Equipment Appraisal Blog | Understanding Machinery Appraisals

As the building industry rapidly evolves, are you keeping up with the changes that are happening? If you aren't, you might not have an accurate picture of how valuable your heavy machinery is in the market. Fortunately, a construction equipment appraisal can help you stay on top of changes and take advantage of growth in the market without subjecting your business to unnecessary risk. Here's how it works out:

Using a construction equipment appraisal to keep up with current trends

Current industry trends in construction primarily focus on one particular aspect of building design: efficiency. The general change in the population towards healthier living, sustainability and lower waste on construction projects mean that today's construction company must provide high-quality, sustainable products and techniques while cutting waste and the end cost of the structure to the client. But how do you keep up with these changing trends? One way is by using well-maintained equipment that holds its value well while providing years of reliable service.

But overall, the construction industry is growing both across the country and around the world. As the industry grows, what happens to the value of your construction equipment? As growth overtakes equipment production, existing equipment becomes more valuable, but to what extent? Many businesses find that having construction equipment appraised helps them understand how their equipment values change over time and how that can impact their overall asset values.

However, with this growth also comes the opportunity to replace aging equipment. But how do you decide when it's time to get rid of older construction machinery? A good equipment appraiser spends all their time looking at equipment and writing up reports on its value. This means that they generally have a good feel for how long the remaining useful life span of the equipment may be. By determining this information, you can decide whether you need to change out that older grader that is getting up in years or whether you want to hang on to the old backhoe you have on site because it's still expected to provide years of reliable service, despite its age. This means you can choose the right time to sell, trade in or donate your older equipment for your business' best interests.

When you know your equipment values, you can also make smarter business decisions. When you think that your equipment is worth more than is realistic, you're more likely to take on risky investments because you think  you have the equipment assets and collateral to back up the investment. But when that investment goes south, you'll quickly discover you don't have the assets to cover the financing you took out for the investment. Conversely, if you think your equipment is worth less than is realistic, you may be missing out on fabulous opportunities because you don't believe you have the collateral or assets to make the investment. That means you won't see the level of growth your business is capable of achieving.

By keeping on top of your equipment values, you can quickly take advantage of favorable trends to grow your business while avoiding investments that could prove too risky. Construction equipment appraisal provides you with a wealth of information about your machinery, from its expected useful remaining life to any range of different sale situations. Make sure you take the time to get this important information today to help protect your business interests.

If there's one thing that's true in the fabrication industry, it's that staying on top of changing market trends is vital to the overall health of your business. But how do you determine where your equipment falls, what it's worth and how you can leverage that value to upgrade your shop to the latest technology? A machine shop appraisal provides you with all the information you need and more to determine your equipment values. Here's how it works.

Using a machine shop appraisal to keep up with current trends

New welders offer an entirely new range of precision, lowering your overhead costs and reducing post-welding cleanup operations. CNC machines deliver a level of accuracy that is virtually impossible to match using traditional metal fabrication tools. Multi-axis machines allow unprecedented access to the piece in progress while providing faster production times. Additive manufacturing gives you options you'd never before considered possible for your machine shop. How do you decide which technological breakthroughs are worth your hard-earned equity and whether you can afford these new tools in the first place? What determines the value of your equipment assets?

One way to approach the issue is through a machine shop valuation. Geared at taking a solid look at the actual value of your machinery, a valuation takes a good, hard look at a number of different aspects that impact machine values. Current and projected future demand for that particular piece of equipment is taken into account, as well as the features and kits available, condition of the equipment itself and what would be involved in terms of cost when removing the equipment for use in another facility. This helps you determine what the equipment is worth to your business and whether it's time to upgrade to more advanced equipment or leave the existing equipment in place to provide additional capability in your fabrication business. 

