---
title: "Elements of Equipment Appraisals: Premise of Value Assumed"
description: Appraisers estimate value under an assumed premise that relates to the type of transaction being undertaken and the potential outcomes of an impending sale
image: https://www.equipmentappraisal.com/hubfs/Blog-Images/equipment-appraiser-premise-of-value-calcualtion.jpg
---
[](https://www.equipmentappraisal.com)
# Equipment Appraisal Blog | Understanding Machinery Appraisals
## [Elements of Equipment Appraisals: Premise of Value Assumed](https://www.equipmentappraisal.com/blog/elements-of-equipment-appraisals-premise-of-value-assumed)
Posted by [Equipment Appraisal Services](https://www.equipmentappraisal.com/blog/author/equipment-appraisal-services) on Mon, Jun 26, 2023 @ 07:30 AM
- [Tweet](https://twitter.com/share)
When an appraiser estimates value, they must do so under an assumed premise that relates to the type of transaction being undertaken and the potential outcomes of an impending sale. Premise of value is one of the most critical components of an equipment appraisal given the different assumptions each premise represents and their material differences.
Each value premise must be defined in the appraisal and can reasonably be tied to a typical market transaction, such as a user-to-user sale or an auction liquidation. The most commonly referred to premise is Fair Market Value, which is utilized in many standard business agreements when the need arises to assess value for any purpose. The American Society of Appraisers defines Fair Market Value as follows:
Fair Market Value is an opinion expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date.
There are variations to the Fair Market Value premise, including assumptions for installation and continued use, which typically drive higher levels of value given the additional considerations involved. The important factor to understand with Fair Market Value is that it represents the most equitable transaction for both parties, where neither the buyer nor seller have an advantage. Each party is equally willing to transact and knowledgeable of all the facts.
In the open resale marketplace, this may not always be the case, therefore, other premises of value are considered, including Orderly and Forced Liquidation. These definitions add the factor of compulsion on behalf of the seller, with more limited time to sell a key factor. These premises are appropriate to consider with an inexperienced owner or if a company goes out of business. There may be a reduced level of control over the sale by utilizing a third party, such as an auctioneer, to liquidate the assets. This is the foundation for Forced Liquidation Value.
Liquidation premises of value are commonly reviewed by banks and other lenders who want to consider the possibility of having to step in and resell the equipment if their borrower defaults and they end up taking possession of the assets. They are not in the business of buying and selling machinery and may involve an equipment dealer or auction company to manage the logistics of a resale effort.
These liquidation premises will obviously drive a lower estimated value for the machinery & equipment. How much lower will depend on the type of equipment and the state of the resale market, among other factors. Consult with an appraiser to better understand these differences.
Tags: [equipment appraisers](https://www.equipmentappraisal.com/blog/topic/equipment-appraisers), [Equipment Appraisal Services](https://www.equipmentappraisal.com/blog/topic/equipment-appraisal-services), [Premise of Value](https://www.equipmentappraisal.com/blog/topic/premise-of-value)
### Subscribe by Email
### Most Popular Posts
### Posts by Month
- [July 2026 (1)](https://www.equipmentappraisal.com/blog/archive/2026/07)
- [June 2026 (2)](https://www.equipmentappraisal.com/blog/archive/2026/06)
- [May 2026 (2)](https://www.equipmentappraisal.com/blog/archive/2026/05)
- [April 2026 (2)](https://www.equipmentappraisal.com/blog/archive/2026/04)
- [March 2026 (3)](https://www.equipmentappraisal.com/blog/archive/2026/03)
- [February 2026 (2)](https://www.equipmentappraisal.com/blog/archive/2026/02)
- [January 2026 (2)](https://www.equipmentappraisal.com/blog/archive/2026/01)
- [December 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/12)
- [November 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/11)
- [October 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/10)
- [September 2025 (3)](https://www.equipmentappraisal.com/blog/archive/2025/09)
- [August 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/08)
- [July 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/07)
- [June 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/06)
- [May 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/05)
- [April 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/04)
- [March 2025 (3)](https://www.equipmentappraisal.com/blog/archive/2025/03)
- [February 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/02)
- [January 2025 (2)](https://www.equipmentappraisal.com/blog/archive/2025/01)
- [December 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/12)
- [November 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/11)
- [October 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/10)
- [September 2024 (3)](https://www.equipmentappraisal.com/blog/archive/2024/09)
- [August 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/08)
- [July 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/07)
- [June 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/06)
- [May 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/05)
- [April 2024 (3)](https://www.equipmentappraisal.com/blog/archive/2024/04)
- [March 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/03)
- [February 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/02)
- [January 2024 (2)](https://www.equipmentappraisal.com/blog/archive/2024/01)
- [December 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/12)
- [November 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/11)
- [October 2023 (3)](https://www.equipmentappraisal.com/blog/archive/2023/10)
- [September 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/09)
- [August 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/08)
- [July 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/07)
- [June 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/06)
