The small roundtable discussion, “Should I Hold My Own Auction?” started out with three dealers sharing their experiences, and one who was taking the temperature of his peers before taking the leap.
The exchange covered a lot of areas, including financial justification (or controlled losses) of auctions, the role of the online simulcast, philosophies of keeping equipment in the area where it’ll bring parts and service business, and the double-edged sword of big equipment auctions — and how the auction yards were put into business by equipment dealers themselves.
But not long after the introductions, the dealers learned that one of their peers, Bryant Roberson of East Coast Equipment worked in the auction business for 15 years before joining the 13-store John Deere dealership in North Carolina and Virginia in November 2016. So in a serendipitous departure of roundtable rules, the dealers elected to do almost a 1-on-1 discussion with Roberson and his observations from having previously worked on the other side.
Roberson’s advice to dealer peers will be covered in a future Farm Equipment article, but here is a sampling of the discussion points.
Expenses. Bringing in an outside company will require $45,000 for every $1 million in sale. For a dealer to do things right, there’ll still be expense, he says, and Roberson is big on promotion. He favors spending on the brochure and color photos with detailed, unexaggerated listings. He also included a signed message from the president of the company that explained why the sale was being held and the intentions behind it.
Expectations. No dealer sale will ever bring what a retirement or estate sale will, he says. But transparency and having the entire sales crew on board can increase odds. “If you can get above 50 cents on the dollar, you’ve had a rock star in today’s market,” he says, noting that his goals are 70 cents.
Dealing with Disappointment. He says there’ll be things that disappoint you as a dealer, but don’t underestimate the power of your own frown, especially early in the auction. “One buzzard starts circling and then the others will too.” But, he says, that dynamic can also turn them into prey for the auction’s success, so to speak. He advises dealers to get the units they can recover from out of the way early, and save the items that really matter to the dealership — the tractors and combines — for when things get cooking. “The first pen of cows is always the cheapest,” he says.
Don’t Invest in Reconditioning. One dealer noted its analysis that only 25% of any reconditioning investment ever comes back to dealership on an auction sale. Roberson agrees, telling dealers to resist doing anything more to a unit than washing it. By the time you’ve decided on an auction, he says, you’ve already took a shovel and dug a hole, so don’t dig it any deeper by reconditioning. “And if the unit is just a dog, parade it around and say so.” Sometimes that dog can bring more to you, he says. He cited a tractor with 5,000 hours with a ripped cab kit that brought more than one with 4,000 hours in perfect condition.
Make it an Event. He advises holding auctions at mid-week to create the right type of buyer — a “businessman’s sale” so that a buyer can get to the bank. He also likes when there’s something for the wife to do, a mall or outlet store. “He’ll spend more money if she’s not in the way,” he says. He advises dealers to have the full crew present to talk about any new or used equipment, to get them into the dealership and to host a parts special. “Some balloons for the kids can keep them from getting grumpy, too,” he says.
Time & Pieces. He says attention spans should limit the auctions to 3-4 hours and adds that 75-100 pieces is a good rule of thumb. “A good auctioneer can run 28-35 pieces an hour on a steady pace,” he says. He says it’s OK to add some smaller items and tools that you’re OK with taking a loss on to the very end, he says.
Make it Real. He says that buyers like anything that adds misery to an auction, including mud and rain. “Rain during the sale will not discourage the sale, in fact, it speed the bidding up.” Snow will do the same, he says, recalling an ice-covered auction that was successful because the two right farmers showed up and couldn’t let the other one win.
Frequency of Auctions. Roberson advocates a regular cycle of auctions. After dealers have one under the belt, there’s a byproduct in how you can approach trades differently. “When you’ve got someone eager to trade two tractors, the idea about the auction returning again in a few months is a card that can be played .
“You can say, ‘Whatever it brings, we’ll credit it back to your purchase,’” he says. You want people to expect an upcoming auction if you’re going to do it every year.
Invite Your Neighboring Dealers. Roberson says there’ll be some lulls from year to year, and he advises dealers to be prepared to bring competition in to help fill the gaps. “It’s a hard pill to swallow with some guys, but I’ve never been against mixing brands or colors,” he says, even though the competition’s trucks will annoy your staff. “Be a good neighbor; shake hands and put out the olive branch for a week and say, ‘Hey, let’s just work together.’ If they show their tails, it hurts them just as much as it hurts you,” he says.