Equipment Appraisal Blog | Understanding Machinery Appraisals

When you're considering a potential purchase of equipment, making a good deal is half of the excitement. But how do you know whether the equipment values presented are accurate? How do you know if you're making a fabulous investment for your company or are buying a lemon that will pour your capital down the drain? Before you sign on that dotted line to buy equipment for your business, have a machine appraisal performed. Here's why it's important.

How an Equipment Appraisal Helps When Considering Potential Purchase of Equipment

• A machine appraiser doesn't have anything tied up in the transaction. When a business or broker is selling equipment, their profit is on the line. Though they may not be intentionally misrepresenting the equipment's condition, they do want to present it in the best possible light. This can lead to accidental oversights in the purchase process and less than complete disclosure of the machine's features and history.
• Do you need to get financing in place for the potential purchase? Equipment appraisals performed by a certified equipment appraiser are taken much more seriously in financial circles, because a certified appraiser uses standardized methodologies to calculate the machine's value. Unlike the finance guy at the car dealership who says he'll give you $5,000 for your 1992 Geo Metro with 200,000 miles on it through a few math tricks in the financing paperwork, an equipment appraisal is a solid value for that particular piece of equipment.
• What about your insurance? If you're getting a great deal because a company is going out of business, do you know how much insurance to put on the equipment? If you base your insurance coverage on a wonderful price, you'll quite possibly find yourself unable to purchase replacement equipment for the same price after a loss. By having a quality machine valuation performed on the equipment you're considering, you'll know not only how good a deal you're getting, but how much it will cost to replace that equipment in a loss.
• How long do you expect the equipment to last? Equipment appraisers spend all day looking at machinery. For this reason, an experienced appraiser has a good idea of how long a usable lifespan the equipment has left, a boon if you're buying equipment with an unknown past. The appraiser will know to look for delayed repairs that may have caused additional damages, such as a pulley that wasn't immediately replaced causing more wear on bearings elsewhere in the system, leading to an early failure.
• Has the equipment been abused or pampered? We all know someone who never does any of the necessary repairs to their car. As time goes on, their vehicle has more and more serious problems until it hits the point of being too expensive to repair. The same goes of your potential equipment. Has it had after-market kits added that are overtaxing the hydraulics? Was it kept in perfect repair with exceptionally detailed logs? This kind of information helps you make a smart investment.

As you can see, having an equipment appraisal performed for potential purchase of equipment can help keep you from making a very costly mistake for your business.

Whether you're just starting a business with equipment from a serious hobby or are getting ready to make a significant expansion, securing bank financing that meets your business needs is vital to its success. But what about when you can't be approved for financing without collateral or can only qualify for a interest rate that is too high without proof of existing assets? In this post, we'll help you learn how to get better financing without breaking the bank.

How to Secure Great Bank Financing Using Equipment Appraisals

• An equipment appraisal helps you know what your equipment is worth. Has your bank asked for collateral for your loan? The bank officer may be more amenable to accepting your equipment as collateral if they know the verified value of your machinery. By being able to document your machinery's value, you may be able to get better terms for your loan, such as a better interest rate, a higher loan amount or better repayment terms.
• A machine appraisal from a certified equipment appraiser will be treated by the bank with more credibility than they would an advertisement online, your cousin Joe's opinion or similar, less binding documentation. This also means that they can provide a loan closer to the full value of the equipment when the equipment is used as collateral, because they know they'll get their money back if you aren't able to pay them what is owed on the loan.
• How much your machinery is worth can vary greatly based on the purpose of the appraisal, the market and similar concerns. In some situations, the type of appraisal that is performed is mandated by law, such as in a divorce or partnership dissolution. When your market is booming, equipment may be hard to find and therefore will command a higher price than when it has gone through a bust cycle and the equipment is plentiful and cheap. Is your equipment usable in other industries? Does it require extensive retooling to be used by another business? 
• Your machinery's value can also vary strongly based on the condition it's in at the time of appraisal. Has the equipment been properly maintained and repaired when necessary? It will have a longer lifespan and higher value if so. Does it has any after market kits or options that may have not been approved by the manufacturer? These may cause excess wear and tear lowering the value of the equipment.
• A machine appraiser will estimate the expected useful lifespan of your equipment when asked. If you have a piece of equipment that is expected to have another 20 years of service but the bank has previously offered you only a 5 year term, having documentation of the expected lifespan may give the bank officer the opportunity to potentially extend the repayment period out to a more reasonable length of time.

