Equipment Appraisal Blog | Understanding Machinery Appraisals

Keep on top of changes in the market by appraising oilfield equipment

Posted by Equipment Appraisal Services on Tue, Jul 31, 2018 @ 02:41 PM

When you work in the oil and gas industry, you know that market fluctuations can have a strong impact on your bottom line. As prices change, you decide what equipment But did you know that appraising oilfield equipment can help you make smart decisions for your company's future? Here's a quick overview of why it's important to have your oilfield equipment appraised regularly and how this information can provide strong benefits for your business.

Keep on top of changes in the market by appraising oilfield equipment

When market prices change, you may choose to put assets into or out of use based on a wide range of factors that impact cost and price. But when you don't know the value of your equipment, it can be very difficult to determine when that machinery should be put into action or held back to preserve value. But that's not the only area where your machinery values should be considered.

What about when the next big oilfield is discovered and you're in a good position to take advantage of the situation? If you need to quickly take advantage of the situation,  what assets can you leverage to ensure you can secure the financing you need for fast growth? A financial institution may not see the full value of your equipment or may take time to determine the value, costing you valuable days or weeks before you can take advantage of the opportunity. However, having a valuation report already on hand from a certified equipment appraiser allows the financial institution to move more quickly in approving your loan, giving you more time to position your company and start production.

Another area where equipment valuation can help in a boom is by providing you with a solid value for that particular piece of machinery. Instead of being gouged by an equipment sales rep who is inflating prices to take advantage of the situation, you can come to the negotiating table with a firm grasp of exactly what the equipment is worth. This allows you to negotiate from a position of strength, even though you may end up paying a slightly higher price instead of waiting on equipment to arrive from across the country.

Once you're on the oilfield working, can you sustain your production levels or will equipment failures cost you your profits? Many people are not aware of a very helpful aspect of equipment valuation. When your equipment is appraised, its value is based at least partially on its condition. That means the appraiser, who spends their time inspecting equipment, can often provide you with a good idea of where the machinery is having issues such as excessive wear, pressure issues and similar problems.

By appraising oilfield equipment regularly, it's much easier for you to make smart decisions about your business, no matter what the market may bear. But who should you have perform the equipment valuation? Though it may be tempting to simply request one from your local equipment dealer or use your last property tax assessment, keep in mind that these sources will not provide you with a solid valuation report that will hold up in legal, financial, insurance and tax circles. Make sure that the appraiser you use is certified, which will provide you with an honest, independent report of your equipment values. 

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When to Consider Appraising a Machine Shop

Posted by Equipment Appraisal Services on Tue, Jul 24, 2018 @ 10:23 AM

What's your machine shop worth? If you don't know, perhaps you need an appraisal to get the market value of your machine shop. Explore common reasons for appraising a machine shop today to learn when and why to get an appraisal. 

Keep Up With the Times 

If your shop is not keeping up with market trends, you may not be able to handle your customer's changing needs. Getting a valuation can help you tune-up your machine shop, because it will show you your shop's current value, your equipment's condition and remaining useful life, and current market demand for your assets.

When you know this information, you can stay current with the times by investing in the right pieces of new equipment. For instance, many machine shops understand the demand for additive manufacturing technology, yet few have made the investment in this technology. If you've been thinking of purchasing a 3D printer, a valuation can help you compare your existing assets' value and demand, so you can decide whether to sell underutilized equipment and buy a 3D printer or keep your existing assets and take out a loan for the new equipment. 

Lower Tax Liability 

Are you concerned you're paying too much in taxes? An appraisal can provide an up-to-date valuation of your machine shop, which can lower your tax liability. The money you save on taxes can then be reinvested in your business.

Protect Your Investment

Your machine shop is your livelihood, and if your equipment were damaged in a natural disaster or other incident, you would suffer. In order to protect your investment for business insurance purposes, you need to know the total value of your assets -- and this means you need equipment appraisal for all the big-ticket items in your machine shop.

For smaller items that you may not want appraised, you will need documentation to demonstrate your assets and their condition. Think photos of your equipment, serial numbers, make and model information, and even service records for your equipment. 

An appraisal can show your insurance company exactly how much everything is worth and help you determine how much insurance to purchase. By preparing ahead, you'll be covered whether there's a flood at your facility or an unexpected crash. 

