Equipment Appraisal Blog | Understanding Machinery Appraisals

How Medical Equipment Appraisal Helps Support Your Bottom Line

Posted by Equipment Appraisal Services on Tue, May 09, 2017 @ 11:14 AM

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When your medical practice is doing well, it can be tempting to upgrade your machinery or open a new location. But how do you know if that move will be a good investment or a bad risk? Medical equipment appraisal can provide you with the information you need about some of your practice's most expensive assets to help you make an educated decision on these types of issues. Here's more information on how it does this.

How Medical Equipment Appraisal Helps Support Your Bottom Line

How much is your medical equipment worth? You might be surprised just how far that number can vary. When you've got an equipment sales rep in the office, they may say that it's worth very little, especially compared to their latest model. On the other hand, they may say it's worth a great deal, especially when they're willing to accept it as a trade in on the same latest model. Neither number is necessarily an accurate assessment of the machinery's worth.

Looking at what similar models have sold for may not give you a good picture either. How well were those machines cared for? Was the industry in a strong or weak cycle when they were sold? Is there demand for that equipment in the industry because of new techniques or practices? There are a number of different factors that can impact your equipment's value. Working with someone who understands these different factors can make all the difference in determining your equipment's actual value.

Imagine if you had a piece of equipment that had been ill maintained over the years or had been damaged in a flood or fire. It still operates, but not as well as it should, or it's probably going to have a shorter useable lifespan than expected. What happens when you use a standard depreciation table in a tax document to depreciate value? The depreciated value will be stretched out over a longer period of time than the machinery will remain in usable condition. This means it remains on your books as an asset even when it actually has no reasonable value.

Another piece of equipment could be very well maintained. It's always had proper maintenance and has been used within its specified parameters, ensuring that it's in excellent conditions. It can deliver productive results for your practice years after it's been fully depreciated. That means it has no value in your balance sheet, but provides real value to your practice on a daily basis. The first machine creates false value, while the second isn't recognized for the value it delivers. This can create inaccuracies in your balance sheet and make it difficult to make smart financial decisions based on your practice's asset worth.

By getting a medical equipment appraisal, you can ensure that you have a much better idea of where your practice sits financially. With this information in hand, you can make smarter decisions on new investments, whether it's to open up a new location or upgrade your assets to allow for further services for your patients. However, if you're not working with a certified equipment appraiser, you may be getting bad information. Certified appraisers follow accepted practices to ensure they provide you with accurate values for your medical equipment.

Tags: equipment appraisers, medical equipment appraisal

Valuing a Semi Part 1: Truck Appraisals

Posted by Equipment Appraisal Services on Tue, Apr 19, 2016 @ 11:00 AM

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When you run a big rig and need to have a truck appraisals conducted, how do you know what will come into consideration during the process? Knowing what the equipment appraiser is looking for helps you know how to judge equipment values, whether you're considering making a new purchase or figuring out when to upgrade from your old standby. Here are a few things to keep in mind when having your semi tractor appraised:

Valuing a Semi Part 1: Truck Appraisals

  • Show us the paper. Though it seems like it wouldn't have as much to do with your truck's machinery valuation, having proof of maintenance and repairs is vital to the process. Whether you keep a regular maintenance and repair log, have an envelope with all the repair receipts in it or can get a copy of the records from the shop you always use, documentation helps prove good care of your truck.
  • In good condition. Though it's normal to have some average wear and tear on your truck, it should show that it has been keep up, whether that's through regular washing, a clean interior or an engine compartment that is well kept and in good repair. Much like documentation, this step also proves that your truck has been well maintained.
  • Mileage matches wear. Though most people wouldn't dream of messing with the odometer, some shady shops will try to tamper with it to gain a few dollars in the sale price. Equipment appraisals will take a good look at the wear and tear of the entire vehicle, and if it appears to have much more wear and tear than the odometer would support, you may want to have documentation on hand in the form of mileage logs or similar paperwork to back up your claim. Excessive wear is often related to early failure of a variety of systems, lowering the final appraised value.
  • Free from signs of abuse. Much like the mileage concern above, this step is to ensure that the truck will continue to operate for an expected period of time. Abuse can include repairs that have not been seen to, too much play in steering, suspension, brakes and similar systems, poorly made repairs, cracks or dents, bends in the frame and similar concerns. Trucks that have been hard used and not cared for often have much earlier failure rates than trucks that have been well maintained.
  • Manufacturer-added or -approved features. Everyone can buy a basic truck, but one that has a few more bells and whistles will demand a higher price in the market, which is reflected in the appraised value. But what about additions that were manufactured by third parties or part of customization outside the manufacturer's specifications? You may actually end up lowering your truck's value. Why? If a feature was added that causes additional wear and tear on a particular system or circumvents a safety feature, it can actually cause the truck to fail sooner instead of adding value to a normal life cycle.

