No one takes a light approach to buying a piece of large equipment, nor should they. The right piece of equipment for any construction business requires a significant amount of due diligence before putting out thousands, sometimes even hundreds of thousands of dollars, to acquire the best machine for the job.
Last week we talked about the importance of purchase price and depreciation. Today we want to talk about seller reputation, manufacturer and equipment age.
Who the dealer or handler of used construction equipment is plays another prominent role in setting the machinery’s value. Reputable dealers stand behind their inventory, including the used equipment they’re offering for sale.
Transparency in the equipment’s history, including who the previous owners were along with service records, brings a valuable peace of mind to the market. Reputable dealers will also add value by backing up everything they sell with some level of warranty support and return policy.
Reputation extends to the equipment’s former owner as well. The construction industry can be a small family at times, and the reputation of who previously owned the large equipment carries much weight in assuring a prospective buyer that the machine was properly operated, serviced and cared for.
On the other hand, equipment once held by a questionable owner may see its value degraded. The perception of poor maintenance and rough handling sends a risk message along with its asking price. This almost always results in a lower price or longer sale.
Another major factor in determining the value of used large equipment is the manufacturer. Many construction business owners will only buy one or two particular makes of equipment, and brand loyalty reflects in annual sales in used machinery as well as in new large equipment. Equipment owners are often willing to pay more for a brand name that they’ve had good results with and are satisfied with the brand’s performance and retention of value.
Brand loyalty significantly reflects in used large equipment sales. The name often implies built-in quality and reliability. It’s no surprise the manufacturer’s reputation plays a key role in determining the price of used construction equipment.
One of the first things that comes to a buyer’s mind is the age of the used large equipment. What year was it built in? How old is it? How long has it been around? These are all the same valid question, but the answer is not truly in calendar numbers, it’s in hours of operation.
The amount of use is the primary consideration in evaluating price in relationship to the machinery’s physical age. After discounting depreciation, two identical pieces of equipment of the same age can vary widely on their asking price and actual value. They might both be old, but the unit with the lowest number of operating hours will command a higher price, especially if it’s well maintained.
While age is a factor in determining machinery value, it’s not as important as the machinery’s mechanical condition and appearance.
What makes a Lyon Auction unique is that all of the equipment is in the same location. Companies are able to liquidate a large fleet of vehicles in a single auction. Lyon Auction is able to help well-known companies from the conception to the conclusion of the auction. This makes it headache-free and as enjoyable as possible for both the seller and buyer. If you have any questions, feel free to contact us, we’re listening!