Equipment Appraisal Blog | Understanding Machinery Appraisals

Material Handling Equipment Valuations - Why Many Companies Need Them

Posted by Equipment Appraisal Services on Mon, Jan 11, 2021 @ 08:00 AM

Material Handling Appraisal


Virtually every business in the world that manufactures, transports, warehouses or otherwise supports any tangible product needs some type of material handling equipment to manage their inventory. It is important to understand the value of these types of assets when considering any financial transaction within your business so you can be sure to get the most benefit from the utilization and strength of these long lived machines.

What Types of Machinery are Considered Material Handing?

The first thing that comes to mind when discussing material handling for most businesses is forklift trucks. Forklifts are the most common type of equipment that falls into the material handling category, however, there is a considerably diverse amount of lift equipment that belongs as well.

Forklift Trucks

Forklift trucks alone have an immensely broad range of sizes, builds, and other specifications which can be overwhelming and fall into different categories of material handling. From the smallest manual pallet jacks to the largest type of container handler, there are hundreds of makes and models in between. From lifting a 500 lb. box to a 90,000 lb. shipping container, these types of assets are critical to effectively moving product from place to place.

The most common types of forklift trucks you see generally range from 3000-15,000 lb. capacities and are used in and around warehouses, loading docks and shipping centers. The lifts can be powered by rechargeable battery, propane gas, or diesel. Several domestic and international manufacturers compete in the industry, many with solid reputations for quality, producing long life durable machinery. Even if you have a 20+-year-old forklift, as long as it has been well maintained throughout its life, you can expect it to hold value over time.

What are Other Types of Material Handling Equipment?

The answer to this question may be a little subjective depending upon the industry or business you work in. I would consider these types of equipment to be included:

  • Order Pickers
  • Narrow Aisle Reach Trucks
  • Automated Pick & Place Retrieval Conveying Systems
  • Bulk Processing Equipment (Including Conveyors, Hoppers, Elevator Lifts & Augurs)
  • Pallet Racking, Shelving & Related Storage Equipment
  • Aerial Boom Lifts
  • Certain Types of Cranes

Similar to forklift trucks, these assets are typically long lived and hold their value well over time.

In summary, always consider material handling machinery & equipment as part of your asset listing when you need an updated appraisal. When deciding to engage a professional for this task, the best choice is an accredited ASA appraiser.

Tags: valuation, forklift appraisal, certified appraisal, material handling equipment

Why should you get a commercial appraisal on your equipment?

Posted by Equipment Appraisal Services on Tue, Apr 03, 2018 @ 10:42 AM

When you have invested significantly into your machinery, you want to make sure that your investment is protected. Though many businesses will insure their equipment, proving the value of your machinery after a loss is important to making a successful claim. But what if you're not sure what the value of your machinery should be or are having problems proving that value? in these areas, a commercial appraisal is vital to help ensure your equipment remains an asset to your business. Here's a quick look at the benefits of such an appraisal on your machinery.

Why should you get a commercial appraisal on your equipment?

What is the equipment in your business actually worth? It's a common question, whether you're dealing with a tax assessment, securing a business loan or making an insurance claim. Unfortunately, the answer to that question can be difficult to prove. Whether you have purchased new machinery, purchased used machinery or need to document the value of machinery that has been in use for some period of time, documenting the machinery value is important for a wide range of situations. But how do you go about documenting that value to outside interests?

When you first acquire a piece of equipment, whether it's new or used, you'll need to enter that value into your books so that you can deal with accounting issues such as depreciation. But does that mean if you got a good deal on it that the machinery is tied to that specific value? Not necessarily. If it was and you suffered a loss, you may not be able to claim the machinery's full value to your insurance company. A valuation protects the machinery's actual value to your business rather than the cost to acquire it.

It also helps to document the value of the machinery for any number of reasons. A certified appraisal is completed using methodologies that have been tested in a wide range of circumstances over the decades, so such an appraisal can stand up well to strong scrutiny. It will allow you to use that value in financial, insurance, legal and tax agency circles to prove the machinery value.

If you have equipment that has been in use for years, it may have been completely depreciated and have a book value that is virtually nothing. However, the machinery may continue to provide strong service for years to come. How do you document that loss of production value when the equipment had no value on the books? Having a piece of older machinery appraised allows you to benefit when it has been lost instead of losing the production value of the machinery because you have no documentation of its value.

