There will come a time when your business or individual practice will need to appraise your used equipment. You may have a desire to sell and replace with newer machinery, refinance an existing inventory, seek new investors, settle an estate or transfer the assets of the business into a new entity. Depending on the type of equipment you own and operate, the amount of data available to review in the marketplace will range from overwhelming to non-existent

The most difficult step in the process of estimating used equipment value is making sense of the information you uncover, or lack thereof. For commonly resold assets such as construction equipment, trucks, and forklifts, you can find many similar comparisons in the market, however, the range in pricing can vary greatly. On the other hand, if you own a specialized piece of machinery that is customized to your specific operational needs, the resale market will not be the best place to search for information.

Equipment appraisers face these challenges every day, which is an excellent reason to consider engaging with an experienced, accredited valuation expert to assist in this effort. Over time, a seasoned appraiser will have developed sound strategies to reasonably determine value regardless of the type of assets you own. In the meantime, here are a few tips that can help you along the way:

Consider Multiple Sources

It’s not uncommon to see used equipment with the same year, make and model selling for vastly different prices in the marketplace at the same time. This could be due to any number of variables such as condition, hours/mileage, location, and recent refurbishments being completed. Oftentimes it's simply because dealers are testing the waters to see if they can obtain an inflated price given no immediate concern to sell. With all these factors at play, it is difficult to make sense of the varying data.

It’s important to investigate as many distinct sources as you believe reasonable and see if you can determine patterns that will allow you to better value your equipment.

Look at Multiple Perspectives

Given the inconsistent data found in the marketplace, alternate perspectives can bring the valuation process into better focus. Research what you paid for the equipment when you originally purchased it and consider the history of your usage and time since it was acquired. Determine what you believe to be a reasonable useful life for that equipment along with typical levels of depreciation that make sense in the context of your experiences as an owner-operator.

Finally, consider contacting your local equipment vendor to discuss what similar new equipment is selling for and gather their opinions on the current market.

Recognize the Specific Premise of Value You Need to Measure

Appraisers can provide estimates of value at different market levels, and your situation may fall into one or another, as you determine the need to sell. If you are in a hurry to turn your assets into cash, or just don’t have a lot of time to market your equipment, consider an Orderly or Forced Liquidation. If you are selling the assets as part of a larger transaction and the purchaser will be taking over some or all of your operation, then Fair Market Value is realistic, with consideration for applicable installation costs and related expenses to bring the equipment into operation.

In summary, it is always a good idea to consider bringing in an experienced appraiser to help you through this analysis who can develop an independent, unbiased process that will be supported by one or all of these methodologies.

When you have used machinery, how do you figure out what it's worth? You have a few different options available, but only one really solid one. Used equipment values can vary widely, with a number of different sources, but how do you make sure that your equipment value is as accurate as possible? Here's a quick look at different ways you can have your equipment valued, along with the benefits and drawbacks of each method.

How do you accurately determine used equipment values?

So what are the different ways you can have your equipment valued? You could take a good look through online or live auctions, classified ads, magazines or similar markets to see if you could find the same or similar equipment. You could talk to your local dealer and find out how much they would give you for the equipment on trade. You could pay to an equipment appraiser to determine the value of your equipment. Though each of these approaches would give you a value for your equipment, only one of these would be accurate.

Equipment that is being offered for sale is priced based on how quickly the seller wants to move the equipment. If they're going for a quick sale, they may try to low ball the price or put on a fast paint job to hide years of abuse. If they're really not that enthused about trying to get rid of the equipment, they may price it high so that they're only getting rid of it for the price they want.

A dealer may offer you a price based on whether they need to sell new equipment or want to deal with the hassle of trading in used equipment. If they need to make a sale to improve their commissions for the month, they may offer you a much higher value than your equipment is really worth. If, on the other hand, they have a decent paycheck coming up and don't want to deal with the hassle of handling your used equipment, they may offer you significantly lower than it's actually worth.

Though you need to pay for an equipment appraisal, it actually provides you with the most value. An equipment appraiser deals with similar machinery every day can tell what kind of condition your machinery is in, and may even be able to recommend repairs to help improve the value. They take into account your industry's current condition, helping you determine whether you should sell your equipment outside of your region due to a localized slump. The valuation report they produce uses standardized methodologies to determine the value of your machinery, which means it will stand up well to very strong scrutiny if you're getting a loan or facing an insurance loss, incorrect tax assessment or a lawsuit.

Though there are a number of different ways you can calculate used equipment values, getting the accuracy you need for most purposes can only be found when you work with a certified equipment appraiser. Because of their level of training, expertise and experience, certified appraisers are able to calculate values and produce valuation reports that stand up well to the strongest of scrutiny, including legal, financial, insurance and tax agency circles. Working with a certified appraiser is the best way to ensure you're getting your money's worth out of your equipment valuation.