Buying and Selling Used Farm Equipment
It’s impossible to farm without the right equipment, and that equipment doesn’t come cheap. But there are alternatives to buying new, off the lot, at full retail price. There are bargains to be had.
Like used cars, there is a healthy market for used farm machinery. If you are looking to buy or sell, here are some basics you should know.
Used farm equipment trends
According to dealer surveys, around half of dealerships claim their used equipment inventory is too high. That is especially true of late-model, high-horsepower, front-wheel-drive tractors. The market is also strong for 10-20 year-old models in good condition with low hours.
When buying used, it is advisable to speak with the seller to get the tractor’s history and get maintenance records if they are available. Then look the tractor over, paying special attention to any signs of fluid leaks, check the air filter and the fluids, then listen to the engine run. Spending $100 to have the fluids analyzed can be a worthwhile investment.
Whether you want to check the price of your purchase against industry numbers, or make sure you’re getting the most from your trade-in, you can get two free equipment appraisals on Agriculture.com/whatsitworth.
Tractors for sale
There are many types and sizes of tractors, and finding the right one should not be hard.
For the small farm or acreage owner, looking to the used market for a chore tractor can be a good option. Amid the growing demand for 60-120-hp. utility tractors, many are finding the 130-150-hp. models from the1970s and 1980s are a more affordable option. They are capable of pulling a bat-wing mower or shoveling snow, and were likely used for fieldwork in their previous life, creating less wear and tear than chore work.
Of course, you’ll have to fight off the collectors as these muscle tractors come into their own on the vintage machinery circuit.
If it is a late-model tracked tractor you’re looking for, now is the time to buy. Inventories of new and used models stockpiled as commodity prices dropped in recent years, but sales have picked up and inventories thinned in the last year setting the stage for values to increase moving forward.
Used combines are good deals, too
Good used combines can be found on auction in the neighborhood of $150,000, even less if you are in the right place at the right time. As with any equipment, condition, history, and hours matter. So does size, with smaller, more versatile machines sometimes raking in more than larger models that may out-size some operations.
Dealer supplies have dwindled, but there are still used combines to be had. There are great deals out there on 2014-2016 models. Experts calculating the Total Cost of Ownership (TCO) of a combine claim used can be a good deal, since the price of new equipment has increased an average of 2% per year, while the value of a 3-year-old unit has decreased by 2%.
Don’t forget semis and hopper bottom trailers
Trade wars and less than ideal growing conditions have softened demand for equipment like hopper bottom trailers. Some are selling at roughly two-thirds of listed value. The market has led some producers to upgrade size, looking at triple-axle hopper bottoms. If you are one of these anxious buyers, be sure to check your state’s weight limits.
Many semitrucks switched to Tier 4 powerplants in 2007, changing the truck market. Some producers, not wanting the extra hassle of filters and diesel exhaust fluid, are opting for older models. Others have come to accept the change, looking for used post-2007 buys.
What’s your used equipment worth?
Establishing the value of used equipment for trade-in or asset-listing purposes is tricky business. A banker will likely calculate the value by deducting 10% off the depreciation value. A dealer will compare to recent sales for his or her expected return. Anything can happen at auction.
If establishing value for insurance purposes, beware undervaluation. Unless your policy is for full replacement cost, you could end up trying to prove your machinery’s worth in the event of loss. A low valuation will also hamper the equipment’s role as loan collateral.
Knowing and trusting the source of your information is crucial. Websites like ironsearch.com, tractorhouse.com, and fastline.com offer searchable listings and affordable appraisal services. Remember, you can get two free equipment appraisals on Agriculture.com/whatsitworth.
Buy, lease, or rent?
Decreases in farm income, increases in machinery prices, and tightened lending requirements have many farmers looking at equipment leasing as an option. There are pros and cons.
Leasing can free up the debt-to-asset ratio, and enable ownership of large equipment for less cash outlay. But taxes may be a double-edged sword, and the owner does not build equity.
If you are looking to rent or lease, be sure to check with your tax preparer on the details, as well as with your equipment dealer on leasing program incentives.