Pros And Cons Of Auctions And Private Treaty Sales
Industrial auctions are an excellent way of receiving great value for used industrial equipment and surplus equipment. However, equipment auctions are not the only solution. Private Treaty Sales are also a viable alternative. Private Treaty Sales is a sales process where the seller sets the asking price they want for the equipment. An intermediate agent or organization then negotiates individually with prospective buyers to reach a mutually agreeable sale. Evidently, it is fundamentally different from equipment auctions. However, each method has its own set of pros and cons, which will be explored in this blog.
Comparing Auctions And Private Treaty Sales
Industrial Auctions
Pros
- Auctions are known for efficiency and a quick turnaround for the seller. This is ideal if you want a fast sale.
- The competitive nature of an auction can ultimately drive prices higher than expected, maximizing the return for sellers. Auctions allow bidders to put their best foot forward on the auction date.
- Auctions provide a transparent platform where buyers compete openly against each other. This transparency can lead to fair market value prices.
- Once the auctioneer deems the lot has been sold, the sale is final and payment is typically processed within 24 hours reducing the uncertainty often associated with private treaty methods.
Cons
- The fast-paced environment of auctions may intimidate some buyers leading them to make hasty decisions or bid beyond their budget.
- Buyers may have limited time to perform due diligence, and inspect equipment which can increase the risk of overlooking potential issues.
- Auctions often involve various costs, including advertising fees, Buyer’s Premiums, etc., which can eat into the seller’s proceeds.
Private Treaty Sales
Pros
- Increased flexibility allowing more room for negotiation between buyers and sellers.
- It offers a degree of privacy for the seller who doesn’t want to publicly advertise or endorse their equipment or tools.
- This flexibility with the timeline and privacy offers more leeway for the seller to accept, negotiate, or decline an offer as required and allows time to coordinate with their ongoing operations.
- The less pressurized environment of private treaty sales can attract a wider pool of buyers who may feel more comfortable taking their time with the decision-making process.
Cons
- The property or equipment can remain unsold for an extended period of time, making it monetarily detrimental in the long term and not ideal for a quick sale.
- Similarly, extended negotiations and the inability to sell the equipment can increase public exposure, thereby nullifying the very intent of private treaty sales.
- There is a mandatory cooling-off period during negotiations. Therefore, a prospective buyer might withdraw or change their offer.
Therefore, barring a need for privacy, industrial auctions are a faster, more efficient solution to clear surplus equipment or industrial machinery.
Infinity Asset Solutions is a leader in the field of managing the liquidation of companies, receivership, bankruptcies, surplus equipment, and more. With over eight decades of collective experience, our professional services include conducting comprehensive equipment appraisals and audits as well as assisting with industrial equipment auctions via reputable market channels. Contact us today if you need assistance with facilitating an auction or a liquidation.
