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Auction action guide

02/04/2013 @ 11:58am

Increasing volatility in the used machinery market has created an auction season unlike anything you have seen in the past, with some pieces of equipment like low-hour, high-horsepower tractors breaking price records on an almost-daily basis. At the same time, values on other iron like round balers and combines have softened appreciably in recent months, offering opportunities to get a good buy this winter. On the following pages, we will guide you through this uncertain marketplace with insider information on how to size up realistic equipment values, inspect iron before the sale, and negotiate a confident final bid in person or online.

Used equipment values, in general, have been on the rise, noticeably so for over seven years now. Looking through 23-plus years of auction prices on all types of equipment sold throughout North America, it's safe to say we've seen an unprecedented run.

But there are still good deals out there.

One of the softer spots in the used equipment market the last few years has been round balers.

There's just not the buyers' heat surrounding good-condition used round balers like you see with good used tractors, tillage items, gravity wagons, and grain carts, to name just a few hot spots.

Baler values are definitely down from a few years ago.

To illustrate the point, the calculator pricing tool on www.machinerypete.com crunches both average auction prices as well as average dealer advertised prices. Calculator data goes back 17 years on any particular make or model for over 70 different categories.

Check out the charts below showing auction vs. dealer prices. See on the John Deere and New Holland baler models how the average auction price has fallen quite a bit, while the average dealer advertised prices have remained flat over the same period.

Auction price levels are very sensitive and responsive to the bigger economic reality. When folks feel like buying — whether it be due to strong farm income, high commodity prices, rising price of new equipment, or scarcity of good used equipment — prices go up. When folks don't feel like buying, prices go down.

Combine trends

Another segment of the used market that has drifted into the soft category over the past three years has been combines.

The underlying reason is due to growing inventory on dealers' used lots. Fewer buyers are chasing more available late-model used combines, and that equals falling values.

Values did perk back up from August to December 2012, and the calculator tool shows this trend. Here are two examples:

• Deere 9870 STS combines dropped nearly 24% in terms of average auction price from 2009 to 2012, while average dealer advertised price fell only 2%.

• The John Deere 9770 STS combines saw a slightly lower drop of 18% in auction price, while dealer advertised prices dropped only 3.6%.

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