Knowing what to expect during a machine appraisal helps you get through the process quickly and easily by allowing you to have everything you need on hand and accessible for the process. But now that you know what to expect in truck appraisals, what about the trailer? Tune in next time for the second part of this series, dealing with trailer appraisals, and don't forget to contact us for all your appraisal needs.

Tags: equipment appraisers, truck appraisals

How to Determine Fair Value in an Oilfield Equipment Appraisal

Posted by Equipment Appraisal Services on Mon, Dec 28, 2015 @ 10:30 AM

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Whether you need a machine appraisal for insurance purposes or want to better evaluate the worth of a used oil rig up for auction, an oilfield equipment appraisal can help determine the fair value of equipment in the current market. Learn how an equipment appraiser might value a piece of machinery to better understand the equipment values of assets you own or are considering purchasing. 

How Fair Value is Determined for Oil and Gas Equipment 

  • Physical deterioration - An appraiser will review the piece of equipment, taking note of its physical condition. The old adage about never judging a book by its cover applies well to machinery appraisals. Even if an oil rig engine looks old and shows visible wear and tear, these are not necessarily an indication of a low value. Appraisers will typically review maintenance records and inventory for oil and gas equipment before making a value determination. Equipment that was well maintained, or has spare parts on hand in the warehouse, might receive a higher value accordingly. 
  • Replacement cost - An appraiser might gauge how much it would cost to purchase an equivalent rig or tanker new, and then deduct from this cost based on the condition of the used equipment. When oil and gas equipment is being appraised for insurance or resale process, equipment values are often calculated in this manner. 
  • Useful life - The appraiser may estimate the useful life of the machinery by reviewing the age, physical condition, and depreciation of equipment. By consulting a chart showing the useful life of the particular object, and deducting time for age and wear and tear, an appraiser can calculate how many years of "useful life" a given piece of oil and gas equipment might have left. 
  • Market approach - In a market-based approach to oil and gas equipment valuations, appraisers look at recent sales prices of comparable equipment. While this is considered a highly reliable way to value machinery, the method only works when equipment like that in question has been recently sold, is comparable in condition and value, and was sold in a similar manner and location. It would not be fair to compare the price of a frack tank sold at auction to one up for private sale, for example.  

 

Appraisers will typically employ one or more of these methods to determine the value for a piece of oilfield equipment. The appraisal report should list which method was used, explain the criteria under which the fair value was determined, and provide additional evidence used to support these conclusions. 

If you are considering buying a used rig engine, it is well worth the appraisal cost to know the equipment's fair value on the market. Taking the extra step of having an appraisal done can help you avoid spending money on equipment that is in bad shape and would be expensive to repair or confirm that a piece of used equipment is a good value, enticing you to bid on it. 

When it comes to something as specialized as oilfield equipment, it is important to find an appraiser who understands the oil and gas industry and can value the machinery accordingly. When your business assets and worth are on the line, never settle for a general appraiser who lacks industry experience. For help finding an experienced appraiser of oil and gas equipment in your area, look to Equipment Appraisal Services. 

