When it’s time to replace your construction equipment, you may be considering a trade-in or used construction equipment consignment. Trading in old machines for new equipment is a relatively simple process. You don’t have to worry about dealing with third parties, and the transactions are straightforward. Plus, there’s the added benefit of having a machine while you wait for your existing one to sell before you purchase your new equipment.
However, you may be wondering whether a trade-in will give you fair market value for your used machine. If you’re thinking of trading in your used heavy equipment, it’s important to get your machine resale ready. With the assessed value of your machine hinging on numerous factors, you’ll need to feel equipped with the right information to make sure you can get the highest trade-in value possible.
Our guide for how to value used construction equipment will walk you through what steps go into determining the actual cash value of your machine. We’ll also offer some tips on what you can do to maximize your heavy equipment value and highlight what areas most determine the value of used construction equipment.
Steps to Determine the Value of Your Trade-In
What’s your used construction equipment worth? Each dealer has their own process they follow to determine the fair market value of any given piece of used heavy equipment. First, dealers need to examine the machine and get a rundown of its history. Then, they need to compare your machine to other similar ones on the market to understand its true value.
When your dealer inspects your used machine to to trade it for new equipment, you can expect they’ll take the following three steps to determine the value of your used equipment:
1. Thorough Inspection
Understanding how much trade-ins are worth isn’t as simple as logging your equipment details into a used equipment value calculator. Normally, these online services base their assessments on historical pricing data for the make and model of your used equipment. However, they can’t always factor in specific details about your particular machine.
Dealers conduct thorough inspections to become intimately familiar with your machine. During the inspection phase, the dealer will need to know pertinent information like:
- Machine model
- Serial number
- Number of operating hours
- Equipment features
- Additional equipment that comes with the machine
- Which market the machine is located in
In addition to collecting basic information about your equipment, inspectors will also look at the physical condition and the operational condition of your machine. They’ll do this in person, through photos or a combination of both, depending on the situation.
2. Market Comparison
To determine the fair market value of equipment, dealers need a reference point. Comparing your machine to others like it on the market allows dealers to factor in what the broader market is willing to pay for the equipment. Since the dealer needs to make a profit on the machine once it sells to a new owner, it’s critical that they offer a realistic trade-in value to the current owner.
Dealers won’t just look at the consumer market, where owners are buying and selling among themselves. They’ll also look at auctions, where other dealers sell machines after trade-ins, sometimes in bundles to move equipment faster.
Since the value of any product — whether it’s a truck or tractor — depends on supply and demand, the true value of your trade-in may ebb and flow depending on the season and national and international economic activity.
3. Value Assignment
Finally, the dealer will plug all of the data and research they’ve collected on the machine and the market landscape into a spreadsheet. In this spreadsheet, the dealer will look at values like:
- Fair market value based on the first two steps
- Average auction value
- Repair costs, including parts and labor
- Freight, delivery and transportation expenses
- Profit margins, commissions and incidentals
Once the necessary data has been filled in, the worksheet will calculate and produce a final value that gets assigned to the trade-in. The assigned value is the actual cash value the dealer will offer you for your machine.
As the owner, you’ll decide whether you agree that it’s the best value. Owners may decide to have their machine’s trade-in value assessed elsewhere until they feel confident they’ve received the best value possible for their used equipment.
Ways to Increase Construction Equipment Trade-In Value
Before you have your equipment assessed by a dealer, it’s important to do all you can to maximize the trade-in value ahead of time. One step can be considering what you’d look for when buying used equipment for your business. Below, you’ll find some ways to increase construction equipment trade-in value after you’ve decided to trade in your equipment. Others are habits that all equipment owners should develop so they can extend their machines’ service lives and value.
1. Keep Your Equipment Clean
Keeping your equipment clean is one of the simplest ways to ensure your machine retains its value long-term. Routine cleaning also saves you money on the cost of ownership by preventing premature wear and tear or damage that drives up repair and replacement costs.
Keeping clean equipment is a good habit to develop early in equipment ownership, as it eventually translates into higher resale or trade-in value when the time comes to buy new equipment. Equipment that goes too long between cleanings can start to develop problems with critical components, including the electrical system, undercarriage and engine.
Before you take your machine to the dealer to have its value assessed, be sure to thoroughly pressure wash the exterior, removing caked-on mud and grime. Clean or replace your filters and have your engine cleaned.
2. Follow the Manufacturer’s Maintenance Service Plan
Like keeping a clean machine, following a regular preventive maintenance plan is another good ownership habit to develop early. One of the biggest factors that affects the value of heavy equipment is how well and consistently it’s been maintained.
Equipment manufacturers publish a recommended preventive maintenance plan, detailing when to make which repairs or replacements after specific milestones of operating hours or age. Preventive maintenance plans prevent engine damage or failure and ensure operational performance long-term.
Ensure your machine is up-to-date on its servicing before trading it in. Dealers will deduct the cost of repairs from the value of the trade-in, so servicing your machine beforehand may help you to get the best value for your equipment.