Sell Your Shop 

With the economy doing so well, this is a great time to consider selling a successful machine shop. Maybe you'd like to retire, or maybe you're thinking of moving to another state. A machine shop appraisal will help you understand the worth of your shop so you can take it to market and sell for a fair price. If you're thinking of selling down the road, having your shop appraised now helps you make informed decisions for the next few years. For instance, you'll know whether it makes financial sense to repair or replace old equipment given the equipment's value in the appraisal. If your shop isn't valued as highly as you would like, you can make changes to the business to boost its value so you can earn more at the time of sale. 

A machine shop isn't something that you set up and leave alone. It's always changing. So while there are many reasons to consider appraising your machine shop, know that an old appraisal isn't necessarily reflective of your shop's current business valuation. If it's been a while since you've had your machine shop appraised, or if you've never appraised it, search for an appraiser with demonstrated experience with machine shop appraisals today. 

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Why is it important to consider appraising woodworking equipment?

Posted by Equipment Appraisal Services on Tue, Jul 17, 2018 @ 01:17 PM

When you work with lumber, it's not uncommon to deal with fluctuating values. The lumber you use changes cost after a major hurricane makes prices skyrocket. Your finishing materials change when a manufacturer goes out of business. Your tool costs can even change value when they're put on sale. But what about your woodworking equipment after you've paid the bill? As one of your shop's most expensive assets, appraising woodworking equipment should be at the top of your list when it comes to recording asset values. Here's a quick look at some common reasons why woodworking equipment is appraised.

Why is it important to consider appraising woodworking equipment?

When you know how much your equipment is worth, you're in a better position in a number of different circumstances. Here are a few to consider:

  • A fellow woodworker visits your shop and notices your rarely-used shaper that has been sitting in the corner for the past five years. They ask how much you want for it. If you don't know, you could be asking far too much and costing yourself the opportunity or losing significant value by asking far too little. How do you determine a fair value for your equipment in this situation?
  • A rag is left with finishing products on it and spontaneously combusts, starting a workshop fire that causes significant damage to your high-end cabinet saw. When the insurance adjustor comes out to inspect the equipment, he quotes you a much lower reimbursement amount than you feel your saw was worth. How do you prove the saw's value to get appropriate reimbursement for your broken equipment?
  • After declaring that you're spending too much time in the shop, your spouse states that they want a divorce. Whether you live in a community property state or not, your woodworking equipment is brought into the debate. Your spouse has found the latest models of your equipment with the highest possible values, even though your machinery has been in use for over 20 years. How can you prove what your equipment is really worth and avoid being taken to the cleaners in the settlement?
  • Following years of operating your woodworking business, you're ready to expand. But because of a couple questionable financial issues on your credit report, your bank is balking at approving your new business loan without any collateral. You're willing to put your existing machinery up against the loan, but the bank isn't certain of the value. How can you document it's worth?
  • With a need to increase tax funds through the county, your local tax assessor makes a mistake and determines that your bandsaw is worth significantly more than you paid for it in the first place. They don't want to back down and aren't even willing to make a concession that they could be wrong. How do you fight the bad assessment?

By appraising woodworking equipment in your shop, you'll gain a much better idea of what those assets are worth. This allows you to make better decisions about whether you should invest in repairs, replace a piece of machinery or upgrade to a different model. However, not all equipment appraisals are the same. Make sure you take the time to work with a certified equipment appraiser. This ensures that you're getting machinery values from an independent third party that will hold up well to strong scrutiny.

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Going to seed: How appraising farm equipment improves your farm finances

Posted by Equipment Appraisal Services on Tue, Jul 10, 2018 @ 04:12 PM

When you're in agriculture, your finances can go up and down with the market. Knowing the overall value of your farm assets helps you make wise decisions for your operation's future outlook. With the high cost of machinery today, appraising farm equipment can help you get a better grip on your farm's finances and the overall value of your assets. This can come in handy when you need to make an insurance claim, fight inaccurate tax assessments or secure financing for a farm loan. Here's a quick look at the many ways farm equipment appraisal can help you improve the accuracy of your farm finances.

Going to seed: How appraising farm equipment improves your farm finances

Whether your equipment is the latest model or an aging fleet of implements and tractors, that equipment represents a large portion of your farm's assets. Combine that with the value of your land itself and you're looking at almost every asset for your farm operation. It's easy to see how the value of your farming equipment can strongly impact your farm's economic status. 

