Equipment Appraisal Blog | Understanding Machinery Appraisals

How to Prepare for a Construction Equipment Appraiser Site Visit

Posted by Equipment Appraisal Services on Mon, Nov 26, 2018 @ 02:47 PM

construction equipment appraisal

When you schedule an equipment appraisal for your construction equipment, whether it's a crane, cement mixer, or saw, the appraiser will visit your business to examine the equipment. Planning ahead for the appraiser's site visit will help the appraisal go smoothly for the benefit of all. Here's what you need to know about planning for a construction equipment appraisal site visit. 

Find Equipment Records 

The appraiser will want to know where and when you bought the equipment, how you've maintained it, and how the equipment is used. By gathering records related to your equipment ahead of time, you can provide the equipment appraiser with accurate information, rather than guessing. This could affect the valuation of your construction equipment. 

Records to look for include purchasing records, original receipts, maintenance logs, and replacement part orders. Appraisers may ask for other documentation, so this is not a complete list. Some appraisers let you know ahead of time what they need to see, so you can gather relevant materials. 

If you're having all of your construction equipment appraised, rather than one new asset, it's helpful to print out a list of all the assets you have. This way, you can ensure you don't miss anything. 

Schedule the Appraisal 

Appraisers know that situations requiring appraisals at times can be confidential.  Good appraisers know what to (and what not to) say when approached by curious employees.  Depending on the situation, appraisals sometimes need to be completed at off times rather than during the day.

 Prepare Yourself 

The appraisal will be a more enjoyable experience when you prepare yourself ahead of time.

This might mean reviewing equipment specifications or looking over maintenance logs so you can speak to how equipment is used at your construction company. It could mean writing up a list of questions you want answered. For instance, if you're considering whether to repair or replace a table saw, you might want to ask the appraiser for the estimated remaining useful life of the equipment or what it might fetch at auction, so you can make the right decision. 

Your reason for seeking a construction equipment appraisal may dictate the questions you have for the appraiser. For example, if you are selling equipment as part of business liquidation, then you might want to know more about the resale potential for equipment. If you are appraising construction equipment for tax purposes, then you might ask about maintaining that value over time, to protect your business. 

Speaking of preparation, it's important that you only hire an accredited appraiser who has demonstrated experience with construction equipment. Otherwise, there is no guarantee that the appraiser you hire will be able to accurately value the equipment. 

Tags: construction equipment appraisers

What does a machinery appraiser actually do on the job?

Posted by Equipment Appraisal Services on Tue, Nov 20, 2018 @ 03:13 PM

machinery appraiser

When most people call an appraisal firm, it's to get information about having an appraisal performed. But because of the number of calculations involved and the knowledge behind those calculations, another question that is frequently asked is what does a machinery appraiser actually do every day? Here's a quick look at the regular tasks that take place in an equipment appraisal firm.

What does a machinery appraiser actually do on the job?

They talk to you on the phone, show up at your location, hem and haw over your equipment, go away, then present you with a report of their findings. Machinery appraisers have a somewhat mysterious job, because much of it is hidden behind the scenes. Here's what happens during the equipment appraisal process:

  • When you first call in, the appraiser may be overseeing any number of projects, studying for continuing education for their certification, studying the newest figures on the longevity of a particular model of equipment or catching up on how the market is impacting values for specialty equipment within a specific industry.
  • As they gather the initial information on your equipment, they're already going into calculation mode. "Does that have the optional backhoe?" they ask, knowing this will kick the value up further. "How many hours does it have on it?" knowing that particular model tends to either fade out at 4,000 hours or go strong up into the 10,000-hour range.
  • Once they've gathered the initial information, they verify their own impressions of what the machinery is valued at. Though they may remember the estimated value as a starting point for a range of machinery, equipment that they're not familiar with will require them to find a baseline value from which your machinery's condition factors will be taken into account.
  • When they arrive to inspect your equipment, it seems like they're spending a lot of time just looking at it. However, in that time, they're looking at whether the pulleys or gears are aligned, if the machine is making any unusual sounds, whether that stain is just an old issue or a sign or a serious hydraulic problem and similar aspects of the equipment that will impact its value.
  • Back in the office, they take a solid look at the market. If you have oilfield equipment and the industry is in a bust cycle, that will have to be reflected in a lower value on your equipment. If, however, they see that there's a hot new discovery that's being leveraged, they can provide you with that information so that you can sell at a better price outside of your region.
  • Finally, they take all this information to develop a solid valuation report. This report takes into account the market conditions, type and model of equipment, the condition the equipment is in, its expected useful lifespan and any number of other factors to calculate a final value for your equipment. It's written up neatly and can be appealed for a revision if the value doesn't seem correct.

By gaining a better understanding of what happens behind the scenes at an appraisal firm, you gain a better grasp of the knowledge and experience that a machinery appraiser must have to complete their job on a daily basis. When you understand this, it gives you a better appreciation for the information these certified professionals are able to provide about your company's equipment assets. 

Tags: machinery appraiser

What's Involved in the Appraisal of Construction Equipment?

