OT- letter of credit auctions

Ray · Jul 17, 2010

I notice a lot of auctions require a letter of credit to register for an auction,mostly construction auctions.There's a sale coming up near me that has some tractors and construction equipment that requires one.My bank says they just can't give them out like they used to and i would need to file a morgage on my property to get one.How do you guys handle this? my check is good,why should i go to all that trouble for an auction.They tell me that's normal bussiness nowdays.

Spook · Jul 17, 2010

I've only seen the letter of credit for real estate auctions. Basically a mortgage pre approval. I am interested in the responses to this.

Anonymous-0 · Jul 17, 2010

Call the Auction Co, and ask.. It has been my experience that thaey post real strict terms, for legal reasons, but have other payment options. After all, they are going to get paid before the item(s) leave the premises..

Keith Molden · Jul 17, 2010

As an Auctioneer, I require a letter of credit on large purchases. Unless I know the buyer, I'm strict about this. We don't know you & most people are honest. Having said that, if you write a bad check and take your merchandise, we have no recourse to get the money and we still have to pay the seller his money (out of our pocket to make up for the bad check). I don't know too many who could come up with $15,000.00 to pay for a tractor or dozer that may have left the state and we may not be able to catch up with the buyer. That's why we require it, believe me, it's nothing personal toward anyone, just good business practice in todays troubled times. Just my thoughts, Keith

Anonymous-0 · Jul 17, 2010

Ritchie bros. now requires you to put a refundable deposit down if you've never purchased from them before. I think it might have been as high as $2000 but can't remember. Luckily I had bought from them before so it wasn't required when I registered for a bidding number. Years ago the bank gave me a lettter of reference that just stated how much I had available in my account. I'd call the auction company and see if they have a minimum that you have to have available. Then ask the bank for a letter stating that you have at least the minimum amount available. I'm guessing some of the auctioneers have been scammed pretty good in the past. Dave

Anonymous-0 · Jul 17, 2010

Ritchie bros. requires 25% on day of sale for major purchases and the rest within 7 days, I think. Nothing is removed until it is confirmed that it was in fact paid in full. It is good business practice. Purchases under $10,000(I think) have to be paid in full on the day of the sale. Dave

MSD · Jul 17, 2010

I have gotten them from my bank for different auctions with no problems. I just tell them where I am going and how much I would like to spend and they fill in the blanks. Usually states that it is good for that auction only. Last one I had was back in May of this year.

kyhayman · Jul 17, 2010

I've found it depends both on your bank and on the auction company as to how strict they require it to be. Personally, any bank that wont write me a letter when I have the funds on deposit will cease to have my funds on deposit immediately. Of equal aggervation to me was when one bank told me that they charged 1.5 percent of the amount of the letter. I've settled with one bank of late for all my business transactions for this very reason.

I've found that the larger and more remote a banks main office is the harder it is to get one. What becomes more difficult is 'irrevocable secured' letters. I've got one posted in lieu of a bond with planning and zoning to cover a road I built that eventually the county will take over. For this one I have to have the funds in a CD as opposed to on deposit. The bank president has written me letters before in excess of what I have on deposit buy not in excess of what I could resonably expect to borrow on a personal or demand note.

Anonymous-0 · Jul 18, 2010

My bank was always glad to do a letter of guarantee to an auction company, but they did put that amount on hold for 30 days. Even if I bought nothing, my available balance was reduced by the letter amount for 30 days.

jm. · Jul 18, 2010

I,ve dealt in construction equipment all my life and it is pretty much a way of life at auctions. I would say you have a problem with your bank. Any bank should furnish one up to the amount you have on deposit and most banks will exceed that if your credit is good. If you have done bussiness for some time with the bank I would go in and have a good talk with the manager and ask what gives.

kyplowboy · Jul 18, 2010

There has only been one auctioneer around here that has put that in their adds. The first time I went to one of their sales I just called the VP/loan officer at the bank I do most of my buisnees with, got a letter and they never asked for it. That guy still has the "Current bank letter a must" in his adds but now he has computers hooked up to scan your check like wal mart does and he will know right away if your bank will take it or not. (No more running to the bank first thing on Monday morning to beat a check there)

Dave

Mark-Mi · Jul 18, 2010

First time I was at Fort Wayne truck auction they were very strict on how your letter was worded. Most the people that were new there as I was had to go in another line to call their bank to have a new letter faxed. The letter had to state the bank would cover your check even if you did not have the funds in your account.
Luck would have it that mine stated I was good for X amount of dollars and signed by bank VP so I was good to go. Mark

OT- letter of credit auctions

Ray

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Spook

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Anonymous-0

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Keith Molden

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Anonymous-0

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Anonymous-0

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MSD

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kyhayman

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Anonymous-0

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jm.

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kyplowboy

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Mark-Mi

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