Thursday, April 13, 2017

Machinery & Equipment Appraisal FAQs


Machinery & Equipment Appraisal 
FAQs




We get questions all the time.  It's interesting how many people have questions about the appraisal process.  Here is a list of the most popular questions we have heard over the years:

1. What does the appraisal process consist of?

It really depends on the use of the appraisal.  Typically the process starts by the client contacting the appraiser and talking about the aspects of the assignment.  This usually leads to a Letter of Engagement, Scope of Work, and payment options.  A site visit by the appraiser may or may not be needed depending on the Scope of Work, but whoever does the site work, details about the machinery or equipment and photographs will need to be taken.  Next the appraiser will conduct the necessary market research needed in determining the value of your machinery or equipment.  After that the report is assembled, reviewed, and then sent to the client or intended user.

2. How long does an appraisal take?

Well, it depends.  A desktop assignment with a few pieces of commonly purchased equipment could be turned around in a day or two.    Several hundred pieces of equipment that need to be individually inspected that are not readily available on the market will take longer (travel, international market, lack of sales data, etc).

3. Are desktops a better value?

A desktop can be a quicker option, but the quality of the data collection is solely on the client.  The appraisal can only be as good as the data that was provided.  However, when there are several sites, several pieces of equipment, or you just don't have the time to climb over your equipment gathering data, then a site visit by the appraiser may be in order.  

4. Why would I get a certified appraisal when I can get one from my local auctioneer?

Because they stand up to the scrutiny that can be expected in a court of law.  Our appraisals are developed using recognized methods and techniques, adhere to USPAP, are credible and reliable, and are certified.  Not all auctioneers or dealers can make that claim.  

5. What are the different types of value?

There are 4 basic ones, and each of these have some sub-definitions.  Fair market value (FMV) is similar to new or refurbished with warranties.  Orderly liquidation value (OLV) is the value that can be seen at auction with a typical market exposure.  Forced liquidation value (FLV) is the value that can be seen when the equipment is sold as soon as possible with little to no marketing.  Salvage is the value of the equipment if it were to go to a recycler.  For more information see: Valuing Machinery and Equipment: The Fundamentals of Appraising Machinery & Technical Assets, Third Edition, by the American Society of Appraisers.

6. What is capital Equipment?

Capital equipment has a different definition depending on which organization is using it.  The NEBBI recommends capital equipment are pieces of equipment that have a value in excess of $2,500.  However, this number is not set in stone.  

7. What does an appraisal cost?

Again it depends.  Flat fee, per item, and hourly are the three main ways machinery and equipment appraisals are ordered.  We have a base fee of $700 for less than 7 pieces of capital equipment site visit or desktop.    

8. How are appraisals delivered?

We have two main ways.  First is an electronic copy in PDF format, that we keep an original on file in accordance with USPAP, and we also mail out a bound hard copy for those who want one.  In many cases our clients ask for both!


Call Today To Speak To An Appraiser!
717-475-4263