Equipment Appraisal Blog | Understanding Machinery Appraisals

An ASA accredited equipment appraiser most often uses one or a combination of the following premises of value in their reports:

• Fair Market Value
• Orderly Liquidation Value
• Forced Liquidation Value

These terms are formally defined by the American Society of Appraisers (ASA) as follows:

Fair Market Value

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.

Orderly Liquidation Value

Orderly Liquidation Value is an opinion of the gross amount, expressed in terms of money, that typically could be realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.

Forced Liquidation Value

Forced Liquidation Value is an opinion of the gross amount, expressed in terms of money, that typically could be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.

We are often asked how these definitions translate to the actual marketplace where the buying and selling occurs every day. To facilitate a response to this question, we will consider selling your used vehicle (car, pickup SUV) when it is determined you need to replace it. We will begin with the Fair Market Value premise.

Fair Market Value is considered the higher end of the value spectrum and can be considered comparable to a private party sale where you, as the owner of the vehicle, put an ad online or in a local paper in an attempt to sell to another private party. The key assumption here is that there is no immediate sense of having to sell or purchase and the sale is on an “as-is where is” basis with no warranty or other conditions of sale.

The ability to obtain Fair Market Value is more realistic if you are in the business of buying, selling, leasing or operating equipment in the applicable industry. That is why new and used equipment dealers will typically be a good source to best understand this “retail” level of value.

To summarize, fair market value while being an accepted level of pricing in an equipment resale effort, many businesses such as banks and other investors look to liquidation values as a more attainable figure in a typical resale scenario.

In our next blog post we will cover the two types of liquidation values as they relate to the sale of your used vehicle.

The value of precious metals has often reaped the benefits within unstable currency markets. Given the state of the current US economy in these uncertain times, many precious metals are trending upward in 2020. Gold and silver mining facilities are the most common, however, this industry includes other types of mines such as rhodium, palladium and platinum, which drive the precious metals markets on a day to day basis.

For businesses owners involved in the mining of these metals who may be considering selling in a strong market or expanding their capabilities by raising new capital, it is important to consider a current appraisal of the machinery & equipment working every day to keep your company operational.

An accredited ASA (American Society of Appraisers) appraiser will provide a detailed valuation of your tangible mining assets, including drills, high wall miners, draglines, shovels/excavators, loaders, haul trucks and any other support items involved in the day to day running of the operation.

At Equipment Appraisal Services we can complete an on-site visual inspection of the equipment or a “desktop” valuation based the descriptions and photographs you provide directly to us. We will thoroughly research the market and complete a detailed valuation to assist you when making important business or investment decisions.Our experienced, accredited appraisers have been completing these types of fully researched valuations for decades and can meet the demands of any machinery & equipment appraisal assignment across all markets & industries.

The restaurant industry has certainly been one of the top business segments to suffer during the COVID-19 pandemic over the last six months, with indoor dining options still not allowed in certain locations and most others facing limited capacity with stringent and costly guidelines to adhere to.

If you are a restaurant owner thinking of selling or are considering investing in one knowing the market will eventually open up again, you will need to make a sound decision armed with as much ammunition as possible. Part of your arsenal should include a current market appraisal of the furniture, fixtures and equipment, commonly referred to as FF&E.

An accredited ASA (American Society of Appraisers) appraiser will provide a detailed valuation including the kitchen equipment, bar and seating area assets and any other supporting tangible items involved in the day to day running of the restaurant. An appraisal can be completed as an on-site visual inspection of the equipment or as a “desktop” valuation based on the descriptions and photographs you provide to the appraiser.

Whichever direction you’re heading, Equipment Appraisal Services can assist you in the process and provide an independent opinion of value which can help form a realistic purchase or sale price for the business, and support the information needed to potential investors, financial institutions, insurance companies and other parties involved in the project. Our experienced, accredited appraisers have been completing these types of fully researched valuations for decades and have the depth of knowledge and experience to meet the demand of today's challenging market.

Whether your business is expanding or going through a downturn, being purchased or sold, audited or invested in, refinanced or liquidated, it is important to understand the real market value of your tangible assets, specifically the machinery & equipment that work every day behind the scenes.

Obtaining an equipment appraisal from a qualified valuation firm such as Equipment Appraisal Services can provide you with firsthand knowledge of the value of your machinery and what to expect should you wish to buy, sell, refinance or upgrade these types of assets in the resale marketplace. A formal appraisal analysis and report can assist you in any number of ways as you move through the next phases of your company’s development and can be shared with third parties who may be assisting you with these project plans.

Our appraisers can visit your operations facility and perform an on-site personal inspection and discuss your business directly or complete a “desktop” appraisal based on the information you provide to us, including detailed asset listings and photographs.

The experienced appraisers at Equipment Appraisal Services have been completing these types of fully researched valuations for decades and can meet the demands of any machinery & equipment appraisal assignment across all markets & industries. We look forward to the opportunity to work with you as a key component to your ongoing business projects.

Machinery & Equipment appraisers know from experience that the overwhelming majority of their valuations involves the Sales Comparison (Market) and/or Cost Approaches to value. The income approach is primarily utilized for business appraisals with a few exceptions which allow the tangible equipment to be valued as independently income driven assets.

The challenge becomes which of the two approaches makes the most sense given the scope of work, premise of value and overall perspective of the project involved. Based on our experience at Equipment Appraisal Services, we have found that regardless of the above variables, relying on components of both the Sales Comparison Approach (commonly referred to as the “Market Approach”) and the Cost Approach for each valuation project produce the most credible, realistic and supportable results.

Under the Sales Comparison Approach, researching and properly interpreting the available data in the marketplace for assets very similar to those being appraised is critical to the analysis. Understanding the nuances between asking prices, recent listings, opinions of resale value and the market level at which the machines are traded are all important to the appraisal process.

With the Cost Approach, deriving the data pertaining to replacement cost new, useful life and depreciation should come directly from the specific markets and industries in which the assets are working in. Gathering new pricing information for the make and model of the machinery, along with opinions from third parties who buy and sell these assets is far more reliable than broad multi-industry trends and straight line depreciation.

The experienced appraisers at Equipment Appraisal Services have been completing these types of fully researched valuations for decades and can meet the demands of any machinery & equipment appraisal assignment across all markets & industries. We look forward to the opportunity to work with you as a key component to your ongoing business projects.