As an example, many companies are seeing the potential of additive printing, but very few are investing in the technology at this time. However, companies that are investing in this technology are seeing huge gains in their market share for these specialty tools. Though many companies are considering purchasing a 3D printer, they're not sure whether they have the assets available to purchase one that will meet their needs. Equipment valuation can help with this situation, allowing you to determine what equipment you would need to sell or use as collateral to purchase the necessary equipment to finish fitting out your machine shop for solid technological advancement.

By getting a machine shop appraisal, you can gain insights into your overall equipment values and leverage that value to improve your fabrication company's technology assets. But many machine shops make the mistake of simply counting on their equipment broker's word on what the equipment is worth. By using a certified equipment appraiser, you can ensure that the values you receive are backed up by solid methodologies that have stood the test of time in financial, tax agency and legal circles. If you're not currently working with a certified equipment appraiser, you could be leaving money on the table when it's time to buy or sell equipment.

Farmers are the original economists. Leftover milk goes to the pigs, scraps from the kitchen feed a hungry flock of laying hens and old buckets, barrels and tarps are used time and again to help keep the farm in the black. Old equipment is repaired time and again, and with the cost of new tractors, combines and other machinery, is often considered to have poor market value. However, that's not always the case. A farm equipment appraisal can often hold a surprising amount of value, because advancement in agriculture doesn't mean your old equipment isn't maintaining its value. Here are a few insights into why this equipment often retains its value better than you may think.

Why ag advancement doesn't equal poor farm equipment appraisal values

Drones that release specific amounts of fertilizer or beneficial insects where they're needed most. Bluetooth connectivity in the cab of your John Deere tractor. Precision agriculture to levels of precision that have never been seen before. Agriculture is quickly advancing even as fewer and fewer farm kids are willing to stay on the farm to take over for aging parents. But that doesn't mean that older equipment doesn't have value. 

When it all comes down to it, today's agricultural concern is based on the perfect combination of a few specific elements: soil, climate and the farmer, who manages to work between the other two elements to ensure a successful crop, whenever possible. Having more advanced agricultural equipment doesn't make these two aspects change. For that reason, equipment that isn't as advanced still holds value.

This concept is borne out when farm equipment is appraised by a professional equipment appraiser with experience in agriculture. If your old tractor or combine are from popular lines that are known for their dependability and relatively long life, they may be worth much more than you would think. At the same time, a piece of nearly new equipment known for breakdowns and short useable lifespans may not appraise for as much as you might believe.

But where does equipment valuation fit into the picture? Most farmers can give you a good general price on what they can expect to make per acre, but often completely discount the value of the farm equipment as part of that calculation. However, much like so many expenses in other businesses, this aspect of your farm business shouldn't be overlooked. An equipment valuation performed by a certified equipment appraiser helps you get a better grip on what your farm's assets are actually worth, a necessary figure when you're projecting income or applying for insurance. When you need a loan to get through a bad crop year or two, a properly prepared appraisal report provides you with proof of value that will hold up with your financial institution.

As you can see, having older ag machinery doesn't always mean that equipment doesn't have value. A farm equipment appraisal may seem like something you could handle at the local equipment dealer, but their interests and your interests often interfere with getting a fair market value for your machinery. To get a proper equipment appraisal, you'll want to work with a certified equipment appraiser who has experience with agricultural equipment, giving them the knowledge and training to provide you with an accurate statement of value for your machinery.

If there's one thing that always stays the same in trucking, it's that everything changes. The past few years have seen high and low fuel prices, extreme demand and complete lack of business, easy hiring and hard to find drivers. But what trends are ahead for the trucking industry? Find out how a tractor appraisal can help you keep ahead of industry trends no matter which way the market goes.

