A Disappointing Auction

Cautionary tales about equipment auction disappointments, from both the seller's and the buyer's sides. April 10, 2012

I purchased a machine last week in an online auction, from one of the big auction houses. This was too far to travel for an inspection.

Yes, I know the equipment is As Is. But shouldn't there be disclosure of things obviously wrong with the machine? It is a wide belt sander. There was a detail photo of the tear in the feed conveyor. I knew that and bid accordingly. The melted feed rollers and the totally shot contact drum, and disconnected tracking, were conveniently omitted.

Am I just a sucker here, or is the seller at fault for not being upfront about the machine's condition? Accepting something As Is is fine, when you know what condition it is in. When you don't... well, you don't. I did get the machine cheap, but had I known it needed all this work, I would have passed. The machine that replaced the one I bought in the auction went for less money than it will cost to get this one running right. Ugh.

Forum Reponses
(Cabinetmaking Forum)
From contributor T:
All on you. If you are willing to spend the coin to buy the machine, spend the coin to go to the auction. Buyer beware.
From contributor J:
I have been to many of these auctions and have been hired to remove the equipment. I also know most of the auction companies out there. The guys that go in and list the equipment and take the pictures just get the basic machine information and take pictures to help it sell. They will sometimes list obvious visible problems. But these guys aren't mechanics and don't know what to look for. They also don't tell you sometimes that the machine is buried under some steel work and it would be expensive to remove and load onto a truck.

That is the biggest reason you see the machines sold as-is. They don't know the condition and don't know how to properly check. I am a tech and see this all the time. Sometimes you get a great buy and sometimes you get a lemon. You take your risk, but it's always worth having a tech prepare the equipment or using a rigging company that has a tech and not just riggers. The tech will prepare the machine and look at it and let you know of any problems before it arrives. Techs are usually also available to go out and inspect the machine for you.

Just be careful of who is hired to remove a machine. This can cost you more money in the long run. 5 dollars saved now can cost you 1000 later.

From the original questioner:
Thanks. I appreciate your input. What about the seller - not the auction house? They have knowledge about the machines. Why isn't there disclosure from them about the items they are selling?

It doesn't exactly take a rocket scientist or a machine tech to notice a couple three foot long puddles of melted rubber on the feed belt. I can't imagine for the life of me how that happened. There is no evidence of fire in the machine.

From contributor D:
The other issue to deal with is the fact that the machine manufacturers or importers do not want to provide tech service to used machines. I bought a late model used machine from a reputable new/used machinery dealer, and the machine importer won't hardly even answer enough questions so I can determine what parts to order. Oh, they will for $2.00 a minute. What a bunch of crap.

From the original questioner:
I've actually had the opposite experience when talking to the manufacturers about support, with one exception. Most have been quite helpful, and would even send a pdf manual if I didn't have one. Most of the stuff I've bought has been American made, and the companies are still in business, so that likely helps. I've even had pretty good luck with Panhans support in Austria and they don't have a real dealer or parts presence here at all.

From contributor N:
I recently sold machinery through a bank led auction as a result of a massive down-sizing. The auction house the bank used is not one that advertises on WOODWEB or even handles machinery very often. They got the work through fast and clever arrangements with the bank and by giving them an estimate of the total sale value that was as overvalued as possible.

Since I would benefit from good sale prices, I endeavored to provide all the manuals, docs, repair history, additional tools and tooling, and ancillary equipment. The auctioneer shuffled all this into one pile and could not care less about keeping things with the equipment it applied to. The auction people were so inefficient, they could not even re-key the building when I turned it over to them. They and the bank refused to talk to or contact the auction companies I have dealt with in the past - WOODWEB advertisers. I insisted that they could do better, having bought and sold through them over the years. But the auctioneer's photos misidentified equipment and even showed things that were not for sale.

