Asset management is an important issue for asphalt contractors. With new pavers costing in excess of $300,000, equipment resale value can comprise a competitive advantage. Even with items that remain productive longer, it's important to find a valuable sales channel when equipment reaches the end of profitable use.
Traditionally, paver owners have had limited options when it comes to selling used equipment: selling it back to the manufacturer or dealer, listing it in the classifieds or taking it to an auction location.
Although many contractors have their pavers refurbished by the manufacturer and given back for extended use, they also look to manufacturers when it comes time to sell their equipment as well. While this enables contractors to significantly improve equipment condition, it doesn't always yield the best price realization on the used item.
To offset the cost of refurbishing equipment, manufacturers often do not offer much for used equipment. Similarly, trading a paver into a dealership may provide leverage for negotiating the purchase price of a new paver, but contractors rarely get top dollar for their used item.
To increase resale value, many owners try to sell their used equipment through classified advertisements. Sometimes this approach yields a higher resale value for the owner. However, it can often be a time-consuming process, creating headaches for sellers who must be available to answer questions and handle prospective buyers.
Advantages of online auctions
Today there is a new option for contractors. Online auctions can provide a hassle-free, profitable sales channel for those looking to sell their used equipment. Because they are not tied to a specific location or region, online auctions can reach a global audience of interested buyers, ensuring more bids per item than traditional auctions. As buyers compete to "win" items, owners realize better prices for their used equipment.
Some online auctions also take on traditional seller responsibilities such as fielding calls and handling questions from prospective buyers. In addition to listing the equipment and necessary information, online auctions can actively market items to better connect buyers and sellers.
By monitoring website traffic, online auctions can create a strategy to increase the number of visitors to certain items. By using print ads, HTML e-mails, phone calls and other tactics, some online auction companies even allow bids to be placed before the auction begins.
Online auctions also offer greater convenience. Sellers are able to list their equipment from their workplace or home. Once the equipment is consigned, the seller has little to no responsibility to find interested buyers, and often does not even need to transport the equipment.
Online auctions allow items to remain at the seller's location. Once the item is purchased, transportation can be arranged to pick up the item directly from the seller.
What to look for
Detailed inspection reports provide an invaluable service to online auction participants. Since sellers cannot physically show their equipment to interested buyers all over the globe, a detailed equipment inspection report on the company's website provides a way to communicate the exact condition of the equipment.
Auction companies that provide inspection reports ultimately generate better prices for sellers, especially when accompanied by an equipment guarantee. Anyone looking to auction equipment online should choose a company that offers both services. For buyers, an equipment guarantee allows them to shop, bid and buy with confidence.
A secure payment and equipment delivery process can also relieve anxiety on both the buyer and seller. This transaction comprises the most significant component of online auctions.
Sellers should look for an online auction company that can verify and guarantee payment, and buyers should utilize auction services that provide a secure method of transportation and delivery.
The best auction companies function as intermediaries between the buyer and seller, protecting both parties.
One example might use the following process: once a buyer wins an item, the buyer is required to pay the auction company directly. The auction company then notifies the seller to release the equipment. When the equipment is received by the buyer and its condition verified, the company then releases the payment to the seller.
In this situation, the auction company stands behind the entire process, fairly moderating the exchange.
How to sell equipment online
When deciding which online service to use when selling equipment, visit auction company websites to get an understanding of how the auction company does business. Look for pages that clearly explain auction formats, policies and features. This will give sellers an opportunity to place themselves in buyers' shoes.
The site should be easy to understand and use and have plenty of information on equipment offerings, including equipment makes and models, product categories and locations.
The next step is to meet with an auction company representative. Many online auction companies have regional representatives who will meet with prospective sellers. In the event that it is not possible to meet in person, contact customer service to address any remaining questions.
Ask the representative about providing an inspection report to buyers. In most cases, this report increases equipment resale value. Be prepared to furnish documentation on equipment.
Next, consign the equipment for sale. If meeting with a representative, in many cases they will bring the necessary paperwork to sign or direct you to the website for those materials. A consignment agreement legally recognizes the right of the auction company to sell the item(s) and obligates the seller to deliver the equipment.
It's also important to understand all options. Sellers may have the ability to establish the price at which an auction opens, or set a "win it now" or reserve price, depending on auction type and relevant policies.
Setting a reserve price allows sellers to retain equipment that does not reach a pre-specified bidding amount. "Win it now" prices designate the amount buyers are required to pay to end the auction early by purchasing the product immediately.
Be sure to check on tax-free exchanges. Equipment sold for capital gain may be eligible for tax deferral as outlined in Internal Revenue Service Code 1031. This code allows equipment owners to defer federal income taxes on the sale of a piece of equipment when they buy a similar piece of equipment within a specific time period through a qualified intermediary. Ask a sales representative to help coordinate this paperwork.
Finally, if not already completed, register an online account with the auction company. Registering an account often gives sellers access to important auction information, messages, special offers and other features. It may also help to track the seller's items. Often, personal accounts will keep a history of items listed and sold.
Information provided IronPlanet of Pleasanton, CA.