Trucking Industry Trends: How Tractor Appraisal Keeps You Ahead

• Trucking policy is an unknown at this point. With a relatively new administration in office still shaking things up, it's really difficult to know how the industry will be impacted by policy changes. President Trump made it into office by promising to make America great again by promoting American business, which would suggest an increased demand for trucking services, but how well Congress will work with him on these issues may be another story.
• Are you ready for Elogging? By the end of 2017, all trucking companies will need to be in compliance with the new regulations concerning these areas. This means there's a stronger demand for trucks that already have this capability, which may raise or lower your tractor values depending on whether you already have the technology in place or not.
• Freight costs are on the rise. With our economy solidly in recovery, consumer confidence is rising. Many consumers are using this opportunity to replace items that were allowed to slide during the recession, such as appliances, vehicles, home improvements, clothing and virtually any other aspect of consumer spending. With the increased interest in buying online, shipping traffic should be strongly on the rise, raising your tractor values as more demand for shipments come through your business.
• Get your reefers moving. With elogging putting a stronger demand on drivers' time and increased consumer demand for fresh and frozen items, the strong market for refrigerated trucking is on the rise. If you're able to put more trailers and drivers on the road to maximize your reefer fleet, you're almost certainly going to see good profits, even as fuel prices are moving their way slightly higher than in the past year or two.
• Work together. Virtually every industry in operation today is undergoing digitization, which is leading to significantly different business models than have been used in the past. A major part of digitalization is the collaboration between your business and other logistics and supply chain businesses, forming partnerships and coalitions to reduce overall costs and increase overall consumer happiness with how a product is moved from the factory, field or farm to their home. These partnerships are focused on improving energy efficiency, reducing handling and providing superior outcomes for all involved.

When you stay ahead of your equipment values, you can ensure that your business is in good condition to take advantage of business opportunities without exposing yourself to excessive risk. A tractor appraisal helps you be aware of what you have available for collateral for a new expansion loan, which tractors may need to be replaced sooner rather than later and how much a tractor is worth if you're facing an insurance claim or court case. Make sure you work with a certified equipment appraiser who has experience in the trucking industry to ensure you're getting the right value for your records.

When you're in the oil industry, the changing market means  you might be looking at black gold or just a plain crude mess. How can you compete with rapidly changing market conditions? Fortunately, current market projections are looking favorable to the gas and oil industry. But are you in a good position to take advantage of this market upswing? Here are some more details on how an oilfield equipment appraisal can help you gain ground faster.

How an oilfield equipment appraisal helps you compete in a changing market

The past few years have been hard on roughnecks, roustabouts, drillers, operators and just about everyone in the industry. The low barrel prices of the past few years have moved many oil companies from the boom years of the best of Bakken's offerings to the most stripped-down survival mode. Many companies have been bought out by competitors or sold off at auction to the highest bidder - not very high with low oil prices. But if 2016 was a year of making tough decisions, as summarized in a recent Deloitte report, 2017 is expected to be the beginning of the long road back to productivity and profitability, especially following the election of President Trump, who has made strong promises to bring back domestic energy production.

But how can you get there? If your business is like many oilfield companies, you've had to make major sacrifices to get by during the tight years. Equipment that was sold for pennies on the dollar during the worst of times may now have an increased value as the market recovers and begins to climb once again. Having your equipment appraised provides you with a wide range of information beyond the simple price you can expect to receive for it. For example, a good equipment appraiser will look at the overall industry and adjust the equipment's value accordingly. Just as you might see equipment priced sky-high during the peak of a boom, that same equipment may be significantly lower when the market is flooded with used machinery during a severe downturn.

But what else do they look at? What condition is your equipment in overall? Because an experienced oilfield equipment appraiser spends significant time every day looking at equipment, they can often see issues that your mechanics or other personnel may have missed. This in turn allows you to catch problems earlier on, before they become much more expensive problems. Has your equipment been well maintained or has it been abused or neglected? Well-maintained equipment will often last significantly longer and enjoy a higher value than poorly-maintained machinery. This in turn can give you collateral when you need to secure financing for additional expansion during a boom year.

With the expected improvement in the market, having an oilfield equipment appraisal performed ensures that you'll know the value of your assets. This knowledge, in turn, can give you a strong leg up on the competition when it comes to financing additional equipment, operations or manpower. But don't expect that your local equipment dealer is going to just give you an appraisal that represents fair market value.

