Equipment Appraisal Blog | Understanding Machinery Appraisals

What Kind of Machinery is Covered in a Farm Equipment Appraisal?

Posted by Equipment Appraisal Services on Mon, Apr 20, 2020 @ 08:00 AM

farm equipment appraiser

Your life is on the land, working the soil, managing your livestock and keeping the family farm going. You know that getting a new tractor or upgrading your farm's operation to include a drone can be expensive, but do you know what your equipment is really worth? A farm equipment appraisal can cover a lot more than just figuring out the value of your tractor. Here's a quick look at the types of machinery covered during an appraisal.


What Kind of Machinery is Covered in a Farm Equipment Appraisal?

  • Tractors. Of course, as one of the primary ways to get work done on a farm, a tractor is one of the most commonly-appraised assets. The amount of horsepower, drivetrain, PTO capability and similar features go a long way to helping you get through your to-do list, and they all have value.
  • Implements. Backhoes, bale spikes, front-end loaders, mowers, balers, drills, plows, harrows, rakes: whatever kind of implements you're using on your equipment, it helps you get the job done and can represent a large portion of your investment. Knowing what that investment is worth helps when you're contemplating an upgrade or trade-in.
  • Drones. Combined with a solid precision agriculture strategy, aerial drones do a great job of spot-treating problem areas in your fields. This allows you to get a birds-eye-view of your herds, apply fertilizer, release beneficial insects and handle any number of other tasks without flattening your plants or even leaving the house.
  • Refrigerators and coolers. Whether it's getting milk from your dairy herd cold, cooling your produce or just keeping some of those wonderful, farm-fresh products cold and fresh for your customers at the farmer's market, these vital pieces of equipment help extend the life of your harvest.
  • Trailers and tow vehicles. With the cost of heavy-duty trucks, stock trailers and grain wagons, it's important to have an idea of what this type of equipment is worth. By knowing the estimated value of your farm truck, you can better decide when it makes the most sense to start looking at replacements, before you've lost too much of your trade-in value.
  • Livestock handling equipment. Squeeze chutes, separating gates, corrals, round pens: when you have a livestock operation, you've got a lot of equipment in the field at any given moment, especially when it's time to change things up for the season or send your stock off to the market. Valuing this equipment makes it easier to know what you've got on the ground.
  • Greenhouse equipment. Season extenders such as greenhouses, hoop houses and similar setups include their own range of equipment, including fans, automated vent systems, mist systems, roller tables, propagation systems, irrigation, shade cloth mechanization and numerous other items. By knowing what they're worth, you have a better idea of your overall investment.

Having a farm equipment appraisal performed on your operation's machinery can make it easier to deal with incorrect tax assessments, file insurance claims, prove value during a sale or financing situation and when facing legal issues. However, that estimated value will best hold up to scrutiny if you have the valuation performed by an accredited equipment appraiser, who has had extensive education and experience in determining value throughout their accreditation process.

Tags: Farm Equipment Valuation

How is residual value for equipment leasing estimated?

Posted by Equipment Appraisal Services on Mon, Apr 06, 2020 @ 08:00 AM

Businessman in vr glasses with variable fast changing numbers around

When you have new equipment that you're trying to finance or will lease out to other companies as part of your business, how much is it actually worth? A residual value analysis-M & E provides you with a range of important information about your new equipment, making it easier to prove value for a wide range of circumstances. When you have an accredited equipment appraiser estimate your equipment's value, you've got solid documentation for financial transactions and courtroom battles. Here's a quick look at how residual value is estimated.

How is residual value for equipment leasing estimated?

To start, let's take a look at what residual value actually means. Residual value simply means the estimated future value of the asset from a Fair Market or Liquidation perspective. Based on the appraiser's experience and their understanding of how residual value is established in the equipment leasing industry, the value can be estimated based on a wide range of outside factors. These include:

  • Current Listings: How much is the equipment being listed for resale for across the local, regional and national markets? How expensive would it be to ship to the other side of the country where the market is booming?
  • Data Based on Prior Sales: How much has the equipment been selling for over the past few days, weeks or months? Equipment listed at auction often doesn't reflect a final price until the auction has finished and the sale has taken place.
  • Understanding Typical Market Depreciation Levels: How much should you expect the value of the equipment to decline over time? A well-trained appraiser understands the rate of depreciation for a wide range of equipment, providing them with the tools they need to estimate an accurate value.
  • Size of the Resale Market: How much demand is there for the equipment that's being valued? If there's a lot of demand, you may be able to receive a higher offer for the sale of the equipment or higher reimbursement for its loss because it will be more costly to replace than usual.
  • Current Economic Conditions: When the economy is strong, people are more likely to pay an initial asking price rather than negotiate, while poor economic conditions may limit your available buyers, lowering the amount you can sell the machinery for.
  • Status of the Industry: Is your industry growing? If so, the demand and expected price of the equipment may also rise. If your industry is doing poorly, the demand and expected price may fall.

All these factors have a place in determining an estimated residual value for the equipment. The appraiser will also take into account the specific machinery, emerging technological trends that may increase or decrease the market and similar aspects when determining the equipment's estimated residual value. 

By having a residual value analysis-M & E performed on your business' machinery assets, you can ensure that you're able to leverage those assets to your benefit for a wide range of situations. However, the estimate of value you receive on your equipment is only as good as the appraiser who is completing the process. Make sure that you work with an accredited equipment appraiser to ensure that your estimated value is accurate and properly determined, allowing it to stand up in a wide range of real-world circumstances.

Tags: Residual Value Analysis for Machinery & Equipment