7 Common Mistakes Buyers Make at Auctions
Auctions represent your opportunity to find quality equipment at affordable pricing.
However, if you don’t have experience in the auction process, you may make mistakes that could cost you more money or leave you with ineffective equipment for your business.
To help guide you as you bid for new equipment, our Toronto-based auction appraisal team at Michaels Global Trading will highlight the 7 most common mistakes that buyers make when they visit local equipment auctions.
1. Not completing the preparations
Many steps go into preparing for an auction, including some you might not have considered. For example, have you reviewed the process for integrating the new equipment within your facility? Is your team ready for the new equipment delivery? Do you have a clear understanding of the bidding process and how to communicate your bid with the auction house?
A lack of preparation may have a significantly detrimental impact on your organization. If you don’t have a concrete plan, then you may find that your team isn’t ready to use the equipment. They might not know how to operate it safely, which might then require you to stop working processes for several hours to commit to training.
Remember to plan your visit to the auction house carefully, work with your team closely, and consider all elements of the bidding process.
2. Presenting low bids
When you visit the auction house and make your bids, you might be afraid of bidding too high on the equipment. Many business owners fear making a mistake and accidentally spending too much money. Remember: the bidding process is a competition.
You want to show your competitors that you are serious about the process, and that you can spend the money and secure the product for your business. Remember to be bold in your bidding and try to act as quickly as possible.
3. Failing to bid
If you don’t get your bid in on time, your competition may capitalize on your failure. You might be sitting back and waiting to see how others act. However, this may put your competitors in the driver’s seat, and the bidding process can go by in a flash.
Remember to bid early and consistently, and show your competitors that you’re not afraid of being aggressive to access the item up for bid. However, if you find that the bidding goes beyond your budget, you should also know when to back down. Keeping a close eye on your budget throughout this process will ensure that you bid confidently without overextending your finances.
4. Not knowing the auction house rules
In addition to preparing for the bidding process, you should know the specific rules for the auction house.
There may be specific rules governing the bidding process in your area, and your team must follow these carefully to ensure that your bid is valid. Make sure you consult with the auction house early on in the process.
Discover their deposit and final payment rules. Discuss the storage requirements for the equipment, and make sure you know how much time you have before you must take the equipment from their property.
5. Failing to remain in control while bidding
A common mistake that many business owners make when they attend auctions is they lose
their control. They forget the purpose of the auction, and they try to bid in order to simply outsmart their competition. This lack of control can often mean they leave the auction house having overspent on a piece of equipment that they didn’t need.
Keep calm during the bidding process, and remember that the auctioneer only wants the highest price for the item. They will allow you time to make your bid if you remain calm and in control, and follow all the auction house rules.
6. Not knowing the real equipment worth
Research and planning are the foundation to a successful auction experience for your team. Therefore, if you’re considering visiting a local auction, take the time to analyze the equipment that will be up for bid. How much is the equipment worth on the open market? And how much is the equipment worth to your business? These two values can be different depending on the needs of your company.
It could be that you need construction equipment to complete a lucrative project, and you’re more willing to pay a premium price to bid on items to complete the project by the deadline. Consider all equipment elements, and review these elements alongside your team to create an approximate value for items up for auction.
7. Failing to consider hidden costs
Many buyers rush into a transaction without first considering the hidden costs once the process is complete. They fail to evaluate, for example, how much maintenance the equipment requires. Therefore, they may save money during the auction event, only to spend far more than anticipated once they integrate the machinery within their facility.
Beyond maintenance costs, you should also consider any additional storage fees that you might face after winning the auction. Where will the equipment be stored, and how much will this total storage service cost?
Yet another consideration is that the auction house places a buyer’s premium on your winning bid. This additional fee helps the business with its running costs, such as paying staff and managing the auction house building. Before visiting the auction house, make sure you have a clear idea about their buyer’s premium, and that you’re comfortable with the total cost of the equipment before you finalize your bids.
Book a Consultation With Michaels Global Trading Today
Our team can help you plan for upcoming equipment auctions. We have decades of experience as Toronto-based auction appraisal experts, and we can provide clear guidance regarding your equipment options. To learn more about liquidation and auction services, contact us today.