Equipment Appraisal Blog | Understanding Machinery Appraisals

Using Construction Machinery Valuation to Grow Your Company

Posted by Equipment Appraisal Services on Tue, Oct 30, 2018 @ 12:19 PM

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Tradesmen International's recent study of the economy and construction industry projects that the construction sector will be one of the fastest growing areas of the economy over the next few years. Where is your contracting firm positioned to take advantage of this growth? Using a machinery valuation as an asset to leverage your company's value may help you get the best growth from the current boom cycle before we hit the next downturn. Here's a quick look at several ways you can use an equipment valuation to improve your company's growth and solidify your position in the market.

Using Construction Machinery Valuation to Grow Your Company

  • Does your equipment still have value, or is it just about shot? Because equipment appraisers spend all day looking at machinery, they have a pretty good idea of what regular wear and tear looks like compared to failing parts that may cause expensive repairs down the road. Use the information to decide whether to repair or replace your aging equipment instead of taking a wild guess at its longevity.
  • Can you afford a lot of down time? By knowing what condition your equipment is in allows you to replace it when it makes sense, rather than waiting for it to break down and wreak havoc on your job site. Use the appraisal information to make planned replacements instead of having to make an emergency purchase at the wrong time. This allows you to make the purchase when you're ready.
  • Do you really need that much insurance coverage or are you too low? It's hard to decide how much coverage you need on your equipment. When you have an equipment appraiser take a solid look at and value your machinery, it becomes much easier to know how much coverage to retain, especially since an appraisal report from a certified appraiser will hold up well under scrutiny by your insurance carrier.
  • Are you ready to get that loan from the bank? The economy is still a little shaky, and financial institutions aren't as willing to put out loans as they were before the recession. Being able to document your equipment's value allows you to provide solid proof of your assets as well as providing a basis for collateral if it's needed for your business loan.
  • Are your taxes in line with your equipment's real value? Property taxes are a pain, but if you've noticed a strong upswing in your taxes without a related asset purchase, you may need to fight the appraisal. By having the documentation you need, you can spend less time fighting your appraisal and more time investing the money saved in the process.
  • What will that old equipment really sell for in the long run? When it's time to sell that old skid steer, backhoe or loader, are you just guessing what the market will bear or are you basing your asking price on real-world figures? Having an appraisal means you have a solid basis to back up your end of the negotiations.

By taking the time to have a machinery valuation performed on your construction equipment, you can leverage that information to get the best possible growth out of the current upswing. Consider each of these points carefully, then hire a certified equipment appraiser to get a high-quality report you can use for a wide range of purposes. 

Tags: machinery valuation

What exactly is machinery valuation and how does it benefit your business?

Posted by Equipment Appraisal Services on Tue, Oct 09, 2018 @ 04:48 PM

After you've been in business a bit, you may have heard the term machinery valuation tossed about on occasion. If you've wondered what it's all about and why you might want to consider getting one on your own business, you're not alone. Here's a quick look at what exactly an equipment appraisal is and the many benefits it can bring to your company.

What exactly is machinery valuation and how does it benefit your business?

Most people have been through or are somewhat familiar with the process of having a home appraised or a vehicle valued when considering selling it or trading it in. Someone who seems to maybe know what they're doing will look it over, hem and haw and finally tell you what it's worth. This process tends to be a good bit more reliable in real estate than cars or trucks, but either process can be up to some level of interpretation. 

Now imagine this process but with machinery. You may be dealing with an equipment dealer, but much like the process of trading in a car, you'll often end up getting the value they want you to get - high if they need sales or low if they don't want to deal with selling your used equipment. Fortunately, there's a much better way to have your equipment assets appraised - by using a certified equipment appraiser.

When equipment appraisers work through the process, they are an independent third party. They don't have any reason to push for you to trade now or keep your current equipment. They simply analyze what is. Instead of worrying about what their commission will be, they can get into the nuts and bolts of your equipment, the industry and what it's actually worth. They use this information to create an equipment valuation report that provides you with a number of benefits:

  • The appraisal itself tells you something about the condition of the machinery. Is there a particular part that you missed a recall on? Perhaps there's some wear that isn't that interesting in and of itself, but it could point to wear and failures elsewhere in the machine that could lead to expensive repairs.
  • Because appraisers are familiar with your industry, they may know that though the region you're located in is currently in a slump, the market in another area may still be rather hot. They may even have some connections there, giving you the opportunity to make a profit off of machinery that would otherwise sit around or lose value.
  • Certified appraisers use tested methodologies to calculate the value of your equipment. Because these methodologies have been around for a long time, they've been tested in court, tax agencies, financial institutions and insurance companies. That means they stand up to strong scrutiny, allowing you to save time when dealing with these organizations.

Now that you know what a machinery valuation is and the many benefits of having one performed on your equipment assets, it's time to act. By having an equipment appraisal performed on your assets now, you can help avoid a lot of hassles no matter what life throws your way. Make sure you work with a certified equipment appraiser to ensure that they're familiar with the many factors that can come into play when you have your machinery appraised.

Tags: machinery valuation

Papers Please: How Machinery Valuation Supports Import and Export Documentation

Posted by Equipment Appraisal Services on Tue, Jul 12, 2016 @ 12:30 PM

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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.

