By Karen McMahon
Progressive Farmer Contributing Editor
The risky business of buying used farm equipment online and at auctions after manufacturer warranties end may be getting less precarious. A new business called Machinery Scope now offers third-party appraisals, equipment inspections and extended service plans on used farm equipment. Equipment up to 10 years old or with 5,000 hours or less may be covered by an extended service plan. (Some online auction companies also offer presale inspections but do not warranty equipment.)
Machinery Scope owner Jacob Bryce said the company offers risk protection to used equipment buyers who face substantial financial exposure when buying without inspections or warranties.
"Compare this to somebody buying a house," he said. "With a house, you have an inspection, you get an appraisal, and you protect yourself with insurance. Some farm equipment costs more than a house, yet we take on huge risks of not getting what we thought we were buying and with little or no recourse if there's an expensive breakdown."
Started last fall near Alexandria, Minn., Machinery Scope provides equipment inspection services for buyers and sellers. Its services for now are limited to the Midwest with plans to extend their reach in the future.
Russ Elliott, lead equipment inspector, said technicians, who must have five years of experience working on farm equipment, will travel and conduct independent inspections on-site at a cost that's substantially less than dealership costs. Two levels of inspections, basic and advanced, are available. The advanced includes a thorough physical look at the equipment.
Inspection reports cost from $100 to $300 and higher, depending on the unit and the time involved. A tillage unit may require only an hour, while a combine make take three to four hours. "On tractors, we especially look at the engine, transmission and drive system, and electronics, and make sure it is what is advertised," Elliott said. "Sometimes, the seller can be confused about the options. We look for any leaks. And on a combine, we check everything including the threshing system to make sure it is not worn out."
Realizing that even an inspection by a professional doesn't eliminate equipment breakdowns, Bryce said they sought a way to add extended service plans to their offerings. They found a partner with AgGuard, a company that has been providing extended service contracts to implement dealerships.
With AgGuard's backing, Machinery Scope offers extended service plans to farmers and others when machinery is sold without a warranty. The equipment must be inspected first.
"We are after the equipment that historically doesn't qualify and when dealers don't have an extended service plan," said Joe Bryce, account manager for Machinery Scope and Jacob's brother.
"There's a lot of machinery that's five to 10 years old that is sold without a warranty," Joe continued. "Now farmers can buy used equipment and mitigate some risk."
"When we started Machinery Scope, we didn't have plans to pursue appraisals," Bryce said. "But we found a great need for this in many areas like succession planning, company start-ups, estates and divorce." Now the company offers third-party, nonbiased appraisals that meet IRS standards. Either a desktop appraisal or an in-depth, on-site appraisal may be purchased.
Bob Lange, a Glenwood, Minn., farmer, uses Machinery Scope's appraisal services. "Due to high land values, we have serious issues with estate transfers," he reports. "So we have started moving equipment on to the next generation. A requirement for doing this is getting appraisals."
Lange said the IRS requires the appraisals to be conducted by a third party with proper training, which includes Machinery Scope appraisers.
For more information, contact Machinery Scope at 701-793-4005, or visit www.machineryscope.com.
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