Farm Equipment Auctions Key Terms

Learn farm equipment auctions key terms before you bid

By Steven A. Ottem

As you look for previously-owned farm equipment on a farm auction sale bill, you can simplify your effort if you know a few key terms. As you familiarize yourself with the auction process, you will come to realize that for farm equipment, auctions in your local area may be a great way to find bargains. As the buyer, you are responsible for knowing the quality of the purchased equipment and for moving the equipment from the auction site to your location.

Besides inspecting and moving equipment, the buyer has other responsibilities. You'll need to pay for the equipment before moving it; you'll be responsible for the machinery after the sale, even if the piece remains on the seller's land; and you will have a stated time period when you must remove your purchase from the auction site.

Absolute auction

In an absolute auction, the pre-owned equipment sells to the highest bidder even if there is only one bid for it. That means a used machine could sell for well under the appraised value.
Try: Joe Cotton of Cotton Auctions explains the concept of an absolute auction and a few of the subtleties of the process. Although the website refers to real estate, the term applies to any property, including farm machinery for sale.

Reserve auction

In a reserve auction, the seller sets a minimum price he is willing to accept. If no bid reaches the minimum, the item will not sell. The seller usually pays the auction house whether or not the equipment sells.
Try: Woodruff Enterprises levies a fee for listing an item with a reserve price. It bases the fee on the reserve price and collects it from the seller at the time of listing.

As is

Most farm equipment sold at auction is sold on an "as is" basis, meaning there is no warranty on what you buy.
Try: True Blue Auctions provides a glossary of auction terms, including as is. For a typical example of an auction contract containing an as-is clause, check out item 10 at FarmAuctionGuide.com.

Stock

In many cases stock refers to whatever merchandise a merchant has for sale. For farm auctions, stock may be an abbreviation for livestock, as is the case in the terms stock trailer and stock panels.
Try: Thornhill Auction pictures a typical stock trailer used to transfer livestock.

Rolling stock

For a farm auction, rolling stock means items on wheels. It includes tractors, trucks and other vehicles. A farm auction sale bill will usually advertise a time for beginning the sale of rolling stock.
Try: For a typical sale bill that advertises a time to sell rolling stock, see Montgomery Auction Services.

Commission

A commission is what the auctioneer charges the seller for selling things at an auction. Usually, it is a percentage of the selling price. Be aware that some auctions charge a buyer's premium on top of the commission.
Try: DEAauctions.com provides a glossary of auction terms including commission, buyer's premium and many other auction terms.