Equipment Appraisal Blog | Understanding Machinery Appraisals

In the world of equipment valuation, professionals often specialize in particular industries, such as marine, mining, and aircraft. A generalist equipment appraiser is one who has a broad base of experience across multiple industries and can appraise anything tangible within the machinery markets, as well as many types of personal property. While specialization has its merits in certain areas, being a generalist equipment appraiser can provide a host of benefits.

One of the biggest advantages of being a generalist equipment appraiser is the ability to work across dozens of markets where machinery is a common asset. This flexibility allows appraisers to consistently create opportunities for valuation work, regardless of the industry.

By working across various markets, generalist appraisers attract a broader range of clients. Banks, leasing companies, professionals in tax, insurance, accounting, and legal, and, of course, business owners will need independent appraisals for their practices. This will ultimately lead to a steady flow of work and long-term business growth.

The same standardized methodologies and approaches are used regardless of the asset type; however, appraising all these different types of equipment requires adaptability and sharp analytical skills. Generalist appraisers must quickly understand new industries and develop sources within, to assist them in areas where they have less experience. This continual learning process enhances problem-solving abilities, making generalists well-equipped to handle complex appraisal challenges.

Exposure to different types of machinery broadens an appraiser’s expertise, making them more versatile professionals. This diverse knowledge base can also open doors to teaching, consulting, or even writing industry-related content, further expanding career opportunities.

With the ability to take on varied assignments, generalist equipment appraisers can maximize their earning potential. Instead of being limited to a single industry’s economic cycle, they can accept projects from multiple sectors, ensuring a steady stream of income throughout the year.

Many generalist appraisers work as independent consultants, giving them the freedom to choose their projects and set their schedules. This flexibility allows for a better work-life balance while also enabling professionals to explore new industries that interest them.

In summary, while industry specialization has its advantages, being a generalist equipment appraiser offers significant benefits, from a broader client base and increased earning potential to enhanced professional resilience and skill development. By embracing versatility, generalist appraisers position themselves as valuable assets in a constantly evolving marketplace, ensuring long-term career success and stability.

Starting your own equipment appraisal company can be a rewarding and profitable venture. Becoming an independent business owner allows you to control your career while offering a valuable service to businesses and individuals. Here are some things to consider if you’re thinking about owning and developing your own appraisal business.

Equipment appraisers estimate the value of machinery, vehicles, and many other tangible asset types, with the main exclusion being real estate. The primary purposes for engaging with an equipment appraiser include buy/sell, accounting/tax, leasing/financing, donation, insurance, and litigation support. Clients will include banks, insurance companies, business owners, CPAs, and attorneys.

Obtaining a certification or accreditation from a reputable organization such as the American Society of Appraisers (ASA) or the International Society of Appraisers (ISA) is a critical step to gaining the experience and credibility required to attract clients.

The equipment appraisal industry is broad, covering virtually any type of tangible machinery. Specializing in a particular sector might help you stand out and attract certain clients; however, gaining experience across multiple industries will create more opportunities for business.

Consider having a minimum of 15-20 years of experience applying your skills within a larger organization before venturing out on your own. When you think you are ready, decide on a legal structure for your business, whether it be a sole proprietorship, LLC, or corporation. Formally register the company and complete all the necessary documentation.

Building a strong online presence through a professional website and social media can help attract clients. Networking with financial institutions, law firms, and business brokers can also lead to valuable referrals.

Have an understanding of reasonable fee structures and create boiler agreements and reports that will apply to any appraisal engagement. Stay updated on industry trends and take continuing education courses. Consider joining relevant associations and attending networking events to connect with potential clients.

Litigation support and consulting work, including expert witness services, can be a lucrative area if you have the right amount of experience. Research the right online sources to list your bio with.

Developing and owning an equipment appraisal business is a challenging venture. However, if successful, it will offer many rewards, including complete latitude, flexibility, and future financial independence. You can establish a thriving business by developing expertise, building a strong network, and leveraging technology. With dedication and strategic planning, you’ll be well on your way to becoming a trusted expert in the field of equipment appraisal.

One of the more specialized areas of equipment valuation involves aircraft. Whether it’s a fixed-wing, helicopter, private, or commercial plane, the need to obtain regular appraisals for aircraft is critical to the industry and the markets in which they trade. Here are a few reasons why, along with the key variables that go into an aircraft valuation.

Buying or selling an aircraft will almost certainly require a proper appraisal that ensures buyers do not overpay and sellers list their aircraft at a competitive yet fair price.

Financing and leasing are very common in the aircraft industry. Lenders use appraisals to ensure they are not underwriting more than a plane’s actual worth. Aircraft leasing is very popular and requires extensive knowledge of value, along with maintenance requirements, remaining useful life, and residual value.

Insurers will require a current appraisal that assists in setting appropriate coverage levels and determines reasonable and accurate payout amounts in the event of a loss. Aircraft appraisals are also essential for tax and accounting purposes, estate planning, and litigation involving asset division.

