Having an Auction: Then vs. Now
Historically, the auction method of marketing was viewed as a last resort and used only when other methods of sale were unsuccessful. Today, it is quite the opposite. The single most significant difference in today’s world is asset management, which is the systematic approach to the governance and realization of value from the things that a group or entity is responsible for over their whole life cycles. “The auction method is the greatest and the most ultimate expression of the American free enterprise system” says Scott Steffes, President, which is why the perception of having an auction has transformed over the years. We continue to see record breaking prices on farm machinery and farmland when having an auction is the first choice by farmers, dealership entities and landowners.
Farmers and Auctions
For years, the auction method was viewed as a last resort for farmers across the world and resulted in a disfigurement that auctions were only chosen in the result of a foreclosure, bankruptcy, retirement, or death. Now, with the value of equipment and the costs associated with idleness, it does not make sense to park machinery if it is not being used. Farmers have recognized that markets are much more nimble now, and they can take advantage of buying and selling through the auction method of marketing which allows us to determine fair market value in a way that is virtually impossible through traditional methods of sale.
When farmers choose to have a farm retirement it can be a celebration for the family, but it can also be an emotional time for them. However, we’re always reminded that it opens the opportunity for other farmers, both local and national, to purchase their used equipment for fair market value to help grow or maintain their farms.
Dealership Entities and Auctions
Today, many dealership entities incorporate auctions into their business plans. Dealers are viewing auctions as a way to proactively manage their used equipment. Up to a few years ago, auction companies were viewed as a last resort, or even a competitor for equipment dealerships, and now they are viewed as a marketing option for them. They look at auction companies as an extension of their sales force.
In the past, there was a stigma that whatever the dealers did not want to sell, or could not sell, they passed on to auction companies. Since more dealers now look at auction companies as a viable marketing or remarketing option, there continues to be high quality, high dollar items from dealerships selling at auction. This can be due to equipment of another color than that of the dealer’s major supplier, or due to dealers setting limits for how long a trade-in sits on their lot. Auctions give dealerships a real time look at the cash market which can be used to base future trades. On one recent Steffes Group auction for an equipment dealership, a 2019 John Deere 9570RX with 1,075 hours sold for $415,000, the highest auction sale price ever seen on a modern tractor according to Machinery Pete’s Auction Price Data.
Landowners and Auctions
The auction process is a tried-and-true method of selling real estate. Landowners have seen how the auction method has the ability to get top dollar, within a set timeframe, all while remaining in full control. Landowners have also recognized that there are more than just a few neighbors that want to buy farmland. Through digital marketing, advancements in technology, and the development of online bidding, the markets have become much larger and given potential buyers around the world a fair opportunity to participate. Additionally, people with roots in communities want to return and invest, even if they do not live there anymore.
The team at Steffes Group respects and learns from the history of the auction method of marketing. We are excited about the future of the industry and the opportunities we have to grow alongside it.