Posted by Equipment Appraisal Services on Wed, Nov 14, 2018 @ 10:23 AM

appraisal of construction equipment

When you work in construction, the value of your equipment often falls by the wayside compared to the income that is generated by that machinery. But when it's time to purchase new equipment, the value of that construction machinery is suddenly of paramount importance in terms of how it helps you finance your new machinery. The process involved in the appraisal of construction equipment may seem confusing, but it's actually fairly straightforward. Here's a quick look at the overall process to help you get a better grasp of how it works.


What's Involved in the Appraisal of Construction Equipment?

When used construction equipment is appraised, there are a few steps involved in the process:

  • The appraiser gathers the initial information about the equipment. This includes the manufacturer, model, any additional kits or options that have been included and similar data which helps give the appraiser a baseline to determine the value of the equipment. This part of the process may also include a rough estimate of the machinery's condition by the individual securing the appraisal, but not as a final assessment.
  • The equipment itself is appraised for condition and value. This includes taking a solid look at the entire piece of machinery, including the condition of the body, mechanical condition, performance and similar aspects which help the appraiser determine both the current condition of the machinery as well as the expected useful remaining lifespan of the equipment.
  • The market may be considered. If the equipment is of a type that can only be used in construction, the market conditions can have a strong impact on the appraised value. For example, if the construction market is going strong, the machinery may have a much higher resale value based on that aspect of market demand than when the market is very weak and demand for machinery of this type is very low.
  • The market may be of limited interest. If the machinery in question is, on the other hand, reasonably useful in a range of other industries, such as a forklift, the condition of the construction market may have a much lower impact on the final value of the equipment. For example, the previously mentioned forklift can be used in a range of other applications, such as shipping, warehouse and similar industries, which means that its value can be carried by these industries.
  • The final value of the machinery is calculated. Once these different aspects are taken into account, the appraiser uses a calculation methodology to determine the final fair value of the equipment. As the different factors are taken into consideration, the formula used adds or subtracts value based on whether that aspect increases or decreases the equipment's overall value. This information is consolidated into a final report by professional appraisal firms, especially those that use certified equipment appraisers.

By having a solid grasp of what's involved in the appraisal of construction equipment, you can have a better appreciation for what happens behind the scenes when you're getting ready to trade or sell your used equipment and need to know what it's worth. Make sure that if you decide to have a professional appraisal performed that you work with a certified equipment appraiser to ensure that the valuation report has been developed using standardized methodologies that help protect your interests in your equipment.

Tags: appraisal of construction equipment

How can an equipment valuation help you take advantage of economic growth?

Posted by Equipment Appraisal Services on Tue, Nov 06, 2018 @ 10:43 AM

When the economy is strong, you want to take advantage of that growth to make the best gains you can before things slow down again. But how do you know if you're using your equipment assets to their best advantage during this process? An equipment valuation can be a valuable tool to help you gain significant growth out of the good times to help you through the bad. Here's a quick look at some ways you can use a valuation report to your benefit during periods of strong economic growth.

How can an equipment valuation help you take advantage of economic growth?

  • Finance: A strong economy is a common indicator that it's a good time to take out a loan to grow your business or consolidate your position. However, securing that financing for the best possible rates can be difficult, especially if your business struggled during the last recession and has a few stains on its credit report. When you know exactly what your equipment is worth, you can use it as collateral for your financing. Furthermore, an equipment appraisal report from a certified appraiser holds up to strong scrutiny, bypassing the need for having a secondary appraisal for the financial institution.
  • Improved Production: Downtime is the enemy when production is running hot and you need every possible bit of outcome from your equipment. During an equipment appraisal, a qualified machinery valuation specialist may notice a number of different issues with your equipment. Because they deal with this type of equipment on a daily basis, it's much easier for them to notice when something seems a little off and may be able to provide advice with regards to potential upcoming failures. This allows you to make timely repairs before a major breakdown takes place.
  • Improved Overhead Costs: As part of your overhead costs, knowing when to replace aging machinery is a vital part to ensure that you're putting out as little equity as needed when the time comes for replacement. When you know exactly what your machinery is worth at the time, it makes the replacement decision and the calculations involved much easier to determine. This allows you to make the right decision at the right time for the right cost, saving your business money in overhead costs for replacement machinery.
  • Avoiding Poor Property Tax Assessments: As the economy recovers, every tax agency wants their piece of the pie. When your tax bill goes up, you end up having a lower amount of funds available for rolling into other parts of your business. This means that you need to make sure that your equipment is being accurately assessed by the tax office to ensure you're not paying too much in taxes. Because a certified appraisal holds up well to strong scrutiny, it's accepted as proof of value by many tax agencies.

By having an equipment valuation performed, you end up with the tools needed to take full advantage of the situation. But what kind of valuation should you have performed? Rather than taking the word of an appraiser who has an interest in the outcome of the valuation, such as an equipment sales representative, you'll get much better, more accurate and more actionable results from a certified equipment appraiser. Be sure to ask your appraisers whether they're certified and ask which organization they're certified with.

Tags: equipment valuation