Tags: equipment appraisers, oilfield equipment appraisal

Lovely or Lemon? 4 Benefits of Chemical Processing Equipment Appraisal

Posted by Equipment Appraisal Services on Wed, Aug 12, 2015 @ 09:00 AM

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With the extreme volatility in world markets for inputs finally quieting down and becoming more stable, it's a great time to look at expanding your chemical processing business. Though this volatility caused the industry to contract instead of expand from 2010 to 2014, it's projected to expand by 0.7% annually from 2015 to 2020, making the relatively calm economic state we're currently enjoying a great time to expand your operation with better equipment and faster production.

The best way to upgrade your machinery at this time is by purchasing used equipment, because you'll have less equity invested if the industry starts to become explosive again. But without getting a chemical processing equipment appraisal, how can you tell whether that great deal you're looking at is a good equipment value or a lemon that's going to cost your money precious equity just as your company is getting back on its feet? Here are some ways that getting a chemical processing equipment appraisal ensures you'll get what you paid for out of the equipment you're purchasing.

4 ways a machinery and equipment appraisal protects your business

  1. An equipment appraiser can often spot a problem such as obsolescence. A qualified appraiser may recognize potential problems before you make the purchase such as model changes or manufacturers that have gone out of business. If these issues are caught early, you don't throw your money away on equipment a machine appraiser wouldn't recommend.
  2. You'll find out the actual equipment values, which gives you a powerful tool that helps you determine where to start negotiating price. Equipment appraisers are experts at determining what the value of your prospective machinery is currently in the market. If you don't know the market, you can't negotiate from a point of strength.
  3. Equipment appraisals provide a professional estimate of your equipment's worth that can be backed up by solid methodology, which is often required to get bank financing or to make insurance claims for losses suffered. Without a proper machine appraisal, you can't back up how much the machinery is worth and may end up with a substandard loan rate, insufficient funds to make the purchase or losing out on an insurance claim that could keep your business in operation. 
  4. A proper machinery appraisal gives you an appropriate starting point if you need to depreciate your machinery over time. Just because a machine has been completely depreciated by the business you're purchasing it from doesn't mean it has no value - as the hefty price tag would suggest. Having an appraisal gives you a starting point to depreciate the machinery on your own books, at a depreciation rate that reflects the machinery's value in your business as time passes.

These are the top reasons it's vital for the success of your chemical processing business to get a proper machine appraisal before purchasing used equipment. Make sure you have the prospective equipment you're considering appraised by a qualified appraiser who is accredited with the American Society of Appraisers following the Uniform Standards of Professional Appraisal Practice. If you don't make sure the appraiser meets these criteria, your chemical processing equipment appraisal may not be accepted as legal documentation of your equipment's worth.

Tags: equipment appraisers, processing equipment appraisal

Get an equipment appraisal for your property tax appeals

Posted by Equipment Appraisal Services on Mon, Aug 10, 2015 @ 10:00 AM

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When you get that envelope from the county or city for your business property taxes, you already know it's going to be higher than what you'd like to pay. But what about when you open that envelope and the figures quoted are much higher than expected, to the point of being far above the actual value of your equipment values? Property tax appeals is one part of the process to get your taxes lowered, but how do you start the process? By getting a quality machine appraisal from an accredited equipment appraiser certified by the American Society of Appraisers (ASA). Here's why:

The tax assessor isn't perfect.

Your local county assessor handles a wide range of assessments, from livestock to residential property to construction equipment and back again. That is the main reason why the property tax appeals process is in place for virtually every government assessment process in existence. What's even worse, most property tax assessors will overestimate an assessment than underestimate it. The National Taxpayers Union estimates between 30-60% of property is assessed too highly, but only 2% of assessments are appealed. The tax man may cometh, but that doesn't mean he knows what he's doing when he gets there.

A machine appraiser knows equipment appraisals in your industry.

Because such a diverse array of property is covered by just a few people in the tax assessor's office, it's pretty easy to determine the wrong equipment value for your property taxes. Whether he marked your construction truck as a diesel with 500,000 miles instead of a gas engine with virtually no life left in it, getting a professional equipment appraisal helps ensure you're only being taxed on what that truck is actually worth. This is especially important if you've made significant modifications to your equipment that drastically changes its value.

Professional equipment appraisers can often provide expert witness testimony.

