The Dangers of Buying Used Food Equipment at Live Auction
Why do many auction attendees get caught up in bidding wars? I recently attended an auction which had both on-site and Internet bidding. On-site auctions have become rare as Internet-only auctions have become more popular.
So, what drives people to continuously increase their bid and in many cases reach prices close to or even greater than the cost of a brand new machine? I used to get upset watching this, knowing that we at M&M Equipment have the same piece of equipment available, refurbished, for less money than an auctioneer’s final selling price on a non-refurbished machine. Today, I have a name for this concept, which I fondly refer to as “showtime”.
Now, after attending hundreds of auctions, I enjoy watching this moment as the bidding begins to skyrocket. The bidders’ expressions and body language rapidly change after their bid has once again been raised. What’s going through their minds as they enter bids higher than the new cost of that machine? “How badly do I want or need it?”, “Are any of my competitors here and bidding against me?”, or just “I’ll show them!”?
People become emotionally attached. You receive an email for a future sale, and you need machines for an upcoming project, so you decide to attend. You research the history of the machines on offer, and discuss the condition with a facility employee who provided a glowing report.
The day arrives and so far you have begged your banker for an auctioneer’s financial guarantee letter, traveled to the auction site, gotten a horrible night’s sleep, driven to the sale location, and waited four to five hours for the lot number to come up. You’re tense, you scan the room asking yourself who you’ll be bidding against, it’s “showtime”.
There are several bidding philosophies: some jump in at the opening bid, while others sit back and wait. The show begins and the asking price has raised quickly. You think of the time and energy you invested just to get to this point and you jump in and enter the bidding war. Before you know it, it’s finally over and you’ve won. It feels good, the auctioneer praises you over the microphone, and you’re happy.
At what point do you add up the cost of your purchase? Purchase price, auctioneer’s buyer’s premium, removal and crating costs, shipping charges, travel investment, and keep in mind that the machine is in “As-is” condition. How much will you invest for repairs and updates to the machine? The numbers add up quickly and you realize you paid 10% to 20% more than a new machine.
With all of the research, inconvenience, and investment, why not request a quotation for a reconditioned machine before the auction? This is a great option and may end your bidding earlier than expected.