Greg Peterson, the founder of Machinery Pete, has been tracking used machinery prices for more than 30 years. As such, he’s witnessed a lot of different strategies (and perhaps flounders) at auction.
On a recent AgriTalk radio interview, he gave some perspective on what makes these certain tactics successful.
Universal Auction Bidding Rule
“No. 1, you should have a number in mind when going into an auction,” he says.
Focus On Strategy, Not Bargains
“It’s easy to research and see estimated values. Everyone knows the ballpark for what items should go for, so it’s not a big anticipation of hoping an item goes for 60% on the dollar,” Peterson says. “That said, there are always bargains at every sale. And it’s wide open to apply bidding strategies in your favor.”
The Walk Away
One strategy he often sees is the “walk away.”
“A bidder will finally shake their head, physically turn and walk away,” Peterson explains. “On average they probably go about 12’ to 15’ away while the auctioneer continues their chant. About 70% to 75% of the time, the person who physically walks away bids again. And usually, it’s twice more.”
Peterson says when you’re bidding on an item and a “walk away” does come back in with a bid, go on the offensive and reply with your bid immediately.
“It tells them, ‘You can bid again, but you know I’m going to get it.’”
Come In High And Hard
When auctioneers start the bidding, and then drop it down to pull in interest, it opens a window for determined bidders to take the reign.
“Let’s say an auctioneer has an item and asks for $50,000 without any takers, and then to let everyone play they take the bidding down to $10,000,” Peterson explains. “I haven’t seen it done much, but when it’s done, it sucks the oxygen out of the room. Then if a buyer comes in high and hard, let’s say at $40,000, it’s not uncommon for them to walk away the winner.”
Hop In Late
Peterson says a tactic that wasn’t seen as much when the market was down is re-emerging with the hottest items.
“It’s how most of us are wired, actually, because we aren’t about jumping in high and hard. We wait and see if we can still get it under the price we go in with,” Peterson says. “But when we get a lot of competitive bidding, the percentage of times a bidder will hop in late is rising.”
The new bidder gives the sale a second momentum.
“And smart auctioneers will call out that there’s a new bidder because it tells the audience when someone is jumping in late it’s still a bargain,” he says.
The Jump Bid
This strategy relies on body language.
“If a new buyer comes in, and you were the last bidder, return fire and bid quickly—think about upping it,” Peterson says. “In that way, you’re telling the late bidder, ‘Welcome to the party, but you aren’t getting it.’ Any time I see a jump bid, there’s body language to it.”
If you still want an item, Peterson says, it’s a mistake to hem and haw.
“It may be $1,000 more, but it saws off the momentum and tells everyone that item is yours,” he says.
You can join the conversation with Greg at MachineryPete.com