3. Store and Transport Your Equipment Safely
Part of good equipment ownership is knowing how to safely transport and store your heavy equipment so that it minimizes damage from exposure to the elements and other factors.
Always take the necessary precautions to protect your equipment while hauling it. Your operation and maintenance manual (OMM) will advise you of whether there are any parts you need to remove or break down before transport and which position the equipment should be in while in transit. Be sure to tie down the equipment at the appropriate points so that your trailer can haul it properly.
Likewise, it’s important to take steps to protect your equipment while it’s not in use. If you live in a cold climate, winterizing your equipment is critical to help prevent your machine’s components from cracking under a freeze-thaw cycle. Adequate storage also prevents dirt and moisture from building up, which can lead to rusting.
4. Replace Basic Parts
Before trading in your equipment, make a list of essential components that may need replacing. A good rule is that if a part has 50% or less of its service life left, it may be worth replacing it to increase its value and reduce the amount the dealer will deduct.
However, it’s wise to be selective about the repairs and parts replacements you do before trading in your machine. Avoid over-repairing it, as this investment may not necessarily translate into a higher trade-in value. For example, replacing the transmission on a newer machine may be a wasted expense.
Focus instead on critical components like the tires or tracks, the undercarriage and certain engine parts. Easy parts replacements, like filters and lights, are good-faith tune-ups to do before you approach the dealer.
5. Add Attachments
Depending on your reason for trading in your machine, you may want to include attachments in your resale. Attachments can help increase the value of your equipment in the dealer’s books because it gives them additional assets they can leverage.
If you have attachments you no longer plan to use, such as thumbs for your excavator bucket or pallet forks for your loader, inform the dealer of these work tools to help increase the value of your machine. Make sure these attachments are in proper working condition before mentioning them as part of the trade-in.
The stock attachment you plan to trade in with your equipment should be also in good working condition, just like the machine itself. If it’s an excavator or loader, make sure the bucket’s teeth or edge are intact, without any structural damage, such as cracks or gouges that can impact their operating condition.
6. Highlight Features and Technical Upgrades
The types of features your machine has can also increase the value of your trade-in. Be sure to communicate whether your equipment has desirable features like:
- Enclosed cab or canopy
- Air conditioning
- Safety features, like guardrails or rearview cameras
- Grade, compact or dig control
When trading in your used equipment to a dealer, it’s smart to let the dealer know of any upgrades or technology you’ve installed in the machine. After-market systems can help add value to the equipment, increasing the trade-in amount the dealer will offer.
Telematics additions, like GPS and other tracking systems, can help add value and facilitate background research the dealer needs. Telematics systems maintain a history of the equipment’s operation, which helps paint a picture of how the machine has been used.
Areas That Impact the Value of Your Used Construction Equipment
As you prepare your equipment for trade-in, you may wonder how factors like your machine’s age, service history or previous ownership may affect its value. Several factors work together to determine your used machine’s value, so having an older machine may not necessarily automatically result in it being assigned a lower value.
Below are the top areas that impact the value of your used construction equipment:
The first impression the machine gives off can impact its value. Equipment in good cosmetic condition presents itself as having been well cared for regardless of its age. Excessive chips and cracks in the paint, rust and other imperfections may reduce the machine’s value. Visible issues like leaks can also indicate operational condition issues, depreciating the unit’s value.
Typically, the newer the machine, the more it may be worth. However, having a newer model doesn’t necessarily translate to a higher value.
Some dealers are familiar with certain models from previous years that had features that make the machine less desirable, such as extra maintenance issues or certain engine configurations. However, newer models typically have better hydraulics which makes them perform better.
Machines in good working condition are much more desirable because the dealer has less repair work to complete. Dealers will assess the machine’s operational condition, specifically paying attention to whether there are any leaks or concerning engine noises. If the transmission feels like it lags or isn’t delivering power properly, this can indicate an expensive upcoming repair.
The number of operating hours the equipment has undergone is a critical factor that impacts a machine’s trade-in value because it correlates to the types of repairs and replacements the next owner can expect to invest in. This factor also indicates which major repairs and replacements should have been performed by now based on the manufacturer’s maintenance schedule. When trading in your machine, the dealer will also ask about the number of hours any new parts have undergone to help give a better idea of the overall operating condition of the machine.
5. Maintenance History
How well you’ve kept service records also impacts your trade-in value. If you don’t have a thorough maintenance history on file, it increases the risk the dealer takes on by purchasing the equipment. Keeping highly detailed records makes the process run smoother, cutting back on inspection time.
6. Previous Owners
How frequently the machine has changed hands affects its value. The more owners a machine has had, the riskier the purchase for the next owner since not everyone maintains machines to the same standard.
If you purchased your equipment used, having records from the previous owner can also help facilitate the assessment process. Not having these records may negatively impact the machine’s trade-in value.
Trade in Your Used Construction Equipment at Quinn Company
Find out how much your used equipment is worth in California by contacting Quinn Company today. Our heavy equipment specialists will review your machine’s history and compare it to the current market conditions, offering you a fair trade-in value for your used machine.