With the changes in the tax laws, you can choose to deduct the full cost of new equipment for at least the next few years, which reflects a strong change from the depreciation tables of the past. But whether you use standardized depreciation tables or deduct the cost using the new tax laws, your machinery's value probably does not change to meet those estimated values. Why?

When you use a depreciation table, you're assuming that your machinery is losing value at a steady rate that happens to match the time period of the table. However, many farmers have old equipment lying around that is used regularly which reached a value of zero on the depreciation table ages ago. That doesn't mean that that old hay wagon, ancient farm truck or aging tractor has no value in your operation.

What would you do if you had a fire in your machine shed and lost that equipment? The depreciation tables and your books may reflect that the equipment has no real value, but you know you'll need to replace it before harvest comes around. When you need to make a claim with your insurance company, will their standard value actually cover the cost of replacing that equipment? In situations like these, it's important to have your equipment appraised.

When you need to fight a bad assessment or estimate of value from an insurance company, court or financial institution, an equipment valuation from a certified appraiser provides a solid basis for value. Because a certified appraiser uses standardized methodologies to calculate value, these values have been proven to stand up well to strong scrutiny.

Appraising farm equipment helps you record your machinery's value both at current as well as over time. This, in turn, allows you to update your financial books, which tells you exactly where your finances fall when you need to determine whether expanding your operation, replacing older machinery or upgrading machinery to improve productivity. However, before you try to get a machinery value from your local equipment dealer, remember that they have a vested interest in selling you new machinery, which will impact their valuation. Make sure you work with a certified equipment appraiser to get an accurate machinery value.

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What is looked at when appraising metalworking equipment?

Posted by Equipment Appraisal Services on Tue, Jul 03, 2018 @ 09:44 AM

Welding robots, presses, brakes: when you work with metals, machinery can be one of the largest assets your business benefits from. But how do you protect that investment? Though it's often left until a piece of machinery is being sold, appraising metalworking equipment can help you better judge your equipment's longevity and useful remaining life. This allows you to make better decisions on when it's time to upgrade or replace your equipment. But what happens during the appraisal process? Here's a quick look at some factors that are taken into account when an equipment appraiser looks at your metalworking machinery.


What is looked at when appraising metalworking equipment?

When you contact an equipment appraiser, you'll be asked a number of different questions, but one of the first quickly decides exactly what direction the appraiser will take in calculating equipment values. Because the methodologies used by equipment appraisers have been tested in a range of different circumstances for decades, it's important that the appraiser understand the reason why your machinery needs to be appraised. You'll receive a different value based on whether the equipment is being sold quickly to settle an estate, replaced for insurance purposes, part of divorce proceedings or for a change of ownership.

However, the areas that an appraiser will look at are often very similar. The appraiser will start by looking at the machine's age, overall condition, resale value, the condition of the market you supply, how well the equipment has been maintained and any features that may raise its value. If a piece of machinery has been abused or neglected, it will have a much lower value than equipment that has been well maintained and kept in good repair over the course of its entire lifespan. This information helps the equipment appraiser in a number of different ways.

The machine's age will often play a part in the machinery value, as it can help the appraiser determine roughly where the machinery falls across its lifespan. Does that model tend to last for ten years, twenty years or thirty years? This can make a big difference in value if the equipment is nine years old, as it helps determine how long that machine will roughly provide value to the business. What is its usual resale value and are you willing to wait for the right buyer or sell quickly? Is the equipment currently in demand? This can be determined by the economy and whether you'll be able to find buyers for your equipment without taking a heavy loss. Additional features can help boost value.

Appraising metalworking equipment can benefit your company in a wide range of areas, but by knowing what the equipment appraiser will be looking at can help you get a better eye for machinery values yourself. By having your equipment regularly appraised by an independent third party, you can draw up a schedule and plan for when equipment will need to be replaced, allowing you to shop for the best deals and, if needed, secure the best possible financing for your specific situation. Make sure you're working with a certified equipment appraiser who has experience in your industry to ensure you're getting the most accurate information on your company's values, as that appraisal report will hold up to strong scrutiny in legal, financial, tax and insurance circles.

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