Equipment Appraisal Blog | Understanding Machinery Appraisals

What's Involved in the Appraisal of Construction Equipment?

Posted by Equipment Appraisal Services on Wed, Nov 14, 2018 @ 10:23 AM

appraisal of construction equipment

When you work in construction, the value of your equipment often falls by the wayside compared to the income that is generated by that machinery. But when it's time to purchase new equipment, the value of that construction machinery is suddenly of paramount importance in terms of how it helps you finance your new machinery. The process involved in the appraisal of construction equipment may seem confusing, but it's actually fairly straightforward. Here's a quick look at the overall process to help you get a better grasp of how it works.


What's Involved in the Appraisal of Construction Equipment?

When used construction equipment is appraised, there are a few steps involved in the process:

  • The appraiser gathers the initial information about the equipment. This includes the manufacturer, model, any additional kits or options that have been included and similar data which helps give the appraiser a baseline to determine the value of the equipment. This part of the process may also include a rough estimate of the machinery's condition by the individual securing the appraisal, but not as a final assessment.
  • The equipment itself is appraised for condition and value. This includes taking a solid look at the entire piece of machinery, including the condition of the body, mechanical condition, performance and similar aspects which help the appraiser determine both the current condition of the machinery as well as the expected useful remaining lifespan of the equipment.
  • The market may be considered. If the equipment is of a type that can only be used in construction, the market conditions can have a strong impact on the appraised value. For example, if the construction market is going strong, the machinery may have a much higher resale value based on that aspect of market demand than when the market is very weak and demand for machinery of this type is very low.
  • The market may be of limited interest. If the machinery in question is, on the other hand, reasonably useful in a range of other industries, such as a forklift, the condition of the construction market may have a much lower impact on the final value of the equipment. For example, the previously mentioned forklift can be used in a range of other applications, such as shipping, warehouse and similar industries, which means that its value can be carried by these industries.
  • The final value of the machinery is calculated. Once these different aspects are taken into account, the appraiser uses a calculation methodology to determine the final fair value of the equipment. As the different factors are taken into consideration, the formula used adds or subtracts value based on whether that aspect increases or decreases the equipment's overall value. This information is consolidated into a final report by professional appraisal firms, especially those that use certified equipment appraisers.

By having a solid grasp of what's involved in the appraisal of construction equipment, you can have a better appreciation for what happens behind the scenes when you're getting ready to trade or sell your used equipment and need to know what it's worth. Make sure that if you decide to have a professional appraisal performed that you work with a certified equipment appraiser to ensure that the valuation report has been developed using standardized methodologies that help protect your interests in your equipment.

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