As the economy continues to lumber on, a wide range of markets and industries are being impacted in the process. But what about heavy machinery? Current projections are showing growth in the heavy construction equipment market as global economies continue to crawl out of the last downturn. What does that mean for your machinery values? Here's some insight into how heavy equipment appraisal values will be impacted in the upcoming years.

How is the changing market impacting heavy equipment appraisal?

A recent report issued by Markets and Markets created a global forecast of heavy construction equipment by type, end-use industry, application and region out to 2021. It's projections estimate that the industry will grow by a compounded rate of 7% per year, from $121.46 billion in 2015 to nearly half again that at $180.66 billion by 2021. This is in line with estimates of growing government spending on infrastructure projects, increasing population needs and increased construction in developing countries. Earthmoving equipment is expected to lead the charge as new projects break ground. In all aspects of heavy equipment, the heavy hitters in the industry are already positioning themselves to take advantage of this construction boom. Where do your equipment values stand in the process?

As demand for construction equipment rises, some portion of that will be taken up by new equipment produced by industry leaders. But in many circumstances, the demand for used equipment will actually rise as well. In developing countries, many governments would rather invest in second-hand equipment that will allow them to achieve the same amount of work without having to make as much of an investment in the beginning of the development process. Construction companies that are forming to take advantage of the projected growth will want to maximize the value of their capital, making used equipment an excellent investment. As demand for this equipment rises, so does your equipment values.

As the market grows, you'll want to be in a position to take advantage of the opportunities that growth presents. Part of being able to do so is tied up in what assets you have available to secure funding for business expansion and upgrades. As the used equipment market grows, your equipment values also increase. By getting an updated construction equipment valuation, you can receive solid documentation of the increased value, allowing you to use that value as leverage with your financial institution.

What's more, an equipment valuation report created by a certified equipment appraiser uses methodology that has been proven to stand up in legal, financial, insurance and tax agency circles. That means when your tax assessor's office assumes that the growth in the industry means you should have a much higher tax on your equipment, you already have the documentation needed to fight the unfair assessment.

With the projected growth in the market, we can expect to see solid changes in heavy equipment appraisal values as time marches on. Are you ready for this upcoming growth? If you haven't had a recent equipment valuation, you may be missing asset value that you could use to your business' benefit as this growth takes place.

When your medical practice is doing well, it can be tempting to upgrade your machinery or open a new location. But how do you know if that move will be a good investment or a bad risk? Medical equipment appraisal can provide you with the information you need about some of your practice's most expensive assets to help you make an educated decision on these types of issues. Here's more information on how it does this.

How Medical Equipment Appraisal Helps Support Your Bottom Line

How much is your medical equipment worth? You might be surprised just how far that number can vary. When you've got an equipment sales rep in the office, they may say that it's worth very little, especially compared to their latest model. On the other hand, they may say it's worth a great deal, especially when they're willing to accept it as a trade in on the same latest model. Neither number is necessarily an accurate assessment of the machinery's worth.

Looking at what similar models have sold for may not give you a good picture either. How well were those machines cared for? Was the industry in a strong or weak cycle when they were sold? Is there demand for that equipment in the industry because of new techniques or practices? There are a number of different factors that can impact your equipment's value. Working with someone who understands these different factors can make all the difference in determining your equipment's actual value.

Imagine if you had a piece of equipment that had been ill maintained over the years or had been damaged in a flood or fire. It still operates, but not as well as it should, or it's probably going to have a shorter useable lifespan than expected. What happens when you use a standard depreciation table in a tax document to depreciate value? The depreciated value will be stretched out over a longer period of time than the machinery will remain in usable condition. This means it remains on your books as an asset even when it actually has no reasonable value.

