When you work with lumber, it's not uncommon to deal with fluctuating values. The lumber you use changes cost after a major hurricane makes prices skyrocket. Your finishing materials change when a manufacturer goes out of business. Your tool costs can even change value when they're put on sale. But what about your woodworking equipment after you've paid the bill? As one of your shop's most expensive assets, appraising woodworking equipment should be at the top of your list when it comes to recording asset values. Here's a quick look at some common reasons why woodworking equipment is appraised.
Why is it important to consider appraising woodworking equipment?
When you know how much your equipment is worth, you're in a better position in a number of different circumstances. Here are a few to consider:
- A fellow woodworker visits your shop and notices your rarely-used shaper that has been sitting in the corner for the past five years. They ask how much you want for it. If you don't know, you could be asking far too much and costing yourself the opportunity or losing significant value by asking far too little. How do you determine a fair value for your equipment in this situation?
- A rag is left with finishing products on it and spontaneously combusts, starting a workshop fire that causes significant damage to your high-end cabinet saw. When the insurance adjustor comes out to inspect the equipment, he quotes you a much lower reimbursement amount than you feel your saw was worth. How do you prove the saw's value to get appropriate reimbursement for your broken equipment?
- After declaring that you're spending too much time in the shop, your spouse states that they want a divorce. Whether you live in a community property state or not, your woodworking equipment is brought into the debate. Your spouse has found the latest models of your equipment with the highest possible values, even though your machinery has been in use for over 20 years. How can you prove what your equipment is really worth and avoid being taken to the cleaners in the settlement?
- Following years of operating your woodworking business, you're ready to expand. But because of a couple questionable financial issues on your credit report, your bank is balking at approving your new business loan without any collateral. You're willing to put your existing machinery up against the loan, but the bank isn't certain of the value. How can you document it's worth?
- With a need to increase tax funds through the county, your local tax assessor makes a mistake and determines that your bandsaw is worth significantly more than you paid for it in the first place. They don't want to back down and aren't even willing to make a concession that they could be wrong. How do you fight the bad assessment?
By appraising woodworking equipment in your shop, you'll gain a much better idea of what those assets are worth. This allows you to make better decisions about whether you should invest in repairs, replace a piece of machinery or upgrade to a different model. However, not all equipment appraisals are the same. Make sure you take the time to work with a certified equipment appraiser. This ensures that you're getting machinery values from an independent third party that will hold up well to strong scrutiny.