Five Reasons for Bidders to Get Pre-Approved for Auction Purchases
Check out these easy ways to preserve your pool of bidders and even increase the margin per sale during on-site auctions.
The used equipment marketplace, while vibrant, is beginning to see the signs of contraction…
Any reduction in activity is likely to be experienced industry-wide. Not to despair, though. There are some relatively easy ways to preserve your pool of bidders and even increase the margin per sale during on-site auctions.
One of the main reasons that the used equipment marketplace has remained so strong are the increases in the prices of new equipment. Many factors led to this rapid rise — emission requirements, global demand for steel, original equipment manufacturers (OEMs) not investing in additional capacity, and more. However, even with the higher prices, OEM’s have maintained respectable margins, customer loyalty, and a lower cost of sales.
OEM’s have devoted the human, technical, and capital resources to ensure that the customer experience is better with them than with a competitor. The result is that their dealer network benefits from the support of the manufacturer to deliver not just the equipment, but an entire user experience.
Auction companies can employ some of the same proven tactics to increase margins, lower overall costs, and enhance the user experience. The first, and perhaps the easiest way to achieve improved sales and margins is to get your bidders pre-approved for their anticipated purchase. Here are five reasons why this method will work:
One: A pre-approved bidder is more likely to purchase
They have committed to buying and know how much they can spend. Other industries – like residential realtors and large-scale used car operations – use this sales psychology. In the case of home purchasers, getting pre-approved is now a recognized part of the process so that the buyer can purchase the home that they want quickly. Enacting a similar timely decision process with equipment auction bidders will work the same way.
Two: Reduce decision time when a bidder is pre-approved
Since the equipment sold at auctions is typically below market value, there’s no need for buyers to think about cost once on site. Instead, they can now focus on winning the bid since they will already have the funds needed for purchase at their disposal.
Three: Pre-approval equals purchasing more or more expensive items on-site
With most pre-approvals, the approval amount is more than the bidder’s intended budget, so they know that they have a cushion to “bid up” on the equipment that they want or need. With the extra capital at their disposal, they also have the resources to purchase other items that may be for sale. Also, many approvals include a 10 – 20% soft cost buffer, so the buyer can finance the tax and freight if necessary.
Four: Pre-approved transactions improve the pre and post-sale process
Auction firms that work with an established and competent finance partner have access to a more efficient process that includes electronic documents and working to close sales 24/7 – including on weekends. This partnership should also include access to immediate funding, assistance with clearing titles and blanket liens, plus much more.
Five: Enhance your customer experience (CX)
The next generation of buyers expects elevated Customer Experience or CX. Ask any millennial about what they look for to remain loyal to a brand, and it comes down to how well a company can deliver excellent CX. From an auction standpoint, the more you can interact with the bidder, in person or virtually, the better the experience they will have throughout the auction. To make the experience great, integrate pre-approvals into the process to allow for a faster and more user-friendly experience. With the addition of mobile apps and web portals to encourage interaction, both the bidder and the auction firm can benefit in new ways from improved CX.
BONUS TIP: Extra Revenue!
Not every bidder is going to purchase at your auction, whether pre-approved or not. Perhaps the “perfect” 2009 Hyundai excavator for bidder #21 was sold to a higher bidder. That buyer still wants an excavator, though, and will likely seek out a similar machine needed for their business. Here’s our offer: if one of your bidders working with Oakmont Capital Services purchases elsewhere within 60 days of their pre-approval, we’ll pay you a one percent referral fee.
For any questions on our pre-approval process or ways to partner for an upcoming auction, contact us at firstname.lastname@example.org or call 877-701-2391!
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