There is always likely to be a market for pre-owned construction equipment and one of your main aims is to try and maximize the amount you get for each item so that you can reinvest into your business and balance the books. Here are some pointers on how to set about selling used construction gear, including a guide to the various auction options, how to prepare for a sale, and a look at some of your obligations as a seller.
Here are 10 Tips for Selling Used Construction Gear:
1. Take stock of what you have
Your construction equipment needs can change according to the type of work you are undertaking and you may want to sell some of the items you have in order to upgrade and invest in something new.
The first step before you buy or sell equipment should be to run through an evaluation process and assess each item that you have on your inventory in order to decide whether it needs replacing, or is no longer required.
A regular check of your inventory is always a good idea as your equipment needs can change constantly depending on the type of construction contracts you are currently undertaking.
You don’t want assets on your balance sheet that are not being fully deployed and it makes sound financial sense to sell some gear that you don’t really need to help finance the purchase of equipment you do want.
2. Ready for sale
Once you have identified the equipment that you want to sell there are some standard industry practices that it would pay to follow if you want to achieve the highest sale price.
It is well worth paying to get the equipment professionally cleaned and serviced so that it attracts the right buyer and commands the best possible price.
Arrange to repair any leaks and replace any broken components and if the seat has seen better days, get it repaired or replaced, as this can make a big difference to the sale price you achieve.
You might find that the buyer wants to complete an inspection report before parting with their cash. Anticipate this request and ensure that your machinery has been properly prepared and is ready for that inspection.
3. Auction or private sale?
Although there are potential savings to be made by selling your used equipment through a private sale there is an established market for selling construction gear & equipment through recognized auctions.
Using an auction house should give you access to a larger pool of genuine buyers who have been vetted and payment will be verified and collected before you release the goods, avoiding any potential problems in the process.
There are fees attached to using an auction house, especially if you have to arrange the transportation of the equipment to the venue where the auction is taking place.
A viable alternative would be an online auction, as you can keep the items on your premises until the sale is agreed and the buyer makes arrangements to collect it.
4. The best type of auction for your needs
As well as deciding between an online or more traditional auction you will also need to work out which type of auction process is best for your needs.
There are two main types of auctions, reserved and unreserved.
You will find that unreserved auctions can also be called absolute auctions, but they both mean the same thing. An unreserved auction means that you are agreeing to sell the equipment to the highest bidder and the sale is binding once the bidding comes to an end.
Although this provides some certainty on the day that your construction equipment will sell to the highest bidder, there is always the risk that you might not get the price you want.
The alternative is to sell your equipment with a reserve.
A reserved auction allows you the opportunity to set a minimum sale price, which is the hidden reserve price, and that means you control whether you want to accept the lowest bid offered on the day.
5. Full disclosure
It should go without saying, but it is worth pointing out that honesty is the best policy when it comes to selling any construction equipment.
If there are any faults that you have not reported or the equipment is not in the condition that you have described, this could lead to an abortive sale and a refund demand if payment has already been made.
6. Check out the competition
It is always worth taking the time to evaluate all the auction options available to you and seeing which auction sites might be your best option.
It also pays to look at the results of similar auctions to see what sort of prices have been achieved recently for the type of construction equipment you are selling.
7. Talk to the auction house
You will find that most auction houses will have a representative that you can talk to, and part of their duties will often be to carry out due diligence and ask you some questions about the items you are selling.
Even if you use an online auction process, there will normally be a point of contact who can talk you through the procedure and potentially guide you on valuations.
8. Tax implications
The good news is that, depending on your jurisdiction, you might be eligible for some sort of tax break when you sell used construction gear & equipment.
Make sure you check with your accountant or local tax authorities as to what your tax situation might be. It is possible that you might be able to defer some taxes on the sale of your equipment, provided you buy a replacement item within a specified period.
9. Learn the ropes
You might be keen to get on with the sale of your equipment but learning how to correctly price your items is a sound business strategy.
If you can, attend another auction beforehand and get a clear idea of how the process works and what sort of price you might be able to command for your construction equipment.
10. Check the paperwork
Auction documentation is legally binding once you sign on the dotted line and agree to sell your construction equipment in this way.
Make sure you read through the terms and conditions beforehand, so that you fully understand what you are getting into.
Selling your used construction gear can be a rewarding process, provided you prepare and plan in advance and know exactly what you want to get out of the process.
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