By having a qualified equipment appraiser determine your machinery valuation, you can provide your financial institution with documentation of your equipment values, helping ensure your bank financing will come through.

He said, she said, they said - when it comes to dealing with a divorce, it's a very stressful time. The last thing you may be thinking about is getting equipment appraisals performed on your machinery assets. But when both parties are in a business together or if one party is contesting the divorce, you'll need to have a certified equipment appraiser take a look at what you have and prepare a report that will hold up in court. What's more, you'll need to have a particular type of machine appraisal performed to meet legal requirements. Confused? We'll help you figure it out. Here's what you need to know:

Before You Sign on the Dotted Line: Why Equipment Appraisal is Vital in a Divorce

Why Get a Certified Machinery Valuation?

A machinery valuation helps determine the value of equipment assets during a divorce. But what many people do not realize is that the type of appraisal is different depending on the situation. There are some legal restrictions, depending on your location, that control the type of appraisal that must be performed in a divorce. But beyond the type, you'll want to make sure your appraiser is certified. Why? Certification shows that the appraiser has been trained in standardized equipment appraisal techniques and types, ensuring they'll know how to apply the proper methodology to your equipment appraisal.

They'll also be a neutral party, providing a fair value for your equipment. If your appraisal report is not prepared by a certified equipment appraiser, it will almost certainly be contested or thrown out in court during proceedings. Even if your appraisal was performed by a certified machine appraiser, your spouse may choose to contest the report either out of an abundance of caution or out of spite to drag out the proceedings or force your hand in another area. In that situation, it's vital that you work with a certified machine appraiser who has experience as an expert witness.

What Type of Valuation Do You Need?

Beyond making sure that your equipment appraiser is certified, you may not realize that the law in some areas controls what type of appraisal can be used in divorce proceedings. Fair market value is typically used, with both parties agreeing to use the same independent certified appraiser. If one partner is pushing to get out of the business, fair market removal value may be used, which accounts for the cost of removing permanently-affixed machinery from a business location. In cases where both parties want to quickly leave the business and have the cash to start over, orderly liquidation or forced liquidation values may be used to speed the process along. Though this is relatively rare, it does show up in no-content divorces where neither party wants to retain an interest in the business. 

Though nobody wants to go through a divorce, knowing what's involved in deciding what to do with equipment assets can help a great deal. Remember, you'll want to work with a certified equipment appraiser to ensure your appraisal report will hold up in court and against legal scrutiny.

When you're running a business, there are a lot of financial decisions to make on a daily basis. When you need to get equipment, whether as a start up or an established company that's replacing existing equipment or expanding, one of those decisions is whether you are purchasing or leasing the equipment in question. How do you know if you're making a good deal? Here are some tips to consider.

Considering Leasing? Find Out How an Equipment Appraisal Can Help

Lease vs. Buy

First off, let's take a quick look at the advantages and disadvantages of each type of acquisition. When you lease equipment, you're paying to use it for a set period of time. There may be some restrictions in terms of how you can use the equipment, as the leasing company expects to get back a machine with a certain amount of equity at the end of the lease. A lease also prevents you from building equity in the asset as you pay it down, because you're only paying for the privilege of using it. But at the same time, you typically don't have to worry about breakdowns or heavy repair bills, because that's covered under the terms of your lease. The advantage of leasing is that you typically pay a lower price for equipment you may not want to keep in the future, which is very helpful if your business is expanding.