Accredited equipment appraisers need to understand the intricacies of valuing aircraft. Although the methodologies involved remain consistent with other machinery types, there are specific requirements to consider that will greatly impact the value of these assets.

The appraiser should engage with a knowledgeable aircraft inspection service or have access to recent reports regarding the aircraft’s exterior, interior, avionics, engine condition & hours, as well as overall maintenance history.

Understanding how to review maintenance records requires special experience and knowledge that industry experts have, as well as those involved with the day-to-day operation of the aircraft being valued. Examining logbooks, service bulletins, airworthiness directives, and compliance with regulatory requirements are all important to understand.

Once this is completed, the appraiser can conduct an independent market analysis while considering current trends, availability of similar aircraft, and recent sales data to determine the aircraft’s fair market value. They should also include cost approach variables such as effective age, depreciation, and remaining useful life.

Factors such as engine hours, avionics upgrades, and modifications should be taken into account to adjust the value accordingly.

When selecting an appraiser, it is essential to choose one who is certified by reputable organizations such as the Professional Aircraft Appraisal Organization (PAAO) or the American Society of Appraisers (ASA). Whether you are a buyer, seller, financial institution, or anyone else involved in the industry, having a current aircraft appraisal can help protect your investment and lead to well-informed decisions.

The marine industry has somewhat unique traits when it comes to the vessels operating within it. Like aircraft, both commercial and personal vessels have strict regulations regarding keeping them seaworthy and, in turn, marketable. Two distinct reports are often involved in this process: a certified marine survey and an accredited market valuation. While both involve evaluating a vessel, they serve different purposes and require distinct expertise.

Marine Surveys: A Deep Dive into Condition and Safety

A marine survey is a detailed inspection of a vessel’s specifications, condition, structure, and systems. A certified marine surveyor typically performs it and is an essential requirement for several reasons. The Coast Guard performs regular inspections and issues a Certificate of Inspection (COI) for working vessels. The minimum requirement is that a current survey be completed at least once every five years and, in many cases, more frequently.

If you are considering buying or selling a marine vessel, ask for the current survey and COI. A copy of the survey and COI is also required for securing property and liability insurance and obtaining bank financing.

In summary, surveyors inspect everything from the hull and electrical systems to the propulsion and safety equipment. The goal is to determine seaworthiness, identify necessary repairs, and ensure compliance with maritime regulations. The surveyor will generally not estimate value as part of the survey. If they are asked to provide an estimate, they should do so outside of the specific survey report, and their opinion of value may not be supportable for these purposes unless they are also accredited appraisers.

Marine Appraisals: Determining Market Value

A marine appraisal, on the other hand, is more focused on estimating a vessel’s monetary value. The valuation professional should have experience as an accredited or certified expert with credentials different from that of a surveyor. The American Society of Appraisers (ASA) is a reputable organization offering specialty training in marine valuation.

As part of the appraiser’s data requests, they will ask the owner for a current survey, which will assist them in better understanding the specifications and condition of the vessel. They will then complete their analysis relying on factors such as market demand, comparable sales, replacement cost new, chronological and effective age as well as average annual market depreciation.

Marine appraisals are commonly used for the same reasons as surveys, as well as for other purposes such as estate settlements, business disputes, divorce proceedings, tax, accounting, and financing decisions.

In short, get a survey if you need to know if a boat is safe and functional. If you need to determine its market worth, obtain an appraisal. Both services are crucial in their own right and can help vessel owners make informed decisions.

Solar energy has evolved over the past few decades from being a popular trend to becoming a very smart business decision for commercial property owners. Installing solar panels is a powerful way to reduce energy costs, increase property value, and demonstrate a commitment to sustainability. Another significant benefit to these installations is the availability of federal and state tax credits. With continued technological improvements driving improved efficiencies and reduced costs, going solar has never been more financially rewarding.

Financial Benefits

Solar installations can significantly cut energy expenses by offsetting reliance on the grid. Over time, the savings from reduced electricity bills can more than cover the initial investment in solar panels. Additionally, many states offer net metering programs, which allow businesses to sell excess energy back to the grid, generating an additional revenue stream.

Tax Incentives

The federal government provides an Investment Tax Credit, commonly referred to as ITC, which allows commercial property owners to deduct a significant percentage of the cost of solar installations from their federal taxes. Currently, the ITC covers 30% of the installation costs for eligible projects, materially reducing the upfront cost.

Certain states and local governments may offer additional incentives, including property tax exemptions, grants, and low-interest financing. Combined with the federal ITC, these programs can make solar installations an incredibly attractive investment.

Enhanced Property Value

A solar-powered commercial property is more appealing to tenants and buyers alike. Lower operational costs and a focus on sustainability can make your property stand out in a competitive market. Solar installations also reflect positively on your business’s environmental commitment, which can resonate with eco-conscious tenants and customers.

In summary, the clock may be ticking on some of these incentives, as tax credit rates are always subject to change in future years. So, if you are considering solar installation for a commercial property, acting sooner rather than later is a good idea. Be sure to consult with the installation experts in the field and your accountant for a detailed analysis. Investing in solar energy is great not just for the environment but also for your bottom line.