Auctions are a smart way to buy construction equipment, but it’s important to consider the legal aspects of buying at auction. Keep these three things in mind before you start bidding on equipment.
1. Is the Auction Company Licensed?
Many states require that auction companies be properly licensed. Licensed companies undergo training, bonding and testing. They are also required to continue education.
In states where companies are required to be licensed, there are auctioneer boards where complaints can be directed.
One of the most important things to consider when buying equipment at auction is the auctioneer’s quality and reputation. Credible companies have a good understanding of logistics, strategy and staff.
2. What are the Terms of the Auction?
Understand the terms of the auction before attending and bidding.
Auctioneers usually require payment before any item can be removed. Payments must typically be made in full in either cash, check, certified funds or a letter of credit. Some companies will accept wire transfers and credit cards. Auctioneers may also accept company or personal checks, but usually only up to a certain amount.
Plan ahead to ensure that you have the funds to bring home the item you’re bidding on.
- Have your letter of credit on hand when talking to registration.
- Bring certified checks of varying amounts.
Attending the auction well-prepared will allow for smooth registration, settlement and take-home of the items you bid on.
3. How Does the Auction Process Work?
Before attending the event, make sure that you understand how the auction process works. A reputable auction company will provide assistance to new and experienced bidders alike.
If you are unsure of how the auction works or if you have questions, do not hesitate to contact the company and get the answers you need.
Typically, construction equipment is put up for sale in the traditional auction format, with items sold in lots and a bid caller (a.k.a. the auctioneer).
But there are also other types of auctions:
- Blind or Sealed Auction: In this style of auction, bidders all simultaneously submit sealed bids on the item or items. The highest bidder takes home the item.
- Silent: In a silent auction, bids are written on a sheet of paper, and the highest bidder wins.
- Dutch: In a Dutch auction, the auctioneer starts with a higher price, and the price is lowered until a bidder is willing to accept the price.
Unless specified otherwise, expect the auction will be carried out in the traditional format.