By taking the time to have a commercial appraisal performed on your equipment, you're able to better protect your investment. But not all appraisals are the same. Though it can be tempting to try to value your machinery based on market sales or the word of a sales rep, this type of valuation won't hold up well to the strong scrutiny that will come about in a wide range of circumstances. Fortunately, even if you've already suffered the loss of your equipment, a professional certified appraiser can still perform an appraisal to determine the value prior to the loss, making it easier for you to document your equipment's value.

Tags: certified appraisal, commercial appraisal, appraisal report

What should you look for in a high-quality equipment appraisal firm?

Posted by Equipment Appraisal Services on Tue, Mar 20, 2018 @ 03:03 PM

When you need to have your equipment valued, what do you need to look for in an equipment appraisal firm? If you're not sure, you're not alone. A lot of companies and individuals who want to have their equipment valued don't know what to look for in an appraisal firm. Here's a quick look at some of the traits you should look for before hiring a machinery appraisal firm to document your equipment values.

What should you look for in a high-quality equipment appraisal firm?

At first glance, it can seem as though you already have a wide number of resources available to determine the value of your equipment. You can find similar equipment for sale in a sales flier and base your equipment values off of that value. You could go down to your local equipment dealer and ask for an estimate on trade-in value for your machinery. You could go to a few auctions and see what similar equipment sells for to get a better idea of what the market will bear. These will give you values for your equipment.

However, they're not going to give you an accurate value for your machinery.

When you hire a company to appraise your equipment, you're not trying to get someone's pie-in-the-sky figure that they'll hope they can get for your equipment. Your equipment value shouldn't be based on whether your equipment dealer is trying to convince you that the equipment you have is worthless or if they're willing to give you more than your equipment is worth to push one more sale for the quarter. Your equipment isn't being sold as a last option to raise a little cash, unlike the machinery you'll see at auction.

When you're getting ready to have your equipment appraised, you'll want to look for a certified equipment appraiser who has experience in your industry. Why this particular combination? 

A certified equipment appraiser has gone through a lot of education and experience to become certified. They've learned a great deal, not only about the machinery that they are appraising, but also about the practice of appraisal. They are able to determine exactly which type of value needs to be calculated for your specific situation, whether you need to sell equipment quickly due to a death or disability of the equipment owner, wait for the right price from the right buyer or just record the equipment's value for insurance, donation, tax or other purposes.

An appraiser who has experience in your industry not only deals with equipment on a daily basis, but deals with equipment that is specifically like yours on a daily basis. This gives them a level of familiarity with what your machinery is, how it operates and what to look for in terms of performance, expected useful lifespan and wear. With this knowledge, they can make a solid calculation of your equipment's value.

By hiring a good equipment appraisal firm, you can be assured that the machinery values you're provided with are accurate. You'll know that value will hold up well against strong scrutiny in a wide range of situations. Those values will give you a solid background for your accounting books and a good place to negotiate from when selling that machinery. When you hire a quality valuation company, the benefits you receive will last for years to come.

Tags: accredited appraisers, equipment appraisal firms, certified appraisal

Why should I work with an ASA accredited machinery & equipment appraiser?

Posted by Equipment Appraisal Services on Wed, Dec 06, 2017 @ 11:44 AM

ASA accredited appraiser.jpeg

When you're considering having your equipment valued, do you know what kind of appraiser you should work with? Though you could work with anyone who had a general knowledge of machinery values, that may not be your best bet. The American Society of Appraisers has spent decades developing methodologies that have been proven in a wide range of real-world situations, and that knowledge is reflected in every ASA accredited machinery & equipment appraiser they certify. Here's a look at the reasons why you should only work with an ASA certified appraiser.


Why should I work with an ASA accredited machinery & equipment appraiser?

When you need an appraisal performed on your machinery or equipment, do you know whether the appraiser you contact is certified? Though it's not the first question most clients ask of an appraiser, it's a very important one with regards to the accuracy of your final valuation report. The certification process provides an appraiser with the background education, knowledge and experience to help ensure they're accurately valuing your equipment. As an appraiser is certified, they receive a specific amount of education in both how appraisals are performed as well as which situations demand specific calculations and methodologies.