By comparison, buying equipment means that you're responsible for repairs not covered by the warranty, but you're purchasing the equipment. Every payment you make increases the amount of equity you have in that asset. At the end of the payment schedule, you can choose whether you're going to retain that piece of equipment and invest the payment money into another area of your business or if you're going to sell it and have some additional financial assets available for an upgrade or different investment. Your only restrictions on use may be legal limitations of negligence, or intentionally using the equipment in an unsafe manner. Though buying typically has a higher payment, you gain equity and increase your business' assets.

Where Equipment Appraisal Comes Into Play

But how can an equipment appraisal affect your decision? If you're getting ready to enter into a financial agreement of any kind, you'd want to know you're getting your money's worth. In the end, whether you buy or lease, you want to make sure you're paying a fair amount. That means that having an equipment appraisal performed protects your investment. If you're leasing a piece of equipment, a machine appraisal lets you know whether the lease payments are too high. If you're purchasing that same piece of equipment, the machinery valuation helps you negotiate a fair price for the equipment. You wouldn't pay $30,000 for a 2000 Geo Metro with 200,000 miles on it. but it's easier to know the value of a vehicle than it is machinery that has a much more limited market. Having a certified equipment appraiser provide you with a machinery valuation gives you the knowledge you need to negotiate a good price.

By taking a machine appraisal into account when you're acquiring equipment for your company, you can ensure that you're getting a fair deal whether you're buying or leasing.

When you're considering having a packaging equipment appraisal completed for your business, you may not know what kind aspects of the equipment comes into play and what importance it has on the final machinery valuation. Is a dent in a machine or a worn part going to raise serious concerns with your equipment appraiser? In this piece, we'll discuss what the most common aspects are considered during a packaging equipment appraisal.

What aspects are considered in a packaging equipment appraisal

• The age of the equipment: Though you might think this would be the first place you may lose or gain value, it's not actually as important as you may think. Industrial packaging equipment can retain its value over many years and is designed for long duty cycles over the years. That means that it won't lose value as quickly when compared to consumer-grade equipment and may have a higher value than what you would expect.

• The condition of the equipment: The equipment's condition can actually play a much more important role in the final equipment valuation, including several areas discussed below. Machinery that has been well maintained and has versatile configuration possibilities has the best chance of retaining its value. You may want to consider doing touch-up painting, removing dents or repairing cosmetic issues prior to selling equipment, but these types of issues often don't affect the final value nearly as much as the machine's internal condition, unless they show signs of abuse or poor care.

• Any needed repairs: Before you have a packaging equipment appraisal performed, you may want to make sure that any needed repairs are made. You'll also want to make sure that machinery that has had needed repairs put off has a good inspection performed at the time of the repair. During this inspection, the service technician can report on any related systems that have been affected due to the delay in service and can ensure all the related components that have been damaged due to the delay are repaired. This helps bring the equipment back to its best operating condition.

• Regular maintenance records: Having regular maintenance performed on your machinery helps extend its lifespan and value, but you need to be able to prove that the maintenance has been performed. Though a regular maintenance log is the easiest way to provide this documentation, you can also use service records from outside shops, or receipts for work performed or parts and supplies purchased for maintenance tasks.

• Excessive wear and tear or other signs of abuse: If a piece of machinery shows signs of excessive wear and tear, abuse, bends, dents, cracks or poorly-made repairs, it will lose value. Machinery that has been abused will not perform well, may be unsafe or can fail much earlier than comparable equipment that has been well maintained.

• Current market conditions: Is your industry currently in a boom or bust cycle? Though many kinds of packaging equipment can be retrofitted for other industries, the current market conditions in your industry can affect the valuation of your machinery, especially if the machinery is specific to that industry.

By knowing what will be looked at in a packaging equipment appraisal, it becomes much easier to judge how well or poorly your equipment values may end up. When you look at these particular aspects and keep them in mind, you can maximize your equipment values.