In addition, appraisers are able to provide not only documentation of their valuation process, they can also provide expert testimony for machinery and equipment if it's needed during the appeals process. Expert testimony can include how the assessed value was determined, provide evidence of why that value was chosen and may even be able to provide details about what was done incorrectly by the local tax assessor's process and methodology that created the inaccurately high value in the first place.

How do I start the property tax appeal process?

To start the process, you're going to need to do some investigation into the taxes. Things to keep in mind are cutoff dates for appeals, what the process involves on your part and when you can expect particular documents from the assessor's office. Once you have a basic understanding of how the system works, start gathering your paperwork and make an appointment to have your overvalued property assessed by an ASA-credentialed machinery appraiser using the Uniform Standards of Professional Appraisal Practice (USPAP). When the appraisal has been completed, compare it against your property tax documentation to determine whether the assessment is too high. Appealing your property tax assessment may be as simple as calling or walking into the tax assessor's office with your documented assessment and having a conversation about the problems with the assessment. If it's more involved, you have options available through the appeals process.

Now that you know what to expect from the process, is it time to appeal? Get a quality appraisal completed and start the process.

Tags: equipment appraisers, property tax

Get an Agriculture Equipment Appraisal to Start Expanding Your Farm

Posted by Equipment Appraisal Services on Wed, Aug 05, 2015 @ 10:00 AM

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With low interest rates and an improving economy, many farmers and ranchers across the country are considering expanding their farms. Are you one of them? Before you start shopping for expensive new equipment, upgrades to your barns and other outbuildings or looking at that prime piece of land across the road, your first step should be to get an agriculture equipment appraisal performed on your equipment by a qualified machine appraiser. Why?

A recent report by IBISWorld has shown a continued increase in demand for crops as well as farm machinery, with steady, continued growth until 2021. As our world gets smaller, more and more farmers worldwide are beginning to industrialize, keeping farm equipment values higher than they've been in the past. Before you start looking at expanding, it's vital that you know the worth of what you already have through a machinery and equipment appraisal. 

Fitting Financing

If you're looking at picking up a new piece of equipment? If so, you may be considering financing your new purchase. By having a farm equipment appraisal performed to determine the equipment value of any trade-ins or of the piece you're considering purchasing, you an get a much better picture of where you stand when you get to the negotiating table. Equipment appraisals ensure you're getting a good trade-in value or aren't paying too much for that new tractor.

Upgrade Time

If you're thinking about expanding your farming or ranching operation, you may be considering upgrading your current equipment for newer models or models with more features and options available. You may also want to consider picking up an upgrade by purchasing used farm equipment.  But what are those new features worth? By having a machinery valuation performed by an equipment appraiser, you can ensure that you're not being robbed blind over a little more horsepower, a couple more feet of sprayer boom or a farm truck that has lots of bells and whistles with a lot of problems as well. Upgrades should make your farm easier to manage, not harder because you've made a poorly-informed decision that leaves you stuck with machinery that doesn't live up to its expectations. An agriculture equipment appraisal by a qualified machine appraiser helps ensure you'll be getting your money's worth out of your equipment.

Accurate Financial Picture

Finally, equipment appraisers can help you develop an accurate financial picture to determine whether you are ready to expand your farm at this time. Did you take a standard deduction on an older tractor that is still in prime condition with very few hours on it?  Wouldn't you want the bank to count that tractor as an asset with a value of $15,000, or do you want it counted at the $45,000 it's actually worth? It's hard to figure out exactly where you stand if you don't have a solid idea of where your farm's real net worth stands. An agriculture equipment appraisal helps you figure out exactly what you have and can help you determine what farm expansions and improvements make sense right now, without underselling or overselling your farm's financial situation.

By keeping these reasons in mind when considering a farm or ranch expansion, you can make informed decisions because you know what your financial outlook is like. Having a thorough machinery and equipment appraisal performed on your farm by a qualified equipment appraiser will give you the information you need to move forward confidently to improve your farming or ranching operation.

Tags: equipment appraisers, agriculture equipment appraisal