The most common accreditation program is from the American Society of Appraisers, or ASA. As one of the leading professional organizations for appraisers, the program they offer for accreditation uses the methodologies that its members have been using for decades. This means that reports generated using these methodologies stand up well to strong scrutiny. But in what situations is this really important?

Almost everybody has heard of a situation where a business is dealing with an insurance company, a lawsuit, a tax agency or a financing company where the value of an asset has been questioned. Though most people know that there's an appeals process in most of these situations, they don't bother to pursue this avenue because they don't know how else to prove the value of the asset. That's one of the best places where an ASA accredited appraiser's report can benefit your business or situation.

Because reports generated by accredited appraisers use the same standardized methodologies that have been used for decades, the report is viewed with higher regard than one developed by your local equipment dealer or similar appraisal approach. These types of appraisals have been tested in court cases and often have made a big difference in the outcome of the case. In insurance claims, it's not uncommon for adjusters to make an incorrect valuation because they don't specialize in that type of machinery. In financial and tax circles, an appraisal report can help prove a piece of equipment's value.

When you work with an appraiser, the information you receive can help prove the value of your machinery, but the information is only as strong as the methodologies that are used to calculate that value in the first place. By working with an ASA accredited machinery & equipment appraiser, you're ensured that the valuation report that you receive is accurate and will hold up well to strong scrutiny in a variety of situations. Make sure before you get started with an appraiser that they are certified to ensure you're getting your money's worth out of the valuation report you receive.

Tags: certified appraisal, ASA accredited appraiser

What exactly is a USPAP compliant appraisal?

Posted by Equipment Appraisal Services on Tue, Oct 10, 2017 @ 03:02 PM


When you're considering having an equipment valuation performed, one option that is available is having a USPAP compliant appraisal performed. But what exactly is USPAP and how are appraisals that are compliant to USPAP standards different than other types of appraisals? Here's a quick look at this type of appraisal and how it can benefit you.

What exactly is a USPAP compliant appraisal?

Standing for the Universal Standards of Professional Appraisal Practice, this represents a set of standards set and published by the Appraisal Standards Board, which in turn is authorized by the Appraisal Foundation. The Appraisal Foundation itself was authorized by Congress to be the source of appraiser qualifications and appraisal standards. Though USPAP appraisal practices were initially focused on real estate appraisal specifically, it has since grown to encompass virtually every possible item that can be appraised in business. 

But how can these standards benefit your equipment appraisal? Because of the high scrutiny under which USPAP has been developed and the number of different situations under which it has been applied, it has developed into a comprehensive standard that deals well with a wide range of situations. Over time, it has been tested in a wide range of legal, financial, insurance and tax agency circles. For this reason, it has become a trusted standard that provides business and equipment owners with many benefits.

When a business suffers a loss, whether due to a fire, natural disaster or theft, insurance companies must be dealt with. If the equipment has not been properly appraised, the business has no basis for claiming a value different than the one generated by the insurance company. But the insurance figure may be a generalized average across the industry, which does not recognize that the equipment has been maintained exceptionally well in a clean, dry environment. How do you fight that figure?

What about when a tax assessment is much too high on a piece of machinery that was purchased as a disposable asset, intended to be used hard for a short period of time? When a piece of equipment is purchased as a stop-gap until something different can be made to work, it often doesn't receive the best treatment. Receiving a high assessment on a machine that has a much lower value can be difficult to fight.

When you're getting ready to expand your business, do you need to secure financing using your equipment as collateral? How can you prove to the financial institution how much it is worth? A business loan can be difficult enough without having to deal with proving your equipment's value to the bank.

Fortunately, when a USPAP appraisal is performed, it provides documentation of the machinery's value, which will hold up to strong scrutiny in a wide range of situations. The standard has been tested in many situations, so it is trusted as an accurate measure of value for the machinery in question. An appraisal report prepared by a certified appraiser ensures that your interests are being protected during the process.

Though a USPAP compliant appraisal seems like a complex process, its many benefits help provide you with a wide range of benefits. Because a certified appraiser is already familiar with these standards, they're able to properly apply them to your equipment appraisal to ensure you get an accurate value. Working with a certified equipment appraiser provides you with a range of protections that may last well into the future.

Tags: USPAP appraisal, standards of value, certified appraisal