Options for Liquidating Underutilized Construction Equipment

You've got machines in the yard that are no longer being utilized. What do you do? Whether it's an old workhorse that has seen better days or a high-quality machine with untapped potential, there are several avenues to explore when deciding the fate of your idle construction equipment. In this article we'll walk through your options to help make the right choice for your farm or construction business.

Trade it In
If you're in the market for a new machine and have an underutilized model sitting in your yard, consider trading it in. Trading in your old or idle equipment can offer several benefits. In certain states, a trade-in it may reduce your sales tax liability when purchasing the newer machine. Furthermore, exchanging an older machine for a newer one that aligns with your current job requirements can prove to be a wise investment, potentially generating immediate returns.

While the price you receive for a trade-in may not reach the top market value, the combination of sales tax savings and the convenience of liquidation often makes it an appealing choice.

Take it to Auction
Taking an idle machine to auction is a quick way to find a new owner, but it does come with trade-offs. You'll have no control over the final sale price since most auctions don't allow reserves. Auction fees will also eat into the proceeds, typically around 5% to 10% (with a decreasing percentage as the machine's value increases), along with an initial listing fee of about $100 for titled machines. Don't forget to factor in transportation costs to get the machine to the auction and potentially back if it doesn't sell. Moreover, auctions can be unpredictable; you never know if they'll be highly competitive or not. It's a bit of a gamble.

Consignment Sale
If you prefer professionals to handle the sale, consider the option of consignment. Consignment involves partnering with an equipment dealer to facilitate the sale while still maintaining your role as the seller. In a consignment sale, you pay the dealer a commission, typically from 3% to 10% of the sales price depending upon the value of the machine. This approach often results in a higher sales price since dealers have a broader reach, knowledgeable salespeople with connections to potential buyers, and an extensive network.
Be sure to select a reputable dealer with a proven track record in your equipment category. After all, you wouldn't want to consign a crane to a dealership specializing in smaller equipment.

The drawback of a consignment sale is that it may not be swift or guaranteed. Nonetheless, you do retain control and have the ability to retain ownership if you don't get a price or terms that are acceptable to you.

Private Party Sale
Selling your equipment privately through online marketplaces or local bulletin boards, can draw significant local attention and appeal to bargain hunters. Generally, machines priced under $25,000 can find success on online marketplaces, but higher-dollar equipment often gets less attention. It can work well for small machines, older machines and machines that are ready to be parted-out or sold for scrap. Be ready for a lot of calls and messages from tire kickers and the inherent uncertainties of private sales. Finally, be very careful when dealing with payments, as various scams abound in this arena.

Scrap the Machine
If your machine is no longer operational and the repair costs outweigh its value, it's best not to let it take up valuable yard space. Instead, consider selling it for scrap. Scrapping the machine not only frees up space but can also bring in some extra cash from the scrap and salvageable parts. To get started with scrapping, reach out to your local metal recycling center. They can provide you with the current scrap prices and discuss transportation options for the machine which can be particularly challenging with larger pieces of equipment. Keep in mind that scrap is a commodity and the prices fluctuate depending upon economic conditions. Recently, scrap prices have ranged from $40 to $100 per ton. The auto maker strike happening now (late 2023) is likely going to drive the scrap prices down.

In summary, deciding what to do with unused construction equipment requires careful consideration of your specific circumstances. Each option has its advantages and disadvantages, and the right choice depends on factors like the equipment's condition, your financial goals, and your time constraints. The experienced sales staff at RTL are here to assist you in navigating these options, ensuring you make the best decision. Don't let those idle machines gather dust—turn them into opportunities for growth and profitability.