Buying anything at auction can be an exhilarating experience. There’s something you want, and you join the chase to be the victor and claim your prize. However, exhilaration can quickly turn sour when enthusiasm overruns our self-control.
When buying in an auction for business especially, you need to exercise the same principles you would with any other capital asset purchase.
If a competitor is selling a large quantity of assets, chances are there will be items available that will be useful to your business. Buying in an auction setting can lower your acquisition cost considerably compared to new equipment, but make sure you’re prepared to bid on the right assets for you. Follow our simple 5-step plan to successful buying in an auction. (Auction Term Glossary from National Auctioneers Association.)
Knowing what you want to buy is critical. Take time to review the catalogue carefully and make a list of the lot numbers you’re interested in.
Note down any that are dependant on each other, for example, if buying an asset that is part of a line do you need any other lots for it to function correctly? If you fail to win all the lots, can you source the ‘missing assets’ independently?
Assets sold at auction are generally sold “as is, where is”, which means there are no warranties or guarantees of any sort. Arrange for your engineers to visit the site and inspect the equipment ahead of the auction to be sure of equipment’s suitability and working order. Often, equipment can be viewed under power if necessary – speak to the auctioneer about this before visiting.
Buying in an auction can be fun and fast-paced, but don’t risk getting caught up in the action and spending more than you planned. Use your list from step one and put your maximum bid against it – and stick to it. This is also essential if you are going to share bidding responsibility with a colleague, you’ll both know the limits of bidding and avoid confusion on the day. Review the rules listed below - most auctions have a buyer premium or sales tax on top of the cost.
Most auctions now occur online and familiarity with a bidding system can help. You don’t want to be flustered and wonder ‘which button to press’ when your lot is about to close.
You could register for an earlier auction and simply ‘spectate’. Watch as lots receive bids and find out what onscreen information is available, so you have clarity when you come to bid. Or join the auction early – most online sales occur over several days, so you’ll have time to prepare.
It’s essential that you read and understand the terms and conditions before participating in any sale. When you place a bid you are entering into a contract and the terms of that contract will be set out in the sale’s terms and conditions.
A few essentials to look out for:
Buyer’s premium – this will be added to any bids you place.
Sales tax – again this is added to your invoice, so be sure you’ve factored this into your budget.
Removal terms – when, how and by whom could be specified. If a designated company must be used to dismantle and ship assets (usually due to health and safety concerns) be sure you understand their terms and costs before bidding.
Availability – not all assets are guaranteed to be available immediately on conclusion of the sale. This could be due to removal restrictions or other factors, so if the equipment is mission-critical make sure you can ship it when needed.
When buying at an auction be sure to prepare in advance, know the rules, set your budget and most of all, enjoy the experience!
If you have any questions about participating in a Heritage Global Partners Auction, reach out to Nick Dove - Phone: 858-847-0659 or Email: ndove@hginc.com.