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Perspective
September 11, 1995 02:00 AM

WHEN BUYING USED MACHINES, CAUTION IS VITAL: ADVICE FOR SELLERS

Neil Kruschke Jr.
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    You're a custom molder and you finally won that new contract, but it is putting a squeeze on your current machine capacity and turnaround. You cannot afford to say ``no,'' yet you wonder if you can afford to say ``yes.'' In situations like this, many manufacturers find used equipment helps them meet customer demands. Good, used machinery is available for a fraction of the cost of new, and can be delivered in as few as seven days.

    As a reseller of used equipment, I see dozens of customers each week whose needs could not have been met without our services. Unfortunately, I have also been privy to some shifty dealings in this industry. There are no industry guidelines, no certification programs and no association watchdogs. The modus operandi is buyer and seller beware.

    If you're considering buying used machinery, the following guidelines can help.

    Do your homework. Know exactly what you need. What is the expected capacity or size? What brand names are preferred? How new a machine is needed? Types of controls? How soon will you need the equipment?

    Being prepared will help you make sure you get the right machine for the right price and on your deadline. Always have a backup machine. The market changes every day.

    Choose a dealer. Be sure the dealer you have selected is reputable. Ask around and check references. Find out about the deals that did not go smoothly and whether conflicts were resolved satisfactorily.

    What is the customer service policy? Is the dealer financially secure? Consider pulling a Dun & Bradstreet report on the firm.

    Is it a high-volume dealer? The more equipment a dealer handles, the better he or she will know machines and the market.

    Will the dealer inspect the equipment for you first? Why incur the additional expense of traveling to see a machine that isn't suitable?

    What if the machine needs more work than you anticipate? Will your dealer step in and strike a deal with the seller?

    Ask questions. How will the machine be shipped? Insured, air-ride trucks and trailers should be the answer. Who pays for shipping and how is it billed?

    Take a test drive. You wouldn't buy a car without driving it and looking under the hood. The same holds true for used machinery. Inspect the machine in its working environment as it is running. Talk with the operator. Examine the preventive maintenance records. Check the serial number, age and model of the machine.

    Never hand over money without having a signed contract. The contract should include the make and model of the machine, the serial number, the seller's name and address, a delivery date and a determination of who is to pay for incidentals. Be sure a title search and bill of sale are completed.

    Much of the information for buyers is also relevant for sellers. Here are a few other points to consider:

    Never unplug your machine and let a dealer warehouse it before it's sold. If a buyer can't see the equipment in operation, he or she will anticipate the worst.

    Think twice before offering a dealer an exclusive on your equipment. If your equipment is tied up with one dealer, you may limit chances for a sale.

    Be sure you have your money in hand before the machine is disconnected and removed from your facility. Don't let anyone move machinery without first checking insurance policies.

    If the dealer offers you a too-good-to-be-true price, it may be just that. A dealer should know the market well enough to offer you market value for a machine of its age and condition.

    Machines well cared for and in good condition sell faster. Make the maintenance records readily available. If there is a problem, be upfront about it. Be realistic in your asking price.

    Be sure everything is in writing.

    You also need to decide if you need to go through a dealer. How extensive are your industry contacts? Understand there are certain risks when you go it on your own. Can you be sure the buyer is legitimate? What about finding reliable riggers and shippers?

    It is often helpful to have an objective person serve as a mediator. A third party can be a more-effective negotiator.

    Kruschke is chief executive of Solon, Ohio-based Stopol Inc., a used equipment reseller.

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