Selling Farm Equipment With NO Reserve | Why Its NOT Scary
Selling Without a Reserve is More Effective
One of the biggest struggles a farm equipment auctioneer will ever tackle is helping clients understand that selling farm equipment unreserved is more effective. Everybody wants to keep as much control as possible, so they lean toward using reserves. Many do not realize that reserves almost automatically guarantee less money will be bid on the item. The pattern is such that around 90% of sellers will still take the reduced price anyway – this coming from our hundreds of farm equipment auctions and multiple thousands of pieces of equipment sold.
Unreserved auctions attract more bidders, give interested buyers more confidence, create more competition for the equipment, and result in better sale prices.
To really grasp this you have to put yourself in a buyer’s position. Think of the message you send as a seller when you sell unreserved. It means many things, but above all it says the seller is committed. Bidders respond better to unreserved auctions because the time spent bidding is more worthwhile. The seller has shown commitment to sell, which means bidders will bid more often, thus resulting in the highest possible sale price. In fact, in today’s equipment market there are many buyers that will not bid on reserved auctions – they see it as a waste of time. Many of them do not consider reserved auctions for farm equipment “fair”. The unreserved label is so powerful that we’ve seen as much as a 25%+ gain in sale prices between similar items that were sold reserved versus unreserved.
Our customers sell farm equipment for a myriad of reasons. They may be freeing up trapped capital or intend to upgrade to a newer unit. They may also be selling lease buy outs, liquidating an estate, or trading equipment in hopes of a profit. In every one of these situations time is of the essence. Sometimes a potential customer says to us, “I don’t have to sell it” or, “I’m not going to give it away”. This may simply mean that an auction isn’t right for them. I’m not saying an auction wouldn’t achieve the market price for the item.. it would. But a seller has to have a realistic view that the market is the market and it will produce the right price when sold absolute with no reserve.
Farm Equipment Opportunity Costs
Opportunity costs alone should be a big driving factor when trading equipment, especially where financing exists. Is it worth holding out for an additional $5,000 that the market may never bear for you? All this while paying interest plus the loss of future potential income from the next place you could have put that money? This is the reason farm equipment implements don’t keep trade-in units around very long; their opportunity costs are too expensive to not sell to a reasonable offer so they can turn around and put that money to use on a another deal. For every day selling is delayed, you literally delay the usefulness of that money and its future income. Turn-around time can and will be a significant factor in growing your dollars over time.
Should you be the exception to this rule? Is your situation different? Maybe… but you have to consider that there are already many no-reserve farm equipment auctions for bidders to bid on. In fact, over the course of the last 10 to 15 years the majority of farm equipment auctions have become unreserved. Bidders are beginning to expect this, as it removes the potential for a “no sale” of an item they are interested in. One thing I know is that almost every equipment seller I sold for, is also a buyer at some point. The constant buying, selling and trading is very much a part of farming.
CAI Auctioneer, Land Broker
Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from the World Wide College of Auctioneering, and has achieved the PRI designation from the Professional Ringmen Institute. Jason and his wife founded DreamDirt in 2005, and the company continues to be a leader in the farm auction space and prides itself in offering extensive land seller and buyer information.
Email: firstname.lastname@example.org | Phone: (515) 537-6633
Sell Equipment With DreamDirt
Our approach to selling equipment takes advantage of the best part of the auction method, but offers the convenience of an internet buying experience (less travel, less time commitment, and faster turn around times). We are focused on providing fair and simple transactions, building an extensive bidding community, and providing technology, processes, and systems that simplify the sale of farm equipment. Remote buying experiences are improved with our thorough approach to documenting equipment with photos and videos so you get the best possible inspection of the equipment.
What happens if you insist on a reserve for an item? We do not use reserves in our farm equipment auctions. We reserve our auction space to committed sellers that will offer their equipment to the highest bidder and we invest heavily in advertising those items. If you are in a situation that selling unreserved is not a possibility because of liens or financing considerations, you are able to sell your equipment using a listing in our marketplace. These types of listings are not an auction – its like putting it on Craigslist. Your item has a price and buyers can decide if they want to pay it or not. You can list one item or an entire line of equipment.
Either way, we hope you see the value in selling without a reserve. The equipment market is hot, and we believe now is the time to sell. We have the customizable options to help you get it done, and get it done right!
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Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from...