Equipment Appraisal Blog | Understanding Machinery Appraisals

At least once a year, business owners will take stock of their current operation, while planning for the coming year, determining what changes may need to be implemented to continue on a successful track. One of these improvement areas might pertain to the sale of certain used equipment, which are now considered too old to maintain effectively or are in excess of existing production needs.

It can be challenging to take this project on alone, and fortunately, there are options you can consider that can facilitate the process. Here are a few to think about:

Sell or Trade to Your Dealer

Similar to selling your personal cars or trucks, the first place you might think of is the dealer who sold you the equipment when it was brand new. If you’re looking to replace your older assets with new models of the same manufacturer, the local dealer should provide you with trade-in options. Even if you don’t plan on buying a new machine, they may offer to purchase it outright at or near a trade-in level value. If not, they may agree to broker your used equipment through their resale networks for a reasonable commission once sold.

Listing in Online Trade Journals

There are several reputable national websites available to consider listing your used equipment with. Virtually any type of machinery or vehicle is supported by these platforms. They offer a large network of sellers the ability to list their assets with exposure to thousands of potential buyers. You can include photos, detailed specifications, asking prices, and your direct contact information with the listing. If you are not in a rush to liquidate your used equipment, you might want to consider this option as it may ultimately realize a higher resale value for a low cost.

Auctions

The auction industry continues to grow every year and provides sellers with an option that is a one-stop, fully managed effort, from the marketing, resale, pickup, and delivery of your used equipment. The booming growth of online auctions, especially post-pandemic, makes this option even more attractive, as the number of potential bidders has expanded to those who cannot physically attend the sale. The auction route has more costs and risks, given the ease of the process and more immediate outcomes. You should, therefore, research and determine the best auctioneer to work with who can mitigate these concerns for you.

Machinery & Equipment valuations rely in large part on available market data that can be researched and considered. This information can be in the form of recent sales, current listings, new equipment pricing, opinions on normal useful life, and average annual levels of market depreciation.

Two of the most common sources of this data are equipment dealers (vendors) involved in the retail sale of new and used machinery, and auction companies, who liquidate thousands of used machines each and every year through advertised public sales. How does an experienced appraiser review these sources, and consider them when valuing similar assets?

The answer to that question will likely vary somewhat depending on the appraiser you are working with, however, it is important to first understand the differences between equipment dealers and auctioneers, along with the levels of value each of these sources equate to.

New and Used Equipment Dealers

These market sources are usually experienced in specific equipment types and manufacturer/model lines and can provide valuable insights on the overall market, new and used equipment pricing, normal useful life, and how the assets typically decline in value over time. This data and their general opinions are viewed as direct Fair Market Value comparisons, however, they can also discuss how they purchase used equipment such as typical buy/sell margins from an Orderly Liquidation perspective.

It is important to keep in mind that, although equipment dealers are considered experts in their specific market areas, there may be some level of bias associated with their opinions. It is always a good idea to consider additional perspectives in order to gain a balanced conclusion of value.

Equipment Auctioneers

Auction companies are well recognized in many types of equipment markets, most notably in construction, earth moving, transportation, material handling, machine tools, and certain industrial manufacturing industries. Auctioneers provide a convenient, time-sensitive opportunity to liquidate assets under an organized public sale, and may even provide guaranteed buy-out options as an alternative for those unwilling to take on the risks associated with a “no-reserve” sale.

Because these sales are in the public arena, much of the data can be discovered quite easily through company websites, online databases, and other open sources. Auction sales data technically falls under the comparison to Forced Liquidation Value from an appraiser’s perspective, and actual realized sales can vary greatly depending on the type of equipment, buyer turnout, seasonality, and any number of other factors. Because of the potential inconsistency associated with this data, it is important to understand how best to consider it in conjunction with other sources of data to then conclude on a reasonable value.

In summary, new and used equipment dealers, along with auction companies, are considered two of the most important market sources of data for machinery & equipment appraisers. Making sense of this information and ultimately forming an opinion of value for the actual assets being appraised is the most critical step in any valuation effort. Engaging with an experienced, independent, accredited appraiser will provide you with confidence that the result will be credible and reliable.

If you have heavy construction equipment that you no longer need, selling that equipment at auction makes a lot of sense. Because auctions attract a lot of buyers, they are quick places to sell your equipment, compared to trying to sell something like a crane on your own. Finally since the auctioneer mediates the process, selling your equipment at auction can be less stressful for you. To prepare your heavy equipment for auction, it can be essential to have equipment appraisals done. Learn more. 

Why Have a Crane Appraisal Before Auction 

To understand the benefits of heavy equipment appraisals before auction, think about it from the buyer's perspective. A buyer is visiting an auction in hopes of getting needed equipment at a great price. They may be shopping on a budget, but still want to get a good piece of equipment. 

Appraisals can also help shoppers compare like items. If your crane is more powerful than others on auction, the appraisal can indicate this. If you really want to move your construction equipment, an appraisal is one additional piece that can make your piece stand out. 

Some buyers may be new to the auction scene. These buyers in particular may be hesitant about purchasing used equipment at auction due to not knowing what the market brings for the typoe of equipment. When they can view an appraisal, and see an independent valuation of that crane by an expert, it can provide them with useful knowledge. This can help them bid with confidence. 

While a crane appraisal benefits the buyer, it also benefits you. If you are ready to sell a crane at auction, you probably need the money for other purposes. In this case, it's better to sell the item quickly, even if you get a little less than you hope, than to hang onto that crane for months. Time you spend trying to sell the crane yourself takes time away from needed tasks. 

An auction allows you to sell your crane quickly so you can move on to other things. Getting that appraisal done can increase the likelihood that you sell the crane at auction because you will have an idea of what it may sell for.

How to Find Heavy Equipment Appraisers

When you are preparing to have a piece of machinery appraised, it is critical that you find a certified appraiser. If the appraiser you hire is not certified, the report may not meet the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisers that follow USPAP provide unbiased opinions of value.

Look for an appraiser who is certified and has performed construction appraisals in the past. This person will be familiar with the best ways to take the value of heavy equipment like cranes.