Equipment Appraisal Blog | Understanding Machinery Appraisals

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.

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.

When you run a healthcare practice, your machinery is a big part of your business assets. As a large investment, knowing what it's worth is important to knowing where your practice's finances stand. However, it's also one of the most overlooked parts of your business' overall worth, often only looked at when it's time to sell the equipment or the practice. When you take the time to really keep track of equipment values, you can make smarter decisions that can improve the overall value of your entire practice. Here's why appraising medical equipment helps you keep a pulse on your business' bottom line.

Stat: Why appraising medical equipment is vital to the health of your practice

Why is it important to have your business bank accounts balanced on a regular basis? Why do you take a look at your profit and loss statements? Why do you make sure bad debts are pursued? Much like these other areas of financial concern for your practice, medical equipment appraisal helps you determine your practice's worth in the marketplace.

Like many other types of professional equipment, medical equipment depreciates in value over time. This can happen due to wear and tear, the appearance of new features in updated models, industry shifts to newer technologies and other issues. As it depreciates, your practice loses asset values. With the changes in the tax code, this process is becoming more important than ever, as you can now depreciate the full value of your machinery in a much shorter time period. Where does that fall with your updated tax strategy?

When your medical equipment is appraised, the appraiser looks at a number of factors. What condition is the machinery in? Has it been well maintained and received repairs as needed? Does it currently need repairs or have non-functional features that will impact its value? What about the market? Is this a common manufacturer or model that has a reputation for exceptional performance that will hold its resale value down the road? Is it an odd brand that will be hard to find a buyer for? Has it been largely replaced by more modern equipment that has features that have become standard? Are there features that provide additional benefits to a prospective buyer that are not typical for that type of machinery?

These factors impact the overall value of the machinery and help you determine how much insurance you need, what it's worth in legal proceedings or what you should expect in property tax assessments. By knowing the value, you know whether the value represented by the outside concern is accurate or not.

When you take the time for appraising medical equipment as a regular part of your practice's overall financial management, you can quickly determine which equipment should be sold before it loses value and what machinery may provide significantly more value to your practice before it needs to be replaced. When you decide to have your medical machinery valued, make sure that you verify that the appraiser you're working with is an experienced certified equipment appraiser. This helps ensure that they have the expertise and experience needed to provide you with an accurate value that will hold up in a wide range of areas, including insurance, taxes, legal and financial circles.

When you work in trucking, your equipment is your biggest investment, and at the same time, it's the one that tends to age the fastest and lose value. For that reason, appraising truck tractors and trailers is an important part of protecting those assets from loss due to theft, accidents and disasters. But what happens when your trucks are being valued by an outside company? Here's a quick look at the overall process and the nuances of tractor trailer appraisal.

Roll On: What's Involved in Appraising Truck Tractors and Trailers

Every day, tractor trailers cover hundreds of miles, adding up to hundreds of thousands of miles annually. Every minute, as these assets cover ground, their value is decreasing. How can you account for the change in value of this machinery to your insurance company, local tax assessor, finance company or court when you need to prove what your assets are actually worth?

Imagine a small trucking company that is run by a husband and wife team. During a divorce, the party who is leaving the business claims the value of the year-old equipment at purchase value, because it's the latest time that their tractor trailers were given value. But that doesn't account for the difference that several hundred thousand miles, accidents and damage that can happen while going down the road. When you have an equipment appraisal performed on your tractor trailers, it helps provide a third-party value for your machinery that is impartial to the proceedings.

Nobody likes dealing with property taxes, but when the same assessor is judging a wide range of assets including real estate, small cars, industrial equipment and semis, is it any wonder that sometimes they get things wrong? At the same time, tax assessment offices often demand that you bear the burden of proof when trying to fight a  bad tax assessment. Having an appraisal performed is one of the best ways to immediately prove value of a piece of equipment when an assessment is wrong.

When you have your semis and trailers appraised, the appraiser looks at a wide range of issues that can impact your equipment's value. Unlike other machinery which stays in the same location and often ages in very similar ways, your trucks and trailers are often sent to very different areas that can change how they age. By using a certified equipment appraiser who has trucking experience, you know that they're not going to provide the same value to a semi in pristine condition that has done long-haul work in the Midwest and a truck that has had significant damage in the East Coast's inner cities, even if their mileage is similar.

A good appraiser will also look at the reason the appraisal is needed. There's a big difference between appraising for the value of replacing a truck that is currently in service compared to the value of a semi when a partnership is being dissolved or an ancient tractor finally bites the dust. By appraising truck tractors and trailers for your business, you're protecting your company's bottom line. It ensures you have the documentation needed to process insurance claims, secure financing for expansion or upgrades to machinery, deal with tax assessment issues or work through purchasing or selling a logistics company. Make sure that you work with a certified equipment appraiser who has experience in trucking, shipping or logistics to ensure your appraisal is as accurate as possible.

When your company deals with serious machinery, it's important to know its value for insurance and tax purposes, right? Actually, there are a number of other reasons why appraising industrial equipment assets can help improve your company's situation, flexibility and adaptability in the marketplace. Here's a quick look at how you can use your equipment values to leverage everything your business has to offer, allowing you to improve your position in the market.

How appraising industrial equipment helps improve your company's bottom line

Whether you're processing materials, manufacturing products or otherwise have industrial equipment involved in your business, you know you've got a lot invested in your machinery. But is it really that important to know exactly what your equipment values are? After all, it's accounted for in your books through depreciation, which are based on commonly used tables, right?

Unfortunately, depreciation tables rarely provide an accurate representation of your equipment values. Why? Because they're an average amount of asset value loss over time, they tend to be overly generalized. Virtually every business has equipment that has been fully depreciated for years, yet that equipment continues to deliver value through its use on a regular basis. If that machinery were to suddenly fail, the business would suffer for its loss in terms of production, and an investment would need to be made in terms of new machinery, costing the company capital that it may have already allocated to other operations.

Most companies also have equipment that has failed before it has been completely depreciated. Whether it was a press that was expected to be used hard and abused to a certain extent for a particular project or machinery that has simply failed before it was fully depreciated, it will still show up on the books as having value, even though its only value is as scrap metal. These situations, where equipment has excess or lack of value in the books that doesn't represent real-world values, can create a false sense of your company's assets. This, in turn, can create serious problems when you use those bad figures for securing loans or as a basis for expanding the company's operations.

What about market conditions? When you depreciate a piece of equipment, you have an expectation that the depreciated value may reflect current market demand for that machinery. But when the market is growing, that equipment may be worth more than its depreciated value. This can be problematic when a piece of equipment fails and you base the replacement cost on the depreciated value of the equipment. When this happens and the market is strong, you may have a difficult time finding the machinery you need at the price you expect. Conversely, when the market is poor, you may have a hard time finding a buyer at a higher price point. Machinery appraisal helps provide you with an accurate assessment of the equipment's real value.

By taking the time for appraising industrial equipment, you can learn a great deal about your machinery's condition, performance and value. This, in turn, allows you to leverage that value and condition to your company's best possible benefit and growth. But how do you start the process of having your industrial machinery appraised? Start by finding a certified equipment appraiser who has experience with your industry's machinery. Certification ensures that the appraiser knows exactly how to determine your equipment's value for your specific situation.