Ask Machinery Pete: Best Time of Year to Have Auction?
Mar 09, 2014
From the "Ask Machinery Pete" Mailbag...got this email question today (March 9, 2014). The question and my reply:
Dear Pete: "I enjoy your posts and wonder if you could answer some questions for me. I am approaching retirement and would like your opinion on when is the best time to have a sale in the central Illinois and is there someone you would recommend to do the sale who is well respected and honest." - Greg G.
Pete Says: "Greg, glad you enjoy the posts! As for timing of auction....the past 5 years our data has shown that November - early March best time of year to have auction. The year end tax buying crowd has really grown, into a WAVE actually these last 5-7 years in Nov. & December with the IRS Sec. 179 tax writeoff for equipment purchases being the HUGE factor. This year (2014) however....we'll have to see as the writeoff $$ limit currently dropped down to hardly anything ($25,000 limit now vs. $500,000 in 2013). Congress will likely pick up legislation to up it back somewhere around $200K for immediate writeoff any biz asset purchase (new or used), the thinking goes Washington will try to address this come fall/election time so hopefully before year end.....but if they don't/haven't yet then it would be an open question if auction sale prices would still BUMP HIGHER end of year WITHOUT the tax writeoff bump?
All that said, general rule I'd say has been that good condition used farm equipment with some age on it has continued to sell well on farm auctions no matter when it sells throughout the year, or where the auction is. So here it kinda depends on your equipment line, what you have to draw buyer interest, etc.
No. of sales: this an important factor to chew on. One important reason sale prices on good condition equipment sold on farm auctions has remained strong even since price of corn dropped last year.....there just haven't been many auctions around. So when a nice sale DOES pop up.....my auctioneer friends tell me they get calls from very wide area, again - if good condition used equipment offered for sale. One issue I'm looking ahead and wondering about......will more farmers retire as the lower commodity prices linger and profitability is challenged? I think economics point to yes, will be more retirement auctions coming......that could begin to affect sale prices if we begin to see 25-50% more auctions showing up....more equipment for sale at same time fewer buyers looking to buy.....likely will = falling used equipment values....but most likely will show up mainly on the NEWER used equipment being sold, so 1-5 year old big ticket $$ stuff most exposed to eroding values, so 4WD tractors, self propelled sprayers, late model large combines, 24R+ planters, etc. Already seeing softer sale prices on that stuff....could go softer coming up???
As for central Illinois auction firms, I know many really good options. What town are you in? I think key thing when talking to potential auction firms is getting feel for how they get the word out......INTERNET is the key. They (auction firms) need to address how to let farmers in TX, MN, KY, PA know about your sale using the web....obviously without breaking the bank. Depending on what equipment you have for sale online bidding option and/or taking cell phone bids can be HUGE factor. Look for auction firms that have extensive mailing lists/customer lists built up, not just local but from WIDE area.
I hope this helps a bit. Keep in touch and let me know your plans. When sale time approaches, definitely reach out and get me yours sale bill, we will spread the word through our free "UPCOMING AUCTIONS" section of our www.machinerypete.com
web site, try to send buyers your way!"