Buying and selling advice for farm machinery in the current market

By Matt Reese

Greg Peterson, better known to many as Machinery Pete, spent the last 33 years logging and studying farm equipment auction prices around the country. With the highest-ever values for used equipment holding strong in current markets, Peterson has advice for both buyers and sellers of farm equipment in the months ahead.

Sometimes, specific auction items sell higher than expected simply because of the reputation of the person selling them.

“One thing I’ve loved about reporting on the auction space all these years is the chatter aspect. Really, to me, all that matters is what it brings when the gavel falls, but when you go out to an auction and people are saying things, that chatter is valid,” Peterson said. “I see that in the classic case of a very highly respected farmer having a retirement sale who helped their neighbors for years. They’re just good neighbors, good farmers like we see throughout Ohio Minnesota, everywhere. I’m compiling these sale prices and you can stand there and say there’s a 4440 in Alliance, Ohio with 3,500 hours that sold for $41,500. That’s a number and it’s valid, but a really a big piece of that is when you’re buying that tractor, you’re buying the guy who’s selling it and his reputation.”

With this in mind, it can really benefit sellers of farm equipment to do a better job of telling their stories online.

“Now there is the opportunity to story tell with a video when you’re selling equipment,” Peterson said. “Whether you’re an equipment dealer like my father back generations or you’re a farmer selling private or at auction or an auctioneer — they’ve been picking it up the quickest — they’re starting to send me little video previews. People get worried that this video has to be ‘Hollywood’ but just keep it real. Just show it and say, ‘Hey here’s my 4440 and it’s selling on March 20. I’ve had this thing for 25 years. I bought it at Smith implement….’ Then you’re going to get people in Wyoming that are going to see that and they won’t know you guys as sellers in Ohio, but through a little video clip or YouTube or whatever, they’ll see it and you’re pulling them in. Isn’t that the idea when you’re selling something? More potential buyers? So, to not tell these stories is kind of stupid, in my opinion. What you really should do is get your own video of your own farm when you’re planting in the spring and harvesting in the fall, not for the vanity’s sake, but for three years from now when you want to trade in that combine. That drone video of your gleaner R75 rolling through northern Ohio makes it worth more money, bottom line. So, get the video and keep it. It’s money in your pocket.” 

With a video, the farmer’s reputation can play a role in both live and online auctions.

“Pre-COVID, it was pretty clear the way to go was a live auction with online bidding. Since COVID hit — and it was literally the first week of the shutdown in March of 2020 — by the end of that week I could see it. It shocked the heck out of me,” Peterson said. “The pricing on these online auctions had gone up, and there was no reason for any used values to go up at the start of the pandemic because of all the unknowns. Commodity prices hadn’t gone up yet. We’d had 15 years of online bidding underneath us and when the pandemic hit, it was basically like you threw a rope around the whole farm equipment sector and you yanked it forward 7 to 10 years in a week. I knew right then there was no going back. I do love the physical auction. It’s all about the people, the conversations — it’s a social event. I think the world we live in, unfortunately, is becoming very less personal at a rapid clip. I still like the physical auction with the online bidding, but honestly there’s no price difference if you’re online only. It’s all about how you get the word out. Yeah, it’ll be interesting to watch the next 10 to 15 years how it evolves.”

Both types of auctions will continue to play a role in the continued overall strength of the used equipment market.

“The canary in the coal mine is the hard cash auction price — what would it bring today? We’ve been at an all-time high now going on over two years. I’ve hit the point where I don’t think it can go higher and it just keeps going higher. At first it was all about the new equipment availability issue, when you drive around and you see your dealer lot and there’s nothing out there. Hopefully that is starting to get a little better slowly,” he said. “But I think even more important now is the used equipment availability. We looked at the number of five-year-old used tractors with 175-plus horse versus 2019 and it was 79.3% fewer units listed for sale across the country.”

Looking forward, Peterson thinks farm equipment prices will remain high.

“I think ‘23 is going to be very strong year for used values. The thing to watch on the dealer lots is if you start to see more new stuff sit on the lot. That’ll soften things up,” he said. “But I would say also that manufacturers are not going to want to give up the pricing power they have right now — they just aren’t. If you look at the Deere stock price, they’re going to want to hold on to the ‘you buy it we’ll build it’ model as best they can, so there are going to be competing forces pulling I think.”

As it did when Peterson took over tracking farm equipment auction prices for a local Minnesota bank in 1989, the data he collects provides a useful tool for both buyers and sellers.

“The thing about data and information is you can use it in different ways, but it has to be good, reliable data and that’s what we’ve always tried to provide,” he said. “Hopefully providing a ton of data on different models that just sold gives you a little wider look at what it’s worth, whether you’re buying or selling. It goes back to 33 years ago, that’s why I started doing this.”