Equipment Appraisal Blog | Understanding Machinery Appraisals

What are USPAP appraisal standards and how can they impact your valuation?

Posted by Equipment Appraisal Services on Tue, May 01, 2018 @ 09:06 AM

When you're considering having your equipment values determined, you may hear the term USPAP Appraisal Standards tossed around. But what are these standards, how can they impact your valuation and why should you work with an equipment appraiser who is familiar with these standards? Here's a quick overview of the standard and how it impacts your machinery values.

What are USPAP Appraisal Standards and how can they impact your valuation?

When it comes to appraising real estate, property, intangible assets and business values, the Universal Standards of Professional Appraisal Practice provide a type of quality control to the process. It was established prior to the Savings & Loan Crisis in the late 80s and was then taken over by The Appraisal Foundation following the crisis. TAF is overseen by the Appraisal Subcommittee in Congress to ensure that artificial inflation of a valuation can't grow out of control again.

Since 2006, the standard has been updated every other year. This allows it to remain current with changes in the industry and new regulations. Though it's mainly used in the US, it's been adopted either in whole or partially by a large number of professional appraisal organizations in foreign countries. Though it controls the standard of how appraisals are performed, including requiring that the appraiser be familiar with and use the appropriate methodologies, it does not, in fact, require particular methodologies to be used.

There are a wide range of different certifications available that address the USPAP standards, dealing with a number of specialties. There are some that cover different aspects of real property, while others focus on federal government property appraisals. The Personal Property Appraiser certification is the specialty that deals most closely with machinery valuations. To meet the qualifications for this certification, the appraiser is required to remain in compliance with USPAP, have successfully completed 30 hours of college-level work from an accredited educational institution, have passed the 15-Hour Personal Property USPAP Course or a 45+ hour course and exam dealing with valuation practice, additional hours of coursework and many other qualifications. 

But how do you benefit when you choose to have an equipment appraiser use USPAP standards to appraiser your machinery? You'll know that the appraiser is well-educated and experienced in the appraisal process and can be counted on to provide you with a calculated appraisal report that is accurate and will be accepted in virtually all circles, including legal, insurance, financial and tax agency situations. You'll know that the appraiser has dedicated significant amounts of time to studying the standard to ensure that they remain in compliance with the USPAP and will be knowledgeable about any questions you may have about their practices and methodologies. You'll also know that you can count on their calculations to provide a solid figure for negotiations when you're planning on buying, selling or trading a piece of equipment, which in turn can help keep you from being taken advantage of.

By understanding the USPAP Appraisal Standards and how they impact your equipment valuation, you can gain a better understanding of how machinery is valued and what aspects can impact those values. When you're having your equipment appraised, using a certified appraiser who is familiar with the machinery in your industry and the appropriate USPAP standards is the best way to ensure your appraisal is as accurate as possible.

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