Walter Piehl of Marion, ND, is a tall, slender, straight-talking man who buys and sells used farm equipment and livestock trailers for a living. He works a three-state area, buying what is out of style in one area and selling it in another based on demand.
“They call me a jockey,” laughs Piehl, of Marion, ND, who has been in the business for 40 years.
Piehl profits off the margin, or the difference between what he paid for an item and what he sold it for. “I always tell people I lost money,” he says with a smile. Stuff too bad to sell he rips up and sells for parts.
Piehl, and other machinery “jockeys,” or traders, know more about buying used machinery than anybody else. They know what is selling where and how much it's worth. They know when to buy and when to walk away. And they can tell a deal from a dud just by checking a few components.
Used-machinery dealers not only buy and sell equipment but also fix it and stand behind it. Farm Industry News tracked down these rare breeds of experts and asked them how farmers shopping for used equipment can get the best value for their input dollars. Here are their tips.
- Price by the book
Piehl says today's farm equipment is more compact and streamlined than the models built before 1990. As a result, the newer equipment is harder to take apart and judge for mechanical problems.
“It's harder to tell nowadays how much anything is worth,” Piehl says. “Everything is streamlined now for looks.” He says your best indicators of value on the newer tractors and combines are book value and number of hours, both of which you can get from the dealer manufacturer.
- Expect repairs
Jim and David Laughlin are used-equipment dealers and owners of Laughlin Farm Equipment, Butler, MO. This father-and-son team fix what they buy, making money off the labor, and stand behind the equipment they sell.
Based on experience, the Laughlins say most machinery owners do not take care of their equipment. “We buy too many tractors that farmers owned for the last 20 years to know that when something breaks on them, if they don't have to have it fixed to use it, they don't fix it,” Jim says. As a result, used-equipment buyers should expect to make at least some repairs after the sale.
- Play lowball
Jim says that, because used tractors may require repairs, buyers should make a low offer because sellers will probably take it. “It's kind of like people with their car,” he explains. “They might imply that it is still worth a lot of money. But in their mind, they just want to get rid of it and buy new because they are aware of all the things that need to be fixed before it can be used.”
- If it's a bargain, buy it
Ken Bell and Kenny Bell, Jr., owners of Clark Sales in Clark, SD, host auctions four times a year and sell machines from their lot between sales. “The biggest thing I can say, and this is big, is no matter who owns a piece of machinery, if it is worth it, buy it,” Kenny advises.
He says farmers who come to auctions are sometimes leery of buying a machine that is priced less than what they would pay for it on the lot at their local equipment dealer. “If a farmer sees a machine marked $8,000 here and knows a dealer who is asking $12,000 or $13,000 for a comparable piece, then everyone is scared of it,” Kenny explains.
However, used-equipment dealers typically offer machinery at a lower price because they have less overhead than manufacturer dealers have, according to Kenny. The bottom line: “If the piece of machinery is way under what a dealer is asking, it is usually a better deal,” he says.
- Check the paint
Another tip Kenny offers buyers is that if a machine has been repainted, they shouldn't automatically assume the seller is trying to cover up a problem. Rather, when the seller applies new paint, it is usually because the old paint has faded from the sun.
There are exceptions, he admits. But he says you can sometimes spot a cover-up by looking at the quality of the paint job. “If the paint job is bad, it might be bad underneath,” he says.
- Buy good-quality equipment
Kenny's father offers these tips: Buy brand-name equipment, and don't buy rough equipment. “I just say buy decent equipment or leave it alone,” Ken Sr. says.
He says equipment that has been doctored up or shows signs of abuse such as holes in the seat or rust and dents will end up costing you more than if you had paid more for a good piece because the price of parts and labor is much higher than it was in the past.
Other dealers echo this advice. “Unless you are really mechanically inclined, buy the super-clean, low-hour equipment that doesn't need work,” says a dealer from South Dakota. “It probably has the most life left in it, and in the long run, it will be cheaper than anything else.”
On the downside, dealers say that brand-name, low-hour equipment that is in good condition is currently in high demand and short supply. As a result, buyers may have to pay a little over book price to get it.
- Know a bargain
Louie and Bob Podhradsky, owners of D&L Implement in Mitchell, SD, say a lot of buyers don't know a bargain when they see it. “They may have a bargain offered to them, but they don't know it at the time,” Louie says. “And by the time they go back to get it, it is gone and bought by someone who knows it is a bargain.”
To recognize a bargain, you need to know in advance what item you want and its value. “For example, if you know something is worth $6,000 and you can buy it for $5,000, it is a bargain,” Louie says. “And if it's a bargain, buy it.”
As a precaution, he recommends that you call the state to make sure an item is not mortgaged or stolen, especially if it is being sold individually by someone not in the used-equipment business for thousands less than its book value.
- Look it over
Roger Kraus, owner of Long Prairie Consignment, Long Prairie, MN, says before you buy used equipment, look it over. “No matter how many times you buy something, you cannot be 100% based just on the year,” he says.
For example, he says to check the engine and see if you hear knocks or see smoke. “That is something you want to walk away from,” he says. Also check the bearings, knuckles and joints for cracks, which are indicators of wear.
- Trust your gut
Kraus adds that when evaluating used machinery, your first opinion is always best. “When you think it is kind of bad, it is probably worse than you think it is,” he says. “That has been my experience.”
Red flags, for instance, may be if the motor sounds a little funny or doesn't start properly. “I'm not saying that the problem might not be something minor,” he says. “But it seems like it always gets worse than minor when you get it home.”
At the same time, just because a trailer has a flat tire doesn't make it bad. “It is usually a bargain,” Kraus says.
- Stay home
Finally, Kraus says farmers who go to auctions in search of a good deal may find a better deal by buying from their local dealer. The reason is that auctions can entail hidden costs that buyers must factor in, such as fuel, travel time, temporary help, trailer rental and the income they could have earned while staying home.
Machinery traders, on the other hand, have accounted for these expenses in their costs of doing business. “An auction is a place where traders can make their money because they know what pieces work where and when. It is not that they are cheaper. It is just that we know where to send them. And we have the trailers and equipment to load and haul them and the time to do it.”