Valuing Machinery and Equipment
Equipment Valuation and the Myth of Auction Value
Lately, we’ve gotten a couple of calls asking for equipment appraisals at “auction value.” That’s a tough one! Auction value, you see, isn’t an appraisal value at all. USPAP requires compliant appraisals to define the value being used and to cite the authoritative source of the definition and I’ve yet to see any respected authoritative source—whether the IRS, any of various legal codes, courts, or appraisal organizations—provide a definition for “auction value.” And there’s a reason for that: Auction is a method of selling items, not a definition of value.
Choosing a Bankruptcy Equipment Appraiser
When your Bankruptcy Attorney requests an equipment appraisal, it’s usually up to you to find a qualified equipment appraiser. And as you might suspect, not all machinery & equipment appraisals are created equal!
When you need an appraisal for your bankruptcy—or any other reason, for that matter—be sure that the equipment appraisal company you choose meets the four important qualifications of Accreditation, Experience, USPAP Education and Approval of your Bankruptcy Attorney.
Professional Accreditation
A professional equipment appraiser has the expertise, certification and knowledge to conduct an independent, third-party machinery and equipment appraisal. When you work with an equipment appraiser accredited by the American Society of Appraisers, you can be confident that you’ll receive a summary appraisal report with substantiated and realistic values.
Appraising Commercial Trailers in a Demanding Market
Recently I prepared an ag equipment appraisal for a transportation company in the Sacramento Valley. The bulk of the equipment was rolling stock–trucks and agricultural trailers. During my research, I realized that the commercial trailers had increased tremendously in value as the years rolled by. Hopper trailers, in particular, are trading at premium prices right now, and not just in California. Part of the reason trailers don’t lose value as quickly as other agricultural and commercial vehicles is obvious: no engines to break down, no odometers, no hour meters and very few moving parts mean that maintenance is less complicated.
Ag Equipment Appraiser at Colusa Farm Show
February 1 dawned clear and windy, a perfect day for the Colusa Farm Show, just a few miles down the road from our Northern California Equipment Appraisal Office here in Yolo Co. So we set up call forwarding from the office phone and spent the day at “the Granddaddy of Farm Shows,” admiring farm equipment and chatting with dealers, manufacturers, farmers, dairymen, ranchers and other fans of agricultural equipment.
Super Truck Appraisals: Equipment Appraisal on the Road
I got my first Super Truck limited edition CAT scale collector card October 2010. These Super Truck Limited Edition cards–for those of you, like me, who didn’t already know–are slick full-color trading cards that feature working trucks. Really amazingly customized big rigs that stand out from the transportation most of us see cruising down the highway, hauling chickens or lumber, produce, automobiles, or production goods. These trucks really are, well, super.
Canadian Equipment & Machinery Appraisals
One of my favorite vacations–this was long before I became an Accredited Senior Appraiser–included long summer Canadian days strolling the Plains of Abraham in Quebec City. We stayed in the old city, ate a stunningly delicious tomato quiche in a small restaurant with cats in the upstairs windows, admired a troupe of skateboarders as they assembled and employed a portable skate park in a downtown square, explored neighborhoods of architectural delight and inventive sorbets, and happened upon an Irish music jam our last night in town. We’ve always planned to see more of Canada, but haven’t done it yet.
Liquidation Values: Orderly or Forced?
I recently provided an equipment and machinery appraisal report on the Subject Assets of a specialty manufacturing company in the Sacramento area, using Orderly Liquidation Value, as specified. After receiving the report, the Sacramento bank for which the equipment appraisal was done contacted me, concerned that the in-house appraisal department was finding values considerably lower than those I had submitted. Turns out they were looking at figures for Forced Liquidation Value, a different kettle of fish altogether, according to The American Society of Appraisers, Valuing Machinery and Equipment, 2000:
Premises of Value AKA Levels of Trade
The below definitions are from Valuing Machinery and Equipment, the American Society of Appraisers (2000).
Because the machinery and equipment appraiser deals with a variety of assets, most of which can be moved, it is necessary to recognize different premises of value. These can be broadly broken down into categories, distinguished mainly by an asset’s anticipated use.
