Tuesday, October 4, 2016

Farm Machinery Values

Why are shows like Barrett-Jackson so popular?  Is it the cool cars, the excitement of competition, or the entertainment of watching people blow through their money?  The answer is: YES.  My point is in any auction setting there are several factors going on.  These factors are: supply, demand, emotion, and hopefully informed buyers and sellers.

As a certified machinery and equipment appraiser through the NEBBI, I see these factor's influence in the valuation of farm machinery.  When financing is involved, bidding wars can quickly cause problems because if the definition of market value.  Basically, the lending industry does not was the definition of market value to state "the maximum price", but rather "the most probable price between informed buyers and sellers acting prudently" (there are different versions to this definition).  A bidding war can cause a price to elevate beyond the most probable price and could cause complications in the loan process once the appraisal comes in.  The key is to know when to stop bidding!

Farm machinery has seen a decline in recent years.  According to Rich Vacha of Ritchie Brothers, he says he does not trust prices given for equipment from a year ago let alone those tendered several months in the past.  Prices for all machinery- particularly large horsepower late-model machinery, have been fluctuating seasonally, even monthly since 2014.

High supply, low scrap prices, farmers looking for older equipment as opposed to new are all factors in the low prices for farm equipment.  However, as supply starts to dwindle, look for prices to rise.