Tags: machinery valuation, import, export

4 Details Potentially in a Heavy Equipment Appraisal

Posted by Equipment Appraisal Services on Mon, Oct 05, 2015 @ 03:00 PM

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When you own heavy equipment, knowing the equipment value is an important part of your business' financial situation. But what does a machine appraiser look for when they're performing a heavy equipment appraisal? In this post, we'll take a good look at what details an equipment appraiser looks at during a machinery and equipment appraisal and how it affects your equipment values.

Excessive Wear That Doesn't Match the Meter Hours

When an equipment appraiser is performing equipment appraisals, one of the biggest signs that something may not be right with the equipment is when there's wear on the machine that is far too excessive for the hours shown on the meter. Much like an odometer reading that shows very few miles on an old, beat-up vehicle, a mismatched amount of wear compared to the amount of hours on the meter is often a sign of tampering. This raises a red flag for most appraisers performing a heavy equipment appraisal and can lead to a much lower appraisal. If you have equipment that has excessive wear, documenting what has happened with the machinery will help the equipment appraiser get the whole story and value the equipment accordingly.

Legal Title Issues

When a machine appraisal is taking place, one of the areas that is looked into is the title for the machinery being appraised. Because issues with the title can affect your ability to sell the machinery or legally claim financial rights on the equipment, it's an important part of the appraisal process. A title that has the wrong name, a co-owner who is not part of the business or other legal issues can impact your ownership of the machinery, which means that you can't depreciate it in your accounting. A salvage title can raise questions about whether the machinery can be safety operated or if there is hidden damage or other problems that could affect its value. If there's any possible way to clear up any title issues prior to your heavy equipment appraisal, it will help the process go more smoothly.

Poor Maintenance or Nonexistent Repair Records

When you own machinery and times are difficult in your industry, it's often less expensive to repair or maintain your equipment on your own or put it off instead of hiring the work out. But a lack of maintenance, incomplete repairs or nonexistent records can make it appear that the machinery has been neglected and will often devalue the equipment. If you can document the maintenance or repairs you've done on your machinery, including any receipts for supplies or parts, you can help avoid this potential appraisal pitfall.

Excessive Abuse

This is different than the excessive wear mentioned above, because it's a sign that the machinery has been abused and may have been taken well beyond its safe limits in daily use. Machinery that falls into this category can include serious dents in the body panels, welds, bends or cracks where the machinery has been taken well beyond its original specifications or rips, cracks and tears in the cab and safety equipment that compromises operator safety. By taking the time to properly train your workers and stay on top of any repairs or safety issues, you're ensuring that your equipment will receive a great appraisal value.

If you're ready to have a heavy equipment appraisal performed on your machinery, take a few minutes to get your records together and make sure any needed repairs or maintenance is performed. Then contact a qualified machinery appraisal service to get a quote

Tags: machinery valuation, equipment appraiser, heavy equipment appraisal

Top Benefits of a Professional Machinery Valuation

Posted by Equipment Appraisal Services on Wed, Jul 29, 2015 @ 11:30 AM

 

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Machinery valuation is often a missed opportunity. While Equipment Appraisal Services knows most business owners appreciate the importance of properly functioning equipment for producing a revenue stream, it is difficult for them to go beyond that assessment and think of their machinery as a valued business asset. Many managers believe they can run their machinery until it is no longer useful, and then simply buy a replacement.

That approach is all well and good until an event occurs which requires the business owner to provide an equipment value. This could be related to an insurance claim or a potential sale, or an equipment appraisal may be required to allocate property as part of a divorce settlement. It can be difficult at that point to find a company that is capable of performing an accurate machinery and equipment appraisal within a limited timeframe.

Our equipment appraisers at Equipment Appraisal Services provide an unbiased and professional opinion of the value of a tangible asset. We may look at the original cost of the equipment less any accumulated depreciation, assess its age and current condition, calculate its estimated earning capability, and try to determine the cost to replace or reproduce it. Values may range from what it would cost to reproduce the equipment with new machinery all the way down to what its value would be as scrap. This provides accurate information on which to base further actions and decisions. There are three approaches we may use when determining equipment values:

  • Cost Approach: This machine appraisal approach may be used most often for such purposes as an outright sale or for tax reporting purposes. It begins with as assessment of what it could cost to reproduce or replace the machine, deducts all forms of depreciation, and takes such factors as age and condition into consideration to determine an estimated value. For example, if you have a lathe that you want to sell, our equipment appraiser would determine what a knowledgeable buyer might reasonably pay for a new piece of equipment, and then make appropriate adjustments to account for the existing wear and tear, in order to justify a realistic sales price.
  • Sales Comparison Approach: In this instance our appraiser will compare the value of your machinery to recent sales and offering prices for similar pieces of equipment. We will then make an upward or downward adjustment, depending on the particular condition of your equipment.
  • Income Approach: This approach tries to determine the present worth of the future benefits that might be derived from a piece of equipment as the result of ownership.

Equipment Appraisal Services is a nationwide provider of certified machinery and equipment appraisals for litigation, bank financing collateral, allocation of assets, divorce and partnership dissolutions, property tax appeals, insurance recovery claims, mergers and acquisitions, gifting and donation justifications, estate settlements, financial reporting, and risk management.

Tags: Equipment Appraisal, machinery valuation