The Benefits of Expert Equipment Appraisals

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The Benefits of Expert Equipment Appraisals

If you’re in the manufacturing industry, there will come a time you’re either going to want to buy or sell a piece of industrial-grade equipment and need to establish a fair machinery pricing range. As certified AMEA equipment appraisers, we at The Equipment Hub are strong advocates of professional machinery and equipment appraisals and the part they play in the movement of capital assets between buyers and sellers.

Machinery & Heavy Equipment Appraisal Services

In this article, we’ll explore some reasons you might need to seek out a professional appraisal specialist, the benefits of seeking out a professional, and how Equipment Hub’s team of professionals can provide these valuable services.  

Male worker conducting AMEA equipment appraisal in factory

Various Types of Certified Equipment Appraisals and Standards of Professional Appraisal

Appraisals are often a very targeted activity based on specific conditions. For industrial equipment and manufacturing machinery, there are 6 types of appraisals that can be performed, and which you choose is determined by the reason you need the equipment appraised. 

Fair Market Value Equipment Appraisals

These appraisals most often occur due to the natural ebb and flow of business – over time equipment will have to be replaced and the best method of offloading the old equipment is to sell it. In order to get the best value from that used equipment, having a fair market value appraisal performed can provide you and potential buyers insight into the condition of the equipment and a certified estimation of what the equipment would be worth to a neutral buyer. 

There is often little rush or urgency beyond the desire or need to upgrade a piece of equipment eventually and the subsequent necessity of having to offload used equipment. And while you might be tempted to use a value you find after researching similar equipment online or using a depreciation table, nothing will be more accurate than an updated professional in-person appraisal, which ensures you as the seller, and your subsequent buyer, are getting the most value in the sales process.

Forced Liquidation Value Appraisal

Manufacturing businesses are not immune to the pressures of our highly competitive economy, and at times a business might find itself in an extremely dire financial crisis situation. Whether voluntarily or not, at times like this a business might decide to start liquidating assets. A forced liquidation value appraisal gives a snapshot of a business’s assets based on the company’s state of crisis and the urgent need for liquidity. Such appraisals require that the seller accept a lower-than-market-value based on the urgency in play, often due to pressures from external actors such as the bank.

The benefit of having such an appraisal performed is that such an appraisal will result in a valuation of the machinery that is designed to move the equipment as quickly as possible, minimizing the “time to sell” window and generating the needed income. 

Fair Market Value in Place Appraisal

Similar to the fair market value appraisal, the “in place” qualifier broadens the scope of the appraisal beyond a specific piece of equipment. This appraisal method is used to determine the value of the entire manufacturing operation and includes the equipment and the facility where they are installed. Because equipment does not have to be uninstalled, transported, or reinstalled, these costs are not considered in the appraisal process. 

This appraisal method is useful for businesses looking to offload assets in the form of entire production plants or manufacturing facilities due to resizing, relocation, reorganization, or any other number of reasons. It provides both the seller and potential buyers with an accurate value but assumes no future business success or failure.

Replacement Value Equipment Appraisals

The replacement value appraisal should occur in the process of securing insurance coverage, in order to establish the value of a piece of industrial equipment in its current state were it to be irreparably damaged and need to be replaced. 

These appraisals are intended to protect your organization from loss in the event that manufacturing equipment is damaged or destroyed due to external circumstances,

Orderly Liquidation Value Appraisal

Similar to forced liquidation value appraisals, orderly liquidation value appraisals take place at a point where the organization has no option but to offload assets in order to gain liquidity. However, there is less urgency involved, as the “orderly” qualifier allows the business a certain window of time by which assets must be offloaded. Further, rather than requiring assets to be brought to auction and losing value in that process, orderly liquidation is similar to the fair market value in place assessment in that assets must be sold as-is, where-is.

This appraisal method, when possible for organizations having to liquidate assets, is preferable as it allows a degree of control in the process and allows them to maximize revenue generated in this way by allowing them to seek out buyers willing to pay more than what might be achieved in a forced liquidation situation. 

New Cost of Comparable Asset Appraisal

This appraisal method is designed to determine the value of a piece of equipment if there’s a need to replace it with a new piece of equipment with the same functionality and production capacity.

This appraisal method provides your organization with a baseline to then determine a true estimate of the value of used equipment. Appraisers do this by taking the replacement cost new and reducing that value based on the condition and age of the existing piece of equipment, as well as any costs related to licensing, warranty, or other contractual costs associated with the machine.

Man performing equipment appraisal on heavy machinery

Trusted, AMEA Certified Heavy Equipment Appraisers

When having these appraisals performed, it’s important to bring in professional, certified appraisal professionals. The Association of Machinery and Equipment Appraisers maintains certification standards for the industry to ensure appraisers are experts that have been tested, peer-reviewed, and maintained knowledge through continuing education Their experience and knowledge in the industry buying and selling equipment gives them the necessary insight to provide expert appraisals and accurate values you can be sure are representative of the equipment you have for sale. 

At The Equipment Hub, we offer  AMEA certified machinery and equipment appraisals to clients all over the country. Whether you’re ready to sell a piece of equipment, or you need to establish some baselines for machinery pricing for insurance purposes – no matter what your machinery appraisal and equipment appraisal needs, The Equipment Hub is here to ensure you offer potential buyers a fair price.