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Navigating online and video auctions

Robyn Scherer Published on 20 January 2014
Superior livestock

Each and every day, cattlemen buy and sell their livestock across the country. Video and Internet auctions have revolutionized how cattle are bought and sold, and knowing how to navigate these sales is important for everyone involved.

According to Joe Lichtie, vice president of Superior Livestock Auction and manager of Superior Productions in the Fort Worth, Texas, office, “Video and Internet auctions allow both buyers and sellers to access a wider range of customers.

Competitive bidding is the best way to get the true market value of those cattle that are sold, and the more bidders, the higher the price.”

Superior Livestock Auction, which markets more than two million cattle this way each year, has more than 8,500 registered buyers in their program.

Becoming a buyer in any online auction is easy, and navigating the sales can be a breeze if the buyer knows what to do. There are several different online auction companies, and most operate the same way.

Sign up to buy

The first step is to register with the company. “We have a few different ways to register. You can register on the website, on our click-to-bid website, or with a paper form that can be faxed or emailed,” says Jill Roark, auction coordinator.

The next step is for the auction company to contact a buyer’s bank to make sure the buyer has the ability to purchase cattle, since all of the cattle are sold by the truckload, which is a large financial sum. This bank check is then performed once a year.

After the registration process, buyers will be set up with a login and password, and can then begin online bidding. The process is the same for buyers who are bidding on video on their TV, except instead of bidding online, they can bid over the phone.

The buyer number stays with the buyer from then on, and the buyer is registered for each sale automatically. Roark suggests for new buyers to register at least a day in advance if possible, and buyers who are registered more than a week in advance will receive a sale catalog in the mail.

“Usually the only hold up is the bank not responding. If your banker or loan officer is out of town, we can’t do anything to register you,” says Roark.

Bidding and homework

The sale process itself works very much like a live auction, except for there are no live cattle. All of the videos are done before the sale and sent in, and are then shown simultaneously on TV, the Internet and in the studio where the auctioneer is.

Bidders can bid in person in the studio, on the phone or through the click-to-bid website online. “We have a live auctioneer just like you were at a sale barn, and we have ring men who take bids, and the online bids show up in front of the auctioneer.

Every bidder sees the video of the cattle with the lot information, base weight, delivery date and other info that he needs to make an informed buying decision,” says Lichtie.

The videos that are shown are videoed by a Superior representative and not the producer. The representative then prepares the contract for the seller that states the terms and pertinent information to the buyer including the description, current location, delivery date, weighing conditions, vaccination programs, etc.

This information is then compiled into a catalog that is hard-mailed or emailed to potential buyers one week before the auction. “In the course of that week things can change, however.

The base weight may change or the delivery date. We always encourage our buyers to watch the screen for the changes. And those changes show up red. We also announce them from the block and change on the screen, but people need to be in tune with those changes,” he says.

The video of the different lots are also available for viewing one week prior to the sale, so potential buyers should study the lots and the lots’ information before the sale so they know what they are looking for.

During the actual sale, the auctioneer calls bids, and everyone can hear those bids whether they are watching on TV or on the Internet.

“We have floor bidding, phone bidding and Internet bidding, and the auctioneer drives the train. The online system tells you are you or are not in, the representative tells those that are on the phone, and those who are in the studio know from the auctioneer.

There is no preferential treatment. Whoever gets their bid in first on a number is in,” Lichtie explains.

During the auction, all of the information on a lot is listed on the screen, including any value-added programs the cattle may be in, including vaccination programs, genetic programs, feeding programs and management programs.

“We have different logos that we use to identify all the different programs, and we talk about them, and it becomes part of the story of the cattle and the reputation of the seller. I encourage buyers to be familiar with what all the different programs are so they can recognize them and bid accordingly,” he says.

After the sale

Once the auction block drops, the buyer’s contract is prepared, and the buyer must make a first payment on those cattle. The delivery date is then arranged, and the Superior representative will go to the ranch where the cattle are to help with sorting and loading, and to make sure the terms of the contract are followed.

The buyer is responsible for arranging and paying for the shipping. Once the cattle are loaded and verified, they become the property of the buyer.

“As soon as they are on the truck, the risk is transferred to the buyer. The truck drivers are required to have insurance, and the representative is there to make sure the head count is correct and that the cattle are all right. The buyer can also be there if he or she chooses, but it’s not required,” says Lichtie.

Upon delivery, the cattle are inspected, and the remaining balance is due. “The buyer then overnights us the balance the next business day after delivery or uses a wire transfer to pay the balance,” he says.

The biggest advantage to buying on the video or online that he sees is what these types of sales do for the cattle. “The cattle that we are selling are still at home. They aren’t trucked or commingled until the new buyer takes delivery. The results in less stress and less shrink,” he states.

Navigating Internet and video auctions may seem a little intimidating at first, but once a buyer understands the system, it can be easier than traveling to the local sale barn.

Buyers can bid from their convenience from their home or office and are exposed to a large number of cattle that are still at home on the ranch, which reduces stress and health issues.  end mark

Robyn Scherer is a freelance writer based in Colorado.

PHOTO

Online auction in action. Photo courtesy of Superior Livestock

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