- [May 2023 (3)](https://www.equipmentappraisal.com/blog/archive/2023/05)
- [April 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/04)
- [March 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/03)
- [February 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/02)
- [January 2023 (2)](https://www.equipmentappraisal.com/blog/archive/2023/01)
- [December 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/12)
- [November 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/11)
- [October 2022 (3)](https://www.equipmentappraisal.com/blog/archive/2022/10)
- [September 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/09)
- [August 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/08)
- [July 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/07)
- [June 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/06)
- [May 2022 (3)](https://www.equipmentappraisal.com/blog/archive/2022/05)
- [April 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/04)
- [March 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/03)
- [February 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/02)
- [January 2022 (2)](https://www.equipmentappraisal.com/blog/archive/2022/01)
- [December 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/12)
- [November 2021 (3)](https://www.equipmentappraisal.com/blog/archive/2021/11)
- [October 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/10)
- [September 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/09)
- [August 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/08)
- [July 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/07)
- [June 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/06)
- [May 2021 (3)](https://www.equipmentappraisal.com/blog/archive/2021/05)
- [April 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/04)
- [March 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/03)
- [February 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/02)
- [January 2021 (2)](https://www.equipmentappraisal.com/blog/archive/2021/01)
- [December 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/12)
- [November 2020 (3)](https://www.equipmentappraisal.com/blog/archive/2020/11)
- [October 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/10)
- [September 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/09)
- [August 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/08)
- [July 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/07)
- [June 2020 (3)](https://www.equipmentappraisal.com/blog/archive/2020/06)
- [May 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/05)
- [April 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/04)
- [March 2020 (3)](https://www.equipmentappraisal.com/blog/archive/2020/03)
- [February 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/02)
- [January 2020 (2)](https://www.equipmentappraisal.com/blog/archive/2020/01)
- [December 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/12)
- [November 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/11)
- [October 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/10)
- [September 2019 (3)](https://www.equipmentappraisal.com/blog/archive/2019/09)
- [August 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/08)
- [July 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/07)
- [June 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/06)
- [May 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/05)
- [April 2019 (3)](https://www.equipmentappraisal.com/blog/archive/2019/04)
- [March 2019 (2)](https://www.equipmentappraisal.com/blog/archive/2019/03)
- [February 2019 (3)](https://www.equipmentappraisal.com/blog/archive/2019/02)
- [January 2019 (1)](https://www.equipmentappraisal.com/blog/archive/2019/01)
- [December 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/12)
- [November 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/11)
- [October 2018 (5)](https://www.equipmentappraisal.com/blog/archive/2018/10)
- [September 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/09)
- [July 2018 (5)](https://www.equipmentappraisal.com/blog/archive/2018/07)
- [June 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/06)
- [May 2018 (2)](https://www.equipmentappraisal.com/blog/archive/2018/05)
- [April 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/04)
- [March 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/03)
- [February 2018 (3)](https://www.equipmentappraisal.com/blog/archive/2018/02)
- [January 2018 (4)](https://www.equipmentappraisal.com/blog/archive/2018/01)
- [December 2017 (4)](https://www.equipmentappraisal.com/blog/archive/2017/12)
- [October 2017 (3)](https://www.equipmentappraisal.com/blog/archive/2017/10)
- [September 2017 (3)](https://www.equipmentappraisal.com/blog/archive/2017/09)
- [August 2017 (4)](https://www.equipmentappraisal.com/blog/archive/2017/08)
- [July 2017 (3)](https://www.equipmentappraisal.com/blog/archive/2017/07)
- [June 2017 (4)](https://www.equipmentappraisal.com/blog/archive/2017/06)
- [May 2017 (5)](https://www.equipmentappraisal.com/blog/archive/2017/05)
- [April 2017 (1)](https://www.equipmentappraisal.com/blog/archive/2017/04)
- [March 2017 (4)](https://www.equipmentappraisal.com/blog/archive/2017/03)
- [February 2017 (4)](https://www.equipmentappraisal.com/blog/archive/2017/02)
- [January 2017 (5)](https://www.equipmentappraisal.com/blog/archive/2017/01)
[See more](https://www.equipmentappraisal.com/blog/elements-of-equipment-appraisals-premise-of-value-assumed#)
© 2026 Equipment Appraisal Services
```json
{
"@context" : "https://schema.org",
"@type" : "BlogPosting",
"author" : {
"@type" : "Person",
"name" : "Equipment Appraisal Services",
"url" : "https://www.equipmentappraisal.com/blog/author/equipment-appraisal-services"
},
"dateModified" : "2023-06-26T11:30:00.306Z",
"datePublished" : "2023-06-26T11:30:00.000Z",
"headline" : "Elements of Equipment Appraisals: Premise of Value Assumed",
"image" : [ "https://www.equipmentappraisal.com/hubfs/Blog-Images/equipment-appraiser-premise-of-value-calcualtion.jpg" ],
"mainEntityOfPage" : {
"@id" : "https://www.equipmentappraisal.com/blog/elements-of-equipment-appraisals-premise-of-value-assumed",
"@type" : "WebPage"
},
"publisher" : {
"@type" : "Organization",
"logo" : {
"@type" : "ImageObject",
"url" : "https://www.equipmentappraisal.com/hubfs/Images%202020/equipment_appraisal_services_header_logo.svg"
},
"name" : "Equipment Appraisal Services"
}
}
```