“What’s it worth?” is a common question that comes up often when discussing used farm equipment. Sellers – or potential sellers – want to know what they could get out of selling a certain piece of machinery, while buyers want to be sure they are paying a good price for whatever it is that they are considering buying.
Of course, used farm equipment value is definitely something that both sides should want to pin down before entering any sort of transaction. But how do you go about actually determining the value of your used farm equipment?
Here is a look at some tips and strategies recommended by experts in the field.
Research other comparable equipment prices and sales
Knowing what other comparable pieces of equipment are priced at and being sold for is one of the first steps in trying to put an accurate price tag on any used farm equipment. This can help you get an idea of what the market value of your machinery is at any given moment.
To get a clear idea of the market value, you should check the last few months of sales of equipment similar to yours in terms of features and capabilities. Don’t just look at the same brand as your equipment either. Other brands need to be taken into consideration in order to get an accurate market value price estimate.
What sort of features does the equipment come with?
To truly find an answer to the question of what any given piece of machinery is worth, you have to know whether the features it has lines up with the features somebody else who may consider purchasing it needs it to have. Value will also likely go up if the equipment comes with popular features that are currently in high demand at the time of selling.
On the other hand, it could have all those features – and more. And that could be a problem, especially if those additional features are unnecessary.
See, in some cases, equipment with all the bells and whistles might seem like equipment that fetches a good selling price, but if those features aren’t needed and only seen as inflating the price, then a potential buyer may end up deciding to walk away.
Is the equipment in good condition?
The better the condition of any given piece of machinery, the more you can expect it to be worth in most cases.
Now, we aren’t just talking about paint and lack of dents here. Working condition and how well the equipment runs is of importance here, too. For those who are serious about selling equipment, it may be good to have an inspection done by a qualified mechanic. They can give you a true account of what sort of condition your equipment is in.
Be sure to keep a hold of any documentation the mechanic provides following the inspection. Interested buyers will very likely want to see it when they do their own research to see if your asking price is fair or not.
Do local dealers offer mechanical support?
Equipment is also worth more if you don’t have a hard time finding someone in the area who is certified to and capable of taking care of any needed repairs or updates on the machinery. This can help protect the price point of used equipment.
But if finding local mechanical support is a chore, then you are likely looking at a lower value, at least to local buyers in your area.
Bankers may value your equipment differently
Keep in mind that how you end up determining the value of your equipment may not match with how a banker – whether yours or the buyer’s – will value the equipment.
According to an article in Successful Farming, bankers want to know the value of any machinery on hand when it comes to loan applications. The article cites one Nebraska expert who says banks will typically determine machinery value by taking 10% off its depreciation value.
The expert does note that this is not the only way to determine value, but bankers will want to know exactly how you are doing so – and they will look for consistency in that method year to year. Bankers, this expert says, want accuracy, reasonableness and consistency out of how you determine value for equipment.
Value can vary depending on type of transaction
It is important to note, though, that a piece of machinery’s value can depend based on the transaction type or setting. For example, a loan value is different from an auction value or a value that a dealership may place on equipment that you could be trading in (or buying from them).
Successful Farming cites another expert that equipment can be valued differently by each of these settings. Different values that could come up include the replacement cost of the machinery, fair market value for continued use, fair market value exchange, liquidation values as ordered by a court, and forced sale liquidation values.
Use the insights that dealers use
If you truly want to think like an expert when trying to determine the value of used farm equipment, then it never hurts to change up your perspective a bit and think like a dealer would.
For example, when buying used equipment, most dealers will apply many of the tips above to do their own analysis. But they will also consider what they know about you the seller.
They may ask themselves what they know about your farm operation and how you run your business. They’ll consider whether they know how hard you push machinery and whether that could affect condition. They’ll also look at your history with used vs. new equipment.
You can do the same when trying to analyse what your used farm equipment may be worth.
Advantage Realty and Land Management can list your used farm equipment
If you are wanting to put up for sale your used farm equipment, then contact Sam Harper at Advantage Realty and Land Management. Harper is an independent sales representative with Big Iron Auctions and can help you get the best deal when selling used equipment and machinery.