Another piece of equipment could be very well maintained. It's always had proper maintenance and has been used within its specified parameters, ensuring that it's in excellent conditions. It can deliver productive results for your practice years after it's been fully depreciated. That means it has no value in your balance sheet, but provides real value to your practice on a daily basis. The first machine creates false value, while the second isn't recognized for the value it delivers. This can create inaccuracies in your balance sheet and make it difficult to make smart financial decisions based on your practice's asset worth.

By getting a medical equipment appraisal, you can ensure that you have a much better idea of where your practice sits financially. With this information in hand, you can make smarter decisions on new investments, whether it's to open up a new location or upgrade your assets to allow for further services for your patients. However, if you're not working with a certified equipment appraiser, you may be getting bad information. Certified appraisers follow accepted practices to ensure they provide you with accurate values for your medical equipment.

Working in metal fabrication can be a tough enough job, with times of plenty and need, difficult work and exacting specifications to meet. But when disaster strikes, it can become even harder to keep your head above water. Whether it's a shop fire, a natural disaster or a theft from your business, it can seem as though you've only gone through one disaster just to deal with another one: insurance company demands for value documentation. Here's some information on how a metalworking equipment appraisal can help you through the process.

Disaster Recovery: How a metalworking equipment appraisal helps you get through

When you have a disaster in your shop, proving the value of the equipment that has been affected can just add to your burdens during a difficult time. Having an equipment appraisal on hand provides you with a wide range of benefits, not the least of which is being able to immediately document the value of said machinery to your insurance company or a court of law, depending on the situation. 

But what if you haven't had the opportunity to get an appraisal performed prior to the loss? You're not necessarily just stuck with whatever the insurance company or court decides to grant you. Certified equipment appraisers are trained to develop equipment valuations in a wide range of circumstances, even when the equipment has already suffered significant damage or has been stolen. By going back to the date of the loss and studying the documentation you have available, an equipment appraiser can provide you with an appraisal report that can document the estimated value of the machinery, which is especially helpful if your insurance company or the other party in a lawsuit is trying to lowball the value of your metalworking machinery.

How does this work? The equipment appraiser will look at your original purchase documents, photos, records of maintenance, repairs and updates made to the machinery and uses that documentation to develop an estimated value for the equipment.

But how is this more accurate than your insurance adjuster's final figure? Equipment appraisers spend all day appraising equipment, often specializing in a particular type of equipment. An insurance adjuster, on the other hand, must determine values for a wide range of items, from houses and medical claims to liability and structures. They don't know metalworking equipment nearly as well as a certified equipment appraiser does.

Though you can wait on getting a metalworking equipment appraisal until after you've had a disaster, having one on hand ahead of time can help speed the process along with your insurance company or court case. But make sure you're working with a certified equipment appraiser who has experience in the metalworking industry. By doing so, your appraisal report will be prepared using standardized methodologies that have been proven to hold up in legal and insurance circles.

Understanding orderly liquidation value in your equipment is just something most business owners never consider. Why? In general, liquidation is considered by most business owners to be a sign of failure, such as a bankruptcy liquidation. But there are a number of circumstances in which you may need to have an equipment appraiser perform a liquidation machinery valuation that have nothing to do with financial trouble in your business. In this post, we'll take a look at which circumstances may call for orderly liquidation equipment values and why this type of appraisal is used in those situations.

How businesses work: understanding orderly liquidation value in your equipment

What is orderly liquidation value?

Orderly liquidation value falls between forced liquidation value and fair market value in terms of monetary compensation. It's calculated under the assumption that the piece of equipment or machinery must be sold, but that there is a longer period of time to do so, such as a few months. You would receive less than you would at fair market value, but receive more than you would under a forced liquidation.

How is it different than fair market value?

Fair market value assumes that the equipment would fall under normal exposure in the market place before being sold for what is perceived as a fair price to both the buyer and seller. There's no serious time limit on how long the equipment would be offered for sale, so it would be sold for a higher price than in an orderly liquidation scenario.

