Equipment Appraisal Blog | Understanding Machinery Appraisals

By now, most people are aware of the supply chain crisis and its impact on many parts of our lives, both personal and business. Facing some of the worst of these issues are international importers and exporters who are experiencing unprecedented increases in product costs associated with purchasing, shipping, handling, and significant delivery delays.

From an appraiser's perspective, questions have arisen regarding the impact of this global problem when it comes to valuing the equipment, personal property, and inventory of the assets for these businesses.

Historically, appraisers have largely been engaged to assist in the customs process, which requires an appraisal on property being shipped overseas. While valuation companies are still involved in this area, the overall marketplace and the effects on both new and used machinery & equipment, as well as how long this crisis might persist, is the more prevalent topic today.

Supply chain issues are affecting other businesses on varying levels as well. A good example is the automotive industry. The new vehicle shortage they are experiencing has led to a sharp increase in prices for both new and used cars and trucks. Delivery delays are also causing significant price increases at grocery stores, furniture retailers, building construction firms, manufacturing companies, and others.

When valuing machinery & equipment in these markets and industries, an appraiser will research and analyze each situation, and determine a reasonable approach to measuring this impact, especially if they believe these supply chain issues are going to continue well into the coming year. Given the uniqueness of this situation, this will likely involve a subjective opinion from the appraiser based on the information uncovered, the level of change from more normal conditions, and the short or long-term effects this will have on the market and the assets involved.

When the need for an appraisal occurs in your import or export business, ensure that you engage with an accredited or certified valuation expert with the experience required to deliver reasonable and supportable opinions.

Dealing in the international trade business, you may have a need to carefully document the current value of used machinery & equipment, especially if the bill of sale is not available. How do you support this value to ensure your assets pass through customs. One option is to obtain an equipment appraisal to back up your transaction, however, it is important the appraiser has the accreditation and experience necessary to complete the valuation.

Here are some details on how an equipment appraisal from an accredited or certified equipment appraiser can help provide documentation that will make your customs experience go more smoothly:

To avoid potential delays and troubles with the import & export customs process involving machinery & equipment, considering an appraisal that supports the current value of your assets can go a long way to alleviating this. The appraisal report follows certain methodologies and procedures that are universally recognized, giving custom’s officials a higher comfort level, leading to less scrutiny and avoiding potential delays in clearing the machinery for transit.

The legal paperwork can be overwhelming during the Import and export process, and if not completed properly, can lead to all kinds of delays and additional expenses with customs. With an equipment valuation in hand, completed by an experienced accredited appraiser, supporting the current value, you can resolve many of these situations in a timely fashion.

An accredited or certified appraisal report is better able to stand up to scrutiny than as it is clearly independent and unbiased. Working with a less experienced appraiser could lead to a higher level of scrutiny as the report will not hold up to the accepted standards used in the valuation field. The accreditation and certification process includes instruction in standardized appraisal methodology, and the appraiser signs a certification letter as part of every valuation performed.

When your business deals with machinery in the international marketplace, consider the engagement of an experienced equipment appraiser to assist you in the documentation process. At equipmentappraisal.com, we would be happy to work with you in this endeavor.

When you deal in international trade of equipment, it's very easy to end up with questions about your import and export documentation. How do you back up the information in your documentation to ensure your machinery passes easily through customs. One method is using equipment appraisals to back up your paperwork, but how should you approach the valuation process? Here are some details on how an equipment appraisal from a certified equipment appraiser can help provide documentation that will make your customs experience go more smoothly:

Papers Please: How Machinery Valuation Supports Import and Export Documentation

Avoid Customs Hassles

Going through the customs process can be a very complicated process. Some businesses choose to simply avoid dealing with international business. But the benefits of purchasing or selling often outweigh the drawbacks of dealing with customs. Because a certified equipment appraiser's report follows certain protocols as it is drawn up, customs officials give more weight to the report's value and are less likely to scrutinize or impound the machinery while working through the process.

Legal Documentation

Import and export paperwork, if not completed properly, can lead to legal troubles with customs. If you've had the value of a piece of machinery questioned at customs, having a machine appraisal on hand to prove the documentation of the machine's value goes a long way towards resolving the situation without additional hassles. Because an appraisal report from a certified equipment appraiser follows standardized methodologies, it's accepted in many legal situations where a rough estimate will not be accepted.

Certification Matters

Why is a certified appraiser's report better able to stand up to scrutiny than, for example, an advertised price for a similar piece of equipment or the estimated value from an equipment company's sales representative? The certification process teaches the machinery appraiser what to look for in equipment to determine value. It teaches which type of value can or must be used in certain circumstances and what the differences are between the various types of appraisal values. It teaches specific methodologies that have been standardized across the board to provide a fair value for the equipment that is being appraised. Working with an uncertified appraiser means the money you're paying may not give you a report that will stand up to scrutiny in customs.

Standardized Methodology

The certification process includes instruction in standardized appraisal methodology, so any certified appraiser can come up with a similar result when faced with the same situation. It teaches the best kind of appraisal approach to use in different situations.  For example, if you're selling the equipment because of a divorce, you may be required to meet fair market value or other type of valuation process as determined by the court overseeing the divorce. Same goes for importing and exporting.  Having a standardized methodology means the valuation that is being performed will be uniform across the industry.

When your business deals with machinery on the international market, having a certified equipment appraiser's machine appraisal support your import and export documentation can make the process much easier. The standardized methodology used by a qualified equipment valuation specialist bears up against scrutiny.