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UP FROM THE PAST - NEWS ARTICLE FROM 1999
(Reprinted with permission from Cass County Reporter, Wednesday, May 5, 1999)
Auctioneers have seen the decay of the farming economy and have evolved into the business of appraisal, marketing and asset management, says Bob Steffes of Steffes Auctioneers.
“We say that if you are going to have an auction, have the best one you can. Just because you have old equipment doesn’t mean you can’t sell that equipment.”
Over the past thirty plus years, Steffes Auctioneers has seen many farm auctions.
“Generally our farm auctions occur from February through April, June through July, and October, November, December,” he says. The company conducted forty-three auctions this spring, up twenty percent from previous spring seasons. There were over 11,000 buyers registered at those sales.
Steffes began his career in 1960. “Back in those days bid-calling was the fundamental part of getting a job,” he says. “Now that’s only part of the equation.”
Other important aspects of the job are product knowledge, finance, advertising and crowd control.
“You’re dealing with much larger numbers of people,” he explains. At his first auction, Steffes did not have a sound system. Soon after, public address systems were commonly used, and being heard was a little easier on the auctioneer.
“Any auctioneer worth his salt needs to know what it is he is selling, what the piece will do and approximately what it is worth,” says Steffes.
Late model farm machinery with low hours and good maintenance is selling as well as it did last year and the year before, he adds.
“For the high-hour equipment – equipment showing long wear – it (value) is in some cases thirty percent lower,” he says. “And the fundamental reason for that is that the people we should be selling that high-hour machinery to are going out of business.”
Steffes Auctioneers conducted two auctions for the same family in two years.
“That is a good example of how the ag economy in our region went from bullish to bearish in a single year,” he says.
That particular farming operation passed from one generation to another, and the family used the auction to reorganize. The brothers who decided to stay in farming updated their equipment in preparation for the long haul.
“There was an awful lot of enthusiasm and optimism a year ago,” says Steffes.
This year the brothers did a pre-season analysis of their farm and decided there was not enough profit in farming. They opted for another auction and rented their land out to others.
“It’s cheaper to rent land than to buy it,” adds Steffes, “because there are two costs to carry with owning land – interest rates and real estate tax.”
Farmers are very selective about what land they will rent, too, says Steffes. It has to have a good production record. The farmers going out of business are those who are carry8ing old debt, he says, for the past five to nine years.
“Agriculture has not been good enough for those people to take care of old debt,” he says. “Much of that probably started in 1988 with the bad drought.”
“They haven’t been able to eliminate that debt to get themselves on a stronger footing where they can absorb a couple of years of low commodity prices,” says Brad Olstad, an auctioneer with the company. “It has been twofold,” he explains, “when the debt compiles, the cash flow becomes tighter and tighter and then their equity position erodes.”
The farm equipment is still being used and loses value as it gains hours in the field. “Their equipment wears out along with their equity position,” he says. Some farmers hold on until the lenders tell them they have to make a change.
For some it is a change of lifestyle, for others it is a business decision, says Olstad. It is far better to make the choice before it is a forced sale, he says. “They would rather change their business opportunities or change their lifestyle and be in control so they are making the decisions.”
Auctioneers can make appraisals and tell prospective customers what their property is worth, too. “We are not auctioneers anymore,” says Olstad, “we are asset managers.”
Auctioneers must sell in every kind of market condition, says Steffes. Normally if the value of a piece of land goes down, a seller would pull it from the sale. However, at an auction, if the land has to be sold – no matter what – “we can do it,” he says.
Steffes Auctioneers has a well-practiced format for planning auctions. The steps are to pick a date, make a list of the items to be sold, advertise the sale, prepare the goods to be sold and take the telephone calls. People will call about certain items on the list. If they call about price, we instruct the clients to call the auctioneers.
Advertising has become a large part of the preparation, since people come from a longer distance. “We are getting people who are coming from Washington, Idaho, Kansas, Iowa,” says Olstad. Their mailing list includes over 10,000 customers. “We are on the Internet,” he adds, “we have our own web page.” They also have an 800 number and get request for sale flyers by fax. “Once they know that we mean business and sell quality machinery; we can have a long-distance buyer fly in, spend two, three days, share their buying needs, have the opportunity to bid on it,” he says, “and if they get it, boy, they shake hands, are happy and away they go.”
Steffes says that in years past, the majority of farm machinery auctioned off would go to farmers in a thirty mile radius. “Now there are no boundaries,” he says.
“Bad weather is your friend at an auction,” he says. “There’s a strong tendency for you to tend to business at home when it is sunny.”
“Many people come to auctions to get a good buy,” adds Olstad.
The best spring auctions they have had have been during late season blizzards.
“Years back, the idea was to keep your best items to the end of the auction so you keep your crowd,” says Olstad. “Not any more.” Now, a large item is scheduled to be sold at a particular time, and the auctioneers stick to it.
“When you get those big check-writers, you have to make sure that you really take care of them,” he says. Some folks come early and stay late for “sociability, entertainment,” says Steffes.
“And once the auction starts, you want to keep it fast paced and add some entertainment value,” adds Olstad. “We kid around a lot.” “You go to buy a house; you could spend sixty days to do it. If you go to a John Deere store and buy a four-wheel drive tractor, usually it will take about two, three or four visits to buy that,” says Olstad.
“You come to an auction sale; you have about two and one half minutes. It is the white heat of salesmanship.”
2006 Auction Price Guide (For equipment sold in 2005) will be available in January 2006.
For a printable order form, please click below.
Click Here for Printable 2006 Auction Price Order Form