Paul Hendrix has sized up more than a thousand used vehicles in his 24 years in the used-machinery business. He is the equipment-pricing analyst for IronPlanet, an online auction house. “That’s a fancy name for an appraiser,” Hendrix says from his office in Alabama. “We sell everything from cars and trucks to cranes and combines all over world.”
IronPlanet backs everything it sells, which means Hendrix has to assess it right the first time or owe the buyer for a machine that doesn’t work. He says in his business, experience is everything.
“Buying used equipment is an experienced-based occupation,” he says. “The more you have and the broader your base, the more qualified you are to do the job.”
If you don’t know what to look for, you may end up bringing home a machine that costs you more than if you bought a new one, Hendrix says. You either need to hire someone to inspect a vehicle or train yourself in how to assess the equipment. Hendrix provides these eight tips that could save you from a lemon.
1. Focus on the features
Make sure the product you’re buying has the features you need. “Used machinery can have every available option on it, or it can be plain vanilla and every combination in between,” Hendrix says. “If the one feature you need is not there, and you happened to miss that, then you’ve just wasted valuable time and money.”
He cites a job in south Florida where he was asked to assess 15 late-model, low-hour John Deere tractors for a row-crop grower in the Midwest. The tractors were fully equipped with air conditioned cabs, mechanical front wheel drive (MFWD), and plenty of hydraulic remotes. But they had a short axle, which was an option from the factory. “What a short axle meant to the buyer was that he couldn’t use dual wheels, which are almost a given on tractors used in the Midwest,” he says. “If I hadn’t noticed that one spec, the tractors would have been useless to him.”
2. Specs are King
If the used machine is equipped with a popular feature you don’t necessarily need, it may pay to buy it anyway if you have the money, Hendrix says. He says the reason is that the feature can increase resale value if you decide to sell in a couple of years. Such features might include a premium cab, onboard electronics, MFWD, remote hydraulics, bucket couplers or additional tire options.
3. Know what similar assets are selling for
Research the market value of the product over the course of several months so you don’t pay more than it is worth. Hendrix says the Internet can be a good source of information. TractorHouse.com and Fastline.com are two resources. Look at the asking price for the machine and compare it to the prices paid at auctions. Factor in differences in how they are equipped.
4. Research competitive brands
“Don’t be married to one brand, when a comparable brand might be good enough,” Hendrix says. “It could save you hundreds, even thousands, of dollars. Ask yourself whether the competitive brand could do the job and if dealer support is available.” Use level also should be factored in. If the machine will only be used a few hours a month, then quite often you can save money with a competitive brand.
5. Assess condition
Condition of equipment has a profound effect on value, Hendrix says. Tractors in good condition usually command a premium. “For example, farm tractors from the Midwest are often so clean that brokers call them ‘Midwest clean,’” he says. “They tend to have very low use-hours and better-than-average care and maintenance. On the other hand, a tractor from south Florida or the Mississippi Delta usually has much higher hours, is faded from being parked outside, and has 15 or 20 drivers instead of one.”
If the machine comes with onboard electronics, check for obsolescence. Don’t pay extra for an option that is not current or upgradeable.
To check for internal problems, ask for a detailed inspection. IronPlanet is one of the only auction houses that provides detailed inspections of the products it sells and guarantees the outcome. Ask for oil samples, too, which can show problems with the engine or transmission.
6. Check for available attachments
“A tractor is nothing more than a mobile power unit,” Hendrix says. “What makes or breaks its value and usefulness is the attachments, which determine what operations you can do.” Make sure several different attachments either come with the tractor or are available to buy.
7. Assess the dealer landscape
Know the support offered by your local dealers. It may determine what brand you buy. “We see that as a big driver in a lot of equipment decisions,” Hendrix says. “If you don’t have a dealer close by, do you really want to drive 100 miles to get parts?” Dealer support may change if a branch closes or changes hands. Stay current on the providers and services in your area.
8. Deal killers
“There are certain things that should make you back away from any used machine,” Hendrix says. “One is if you notice a problem with a major component. For example, if the engine smokes or is hard to start, or if the third gear in the transmission doesn’t operate, those are major problems, unlike a power-steering pump, which is a minor problem.”
Structural problems, like cracks in the frame or plated areas, should be avoided. Corrosion can also lead to consequences like rusted, brittle bolt heads or electrical malfunctions.
Hendrix says the competition for used equipment is high right now, due to economic uncertainty. Manufacturers reduce production to forgo possible losses if the economy suffers another downturn. Limited supply inflates the price of new equipment, causing buyers to buy used until the economy strengthens.