle altogether.

Another advantage is the global reach of online auctions. Some sellers use smaller regional auction companies that have moderate attendance, poor websites or no online presence at all. Although these companies sell equipment, attendance and visibility are significantly lower than that of an online auction, thereby impacting the selling price. Online auctions provide access to millions of users around the world and have made the marketplace more competitive, which translates to higher returns.

Targeted marketing is yet another benefit to online auctions. Most online auction companies have the capability to capture data that traditional auctions do not. They can usually track its users’ navigating and search habits, which helps to re-market equipment to the right groups of people. This type of targeted re-marketing is especially important when dealing with the specialized equipment market where there is a smaller community of buyers.

Getting the Machine Ready for Sale
With the selection process out of the way, it’s time to get the equipment ready for sale. To ensure you get the best price for your equipment, it needs to be in the best condition possible. And a new paint job is not always the right way to go.

If the equipment you need to sell came from a lease return, you must evaluate the equipment and decide what preparations need to be done to get it ready to market. The preparation time allotted to make the machinery presentable is entirely up to you, but remember, what you put into it is what you get out of it. Putting a little bit of elbow grease into the process will help you recapture part of the initial investment. Regardless of your liquidation option, the equipment should be in decent condition and needs to be clean, free of leaks with good, useable tires, an uncompromised undercarriage, and any additional proper maintenance repairs completed. All of this will significantly impact the maximum return on the item.

One of the things that an asset manager consults when considering liquidating equipment and getting it ready for the sale is the appraisal. Appraisals provide the necessary information on the equipment’s value based on the current state of the market. Knowledge of the marketplace is crucial, as it may be more lucrative to hold off selling certain pieces of equipment if they are seasonal items. For instance, if you have an item that is primarily used in summer projects, you don’t put it up for sale after Labor Day. Sometimes the best way to maximize your return is to wait. Appraisals are good tools to help asset managers make better decisions on how and when to dispose of the assets. But beware! Appraisals are market-based for the most part and after even 90, or 120 days in some cases, the market could have changed dramatically — all the more reason to stay in touch with industry professionals who can advise you on market conditions.

When it comes to the resale of equipment, no matter how prepared you are and how much research you have done, the market ultimately decides the outcome of the sale. Understanding the marketplace, equipment segments and the overall flexibility of your business will contribute to the success of liquidating equipment today, tomorrow and for years to come.


Paul Hendrix has been an equipment pricing analyst for Iron Planet since 2001. He has served the equipment industry for 23 years as a sales representative for two large Florida dealers and in various capacities in the traditional auction industry. Hendrix determines auction values for trucks, equipment, etc. for all of North America and assists with pricing support for IronPlanet’s European operations. He resides in his native state of Alabama.

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