Despite the economic advantage of buying used equipment, some business owners shy away from this money-saving option. They fear the risk may outweigh the reward. But with a little extra effort on a buyer’s part, the most common used equipment buying pitfalls can be avoided.

If you are planning to buy heavy equipment very soon, here are 5 ways you can take the risk out of buying used equipment.

1. Buy from a reputable seller

If you are buying equipment from an auction house, dealer, or other company, you will want to confirm you are dealing with a legitimate and reputable business by checking the following:

• Public company records

• The best way to protect yourself is to do business with companies that have a long history and large customer base. Publicly-traded companies are required to publish their financial statements, so you can easily find out if the company is stable and likely to be in business in the long term.

• Online reviews

• Google and Facebook are good places to find unbiased customer reviews. Once published, Google and Facebook reviews can’t be removed or edited by the Google Business or Facebook page owner. If you are tight on time, read the most recent reviews and check for any customer complaints and whether the business professionally handled the complaints.

• Customer testimonials

• Many companies publish customer testimonials on their website. The more frequent, the better. Customer testimonials show that other equipment buyers are more than willing to endorse the seller. If no testimonials are available, call the company and ask if they can provide you with the contact information for a few recent customers.

• Better Business Bureau

• Visit the Better Business Bureau in your area (www.bbb.org in the US and Canada) and search for the business from which you are considering buying used equipment. The Better Business Bureau maintains a list of businesses with contact information and reported consumer complaints.

A few minutes of online reading reviews, testimonials, and business reports should give you a good sense of whether you are buying from a reputable dealer, auction house, or other types of business.

2. Do a background check

Before purchasing used equipment, ensure the seller is the legal owner or has the legal authority to sell the equipment on the owner’s behalf. Two things to beware of: stolen equipment and liens.

If you are buying from an auction company, dealer, or other company, ask if the equipment is owned outright by the seller; if they can’t confirm, do your check. If you are buying from a private seller, ask the seller to provide the original sales invoice for the equipment and check that the name on the sales invoice matches the seller’s name.

Another way to check ownership of used equipment is to ask or look for the item’s serial number or PIN (Product Identification Number). Once you have the item’s unique number, have your local police station or service run the number to see if the item has been reported stolen. For a fee, you can request an equipment check from an organization in your area that tracks stolen equipment (for example, the National Equipment Register’s IRONcheck: ner.net/ironcheck).

If you plan to finance your equipment purchase, most financing companies will do a thorough check on the equipment’s background history, which includes checking if the item has been reported stolen.

3. Ensure a clear title

Equipment ownership can’t be legally transferred from a seller to a buyer if the seller has not paid in full money borrowed from a finance company or bank to purchase the item. If money is owed, the financing company or bank will be named on the title certificate. Once any money owing is paid, the equipment will be considered clear title and ownership can be legally transferred. If you mistakenly purchase equipment that is not clear title or has a lien applied, you may have to forfeit ownership to the lending institution. (Ritchie Bros. checks all equipment for liens before the auction; if we can’t deliver a clear title, we offer the buyer a refund of the purchase price.)

4. Inspect before you buy

If possible, test and inspect used equipment before you buy. If you don’t have considerable heavy equipment knowledge, it’s best to have a qualified mechanic or experienced operator carry out both a physical and functional inspection on your behalf. Phone the seller and arrange a time and place to inspect the item, or contact the auction site or dealer to confirm when and where equipment is available for inspection. If possible, arrange the inspection at the seller’s place of business. Plan for enough time to look over the equipment thoroughly and to run the equipment through various basic operations. As the inspection is carried out, make notes of any items that are damaged, need an immediate replacement, or should be checked more in-depth.

If you are buying online, look for websites that offer a wide range of equipment photos, like Ritchie Bros. auctions, IronPlanet, and Marketplace-E, for example. Scrutinize equipment pictures and don’t be afraid to email any questions you have to the seller or to ask for pictures of the equipment from different viewpoints; for example, a photo of the undercarriage, engine compartments, or hours meter.

5. Leave a payment trail

If you are making a purchase online or from a private seller, you’ll want to make sure you have some kind of recourse should the equipment arrive in a condition that differs from the image presented online, or if the equipment doesn’t arrive at all. Check the terms of any online transaction before you buy, and look for websites that have a secure escrow or transaction process. With each purchase you make, ask for a receipt, invoice, or other documentation naming you as the owner of the equipment. If you are buying in person from a private seller, try to avoid paying in cash. Pay by certified check and leave a paper trail that can help prove you paid for the item.