How can orderly liquidation equipment values impact my business?

When you're getting ready to sell a business, knowing the orderly liquidation values allows you to gain quick cash to help with financing or to provide an additional buffer during the sale process if things don't go as smoothly as you'd like. When you're purchasing a business, knowing these values allows you to relatively quickly sell some of the excess equipment to pay down debts or meet other needs during the process. 

In what kind of situations is orderly liquidation value used?

In many circumstances, people involved in a business need to receive money relatively quickly for a number of reasons, but are willing to wait a reasonable amount of time to ensure they're getting more from the sale of that asset than they would through a forced liquidation. This can include the breakup of a partnership, the dissolution of a marriage where both individuals were involved in the business, the sale of excess equipment in anticipation of closing a business sale, an unexpected death of a business partner or similar scenarios. By providing additional time, the party that is leaving the business or their heirs will then receive money for the equipment that is sold without having to either lose out on the machine's value through a quick sale or wait a long period of time for it to sell using conventional methods and fair market value.  Banks also often lend based on Orderly Liquidation Value.

As you can see, there are many different situations where understanding orderly liquidation value in your equipment is important to your bottom line. When you need equipment appraisals, it's important to work with an equipment appraiser who is certified, because the certification training process ensures they know which standardized methodologies to use in which situations. Why is that important? Standardized methodologies are developed to stand up to strong scrutiny, including legal, insurance, financial and tax circles. Getting a quality equipment appraisal is vital to your bottom line.

There are so many terms in the equipment appraisals process that you would need a dictionary to understand them all. As long as you know the key terms that could affect your machinery valuation, you can interpret the results of an equipment appraisal and buy or sell used equipment for a fair price. When it comes to buying and selling used equipment, one key term to understand is effective age. 

Understanding Effective Age 

Appearances can be deceiving. If you were buying a die-cut machine at auction, for example, you would want to know whether the machine was 2 years old or 20 years old. The age would affect the price you were willing to pay for the machinery. You might be prepared to purchase a die-cut sealer that was either 2 or 20 years old, but for a very different price tag. Likewise, if you were selling the machine you would have a different expectation of acceptable prices based on age. 

What if the die-cut sealer was actually 20 years old, but looked so good you would have sworn it was last year's model? This is where understanding effective age in the appraisal process comes into play. 

Every piece of equipment has a real age representing the time from the date of manufacture to the present. Effective age denotes the look and feel of the machine... in other words, how old it appears to be to observers. 

Whether you are buying or selling, effective age is important to know. It tells you something about the equipment values set at auction.

Effective age is subjective. Depending on how the machinery was cared for, the effective age can be less than or greater than the actual age. 

A machine that looks new but is years old could have been recently repaired and painted to appear close-to-new. When examining old equipment, consider whether the piece was cosmetically enhanced to look good or truly rehabilitated to be competitive with current models. 

Consider the example of a home for sale in your neighborhood that's 30 years old. Let's say the current owner remodeled the bathrooms with low-flow toilets and an energy-efficient shower, put in a new tile floor, and refreshed the paint. The updated bathroom looks brand new even though the home is 30 years old. Now, imagine the same home is on the market, but the bathroom has only been repainted and the sink faucet was replaced. The bathroom looks somewhat newer than the rest of the house, but isn't actually more efficient. The work was simply window dressing to trick the buyer into paying a good price. 

The same holds true for machinery valuation of used equipment. Rather than trust what you see, it's important to dig deeper and ask questions to find out if the equipment meets your needs and if the price is fair. 

An equipment appraiser can help you evaluate equipment you are considering buying from a third party or walk you through the equipment values and effective age of an item before you take it to auction. This can save you time and money if you're selling equipment. Why spend money to fix an item if its effective age will still look poor compared with similar pieces of equipment? 

 Whether you seek equipment appraisals before buying or selling, it's key to find an appraiser who understands the industry, equipment, and core considerations.