Low Hours Equals Big Dollars

October 1, 2018 07:00 AM
 

An amazing trend with used farm equipment has been unleashed here in 2018. An absolute ocean of super low-hour used farm equipment has hit the auction block—the most I’ve seen in my almost 29 years of tracking auction price data.

On Sept. 7, we filmed a farm retirement auction in Woonsocket, S.D., for Machinery Pete TV. Here are a few of the highlights from this auction for Morris and LaVonne Brosnan:

• 2012 John Deere S550 combine, 95.2 separator hours, $184,000.

• 2011 John Deere 9330 4WD, 361 hours, $173,000.

• 2010 John Deere 7830 tractor, 254 hours, $144,000.

• 1972 John Deere 2520 diesel, 2,546 original hours, $27,000.

• 2010 Freightliner Business Class M2 Day Cab truck, 7,550 miles, $67,000.

Why the low hours? Morris told me they actually retired years ago but weren’t sure if their sons wanted to come home and farm.

Also, on Sept. 7, at a farm auction in Walcott, Iowa, a 2013 Bobcat S175 skid steer with 91 hours sold for $26,000 (second-highest auction price ever on S175). A 2006 John Deere 7820 tractor with 2,017 hours sold for $69,000 at the same sale.

Still more from Sept. 7, a 1999 White 8710 tractor with one owner and 1,998 hours sold for $64,000 at a farm auction in Lake Crystal, Minn.

On Sept. 8, at a farm auction in Gaylord, Minn., a Case IH Magnum 245 tractor with 1,002 hours sold for $95,500 (the highest price for that model in five years).

This trend of low-hour equipment has been for late models, as well as older used farm equipment.

At an Aug. 22 farm auction in Montevideo, Minn., a 1997 John Deere 8300 tractor with 868 hours sold for $95,000, making it the highest auction sale price on a John Deere 8300 in five years. The same auction saw a 2010 John Deere 9670 STS combine with 469 engine hours go for $158,000 (no heads), the second-highest auction price on a 9670 in four years.

Our trend of super low-hour equipment has even applied to much older farm equipment. On Sept. 1, at a farm auction in Grand Island, Neb., a 1975 John Deere 4400 combine with only 480 actual hours, sold for a record-high price of $13,000. This same auction saw a 1977 John Deere 4230 tractor with a mere 1,975 hours sell for $26,300. That is the highest auction price on a 4230 in three years.

Behind The Trend. So why is all this low-hour equipment selling in 2018? Part of the answer we addressed in my last column. Since mid-2015, I’ve seen a 50% jump in the number of machinery auctions versus the prosperous ag period from 2007 to 2012.

But there’s more to it than that. Note where the recent auctions took place: South Dakota, Iowa, Minnesota, Michigan and Nebraska. All Midwest.

Now consider the volume of new and used farm equipment purchased during that strong ag period from 2007 into early 2013. Tons.

Most of it was bought to be used, but no doubt a lot of purchases were to use the IRS Section 179 tax write off. Buy it, write it off and hold it. That wasn’t such a bad idea considering the recent age of zero to 1% bank savings rates.

Remember that 1997 John Deere 8300 tractor with 868 hours sold for $95,000 on Aug. 22 in Montevideo, Minn.? Back in 2000, in the same state of Minnesota, a pair of John Deere 8300s in excellent condition with 800 and 960 hours sold for $67,500 and $72,500 on pair of farm auctions. Wow.  

 

For more insights and photos from the auction in Montevideo, Minn., read Greg’s blog at bit.ly/MontevideoMN

Greg Peterson is the most trusted name in farm equipment. Since 1989, he has worked with a network of 1,000 auction companies to track used equipment prices. His website, MachineryPete.com, features equipment listings from dealers and equipment for sale at upcoming auctions.
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