The sale was not advertised, so things were nearly given away. About 16 people showed up, most not even knowing what a molder was, much less a gang rip saw. The phone bank, set up with great fanfare and cost, rang once. It was all smoke and mirrors. I'm not too sure the auctioneer didn't buy some of the bigger things to resell at the market prices. He did tell me that was legal, approved in their contract with the bank.

The stuff sold for less than 1/4 the auctioneer's estimate, and the bank never even flinched. I protested and was told the matter is out of my hands and I should trouble myself elsewhere.

From contributor O:
Most of the companies whose equipment is being auctioned are being forced to close by lenders or are totally broke. They are losing everything and it's the bank's sale and they may even be locked out or haven't had time to take care of their machines for a while. They get no money and have no time to describe the particulars of a machine. It's possible that by the time of the sale there is no one left in the company that knows anything about the machines from a day to day point of view.

You need to expect damage and high freight cost unless you are able to go look at the equipment.

From contributor J:
Some of the owners who arrange these auctions don't truly know the condition of the machines. Only the operators sometimes know what is wrong with a machine. This never gets communicated to the auction company. Sometimes the auction company also doesn't really care. They want to sell a machine and will only list a machine as something is wrong if it is really missing parts that are obvious.

You need to remember they are interested in making a sale and don't worry about after the sale. They make on average 20% of the sale price. They usually make 10% from the seller and 10% from the buyer. But on the other hand, some auction companies will buy the equipment outright for pennies on the dollar and then sell the machine for what they can above their cost.

Most of the guys sent out to list the auction are too busy to take pictures and get information, serial numbers, etc. to get the equipment listed. They don't really worry about the condition, if it looks good. They assume it is. Plus owners really just care about production and not really the condition of a machine. If product is coming through then they will still use a machine and not worry about it until production isn't running. Most of the guys also sent out to get the information don't know what to look for on a machine, especially if they handle all types of industries. Most auction companies will make deals and hold an auction for any company. It's tight times and everyone is trying to survive. Some companies also don't know where to advertise specific sales to get the best turnout and sales. They will advertise it locally and don't know really where else to promote an auction.

There are also plenty of independent techs throughout the country who can go inspect a machine for 100-300 dollars and give you a condition. But not all techs know specifics of all machines and what to look for to know if anything is wrong. Most will go out and try to see if there are any missing parts, but that is it.

If you are looking for parts and service, these guys can locate parts and help out to get anyone running again. There are some parts that are OEM only, but not many. It depends upon the manufacturer and how big they are. Right now with sales of new equipment down, they are losing out and worrying about used equipment. A lot of people are buying used and want help on the phone. Times are tight and they want to send a tech out. But they also rely on parts for maintaining them and keeping these OEMs going. Without the sales of new equipment, to try and supplement themselves, they are starting to charge fees to register a used machine transferring ownership. A lot of shops are buying parts locally to save money, which is what I usually recommend. But OEMs don't like this. The problem is the price they charge on parts is higher is some cases than what you can get locally. Some OEMs buy parts locally and mark it up; others buy from the factory and have to mark it up to make money. This hurts them and losing this parts business is causing them to try to make more on service. They laid off most of their techs now and are trying to find ways of making an income with low sales, low part orders, etc.

From contributor E:
I'm curious if you attempted to ask about condition before the auction? It sounds by your post like you looked at the pics and started bidding? If so then I'd say you're 100% at fault for not even attempting to do your homework.

I've bought machinery from a bunch of different types of auctions, including sight unseen. I try to find out as much as I can before bidding. I call the auction house and sometimes the owner and start asking questions. It doesn't always provide the info I need, but that's a factor I include when deciding how to bid. In at least one circumstance the conversation with the owner convinced me not to bid. Sometimes a short talk can give you a vibe - good or bad.

I've been very lucky in my purchases, but I scratch my head more and more often when I go to auctions. I see machines that have obvious damage sell for way more than most reasonable people would spend. And it's almost always someone bidding online. I can never for the life of me understand the concept of bidding good money blindly. Then again I'm one of those guys who won't spend more than $50 or so gambling when I go to Vegas.