Why Hire a Certified Machinery and Equipment Appraiser in California?
Simply because appraising the value of used equipment and machinery is drastically different from appraising other property, there are five important reasons you should hire certified equipment and machinery appraiser in California.
A Certified Used Equipment Appraiser Is Assured
Hiring a Certified Machinery and Equipment Appraiser (CMEA) guarantees that you’re working with an experienced and licensed professional. They attend training classes and pass a written exam. Each student drafts a sample Appraisal Report that two Certified Appraisers sign off on. They also submit this report to the Peer Review Committee.
Any CMEA follows the Uniform Standards of Professional Appraisal Practice (USPAP). These guidelines hold appraisers to ethical standards.
You might have a general idea of how much your equipment or machinery is worth based on what you paid for it, but that won’t hold up in terms of court compliance. You might need machinery and equipment appraisal values for reasons such as:
- filing insurance claims
- proving your business equity to secure loans
- getting a fair price when you’re selling your business
- properly citing equipment on tax forms
- completing paperwork for your estate, bankruptcy, or divorce settlements
Having an appraisal before any of these major situations occur will protect you in the long run. It’s better to get an assessment of your equipment to have on record. Using a certified equipment appraiser means the documents you receive are admissible in legal and financial situations.
The certified equipment and machinery appraiser also uses various methods of machinery and equipment valuation. Examples include Cost Approach and Market Data Approach.
Cost Approach is when they estimate how much it would cost to replace the machine. They counter that with the depreciation of your equipment, calculated according to the years you’ve had it as well as its remaining life.
Market Data Approach relates to the prices currently assigned to similar machines. The appraiser will check the current listings and compare your equipment to what’s available. They understand how to determine the fair market value of the equipment. This might be a good option when appraising used heavy machinery.
The Cost Approach is more often used with newer equipment, while the Market Data Approach is more of a used equipment appraisal.
Questions to Ask a Certified Machinery and Equipment Appraiser
Hiring a certified machinery and equipment appraiser is important, but you don’t want to pay just anyone for this service. Interview several appraisers before hiring them.
This approach gives you the chance to get to know each individual and understand their background. It will also show you what they can do to benefit your business.
1. Are You Certified? Do You Keep Up With Current Appraisal Industry Standards?
2. Are You in Assent With USPAP?
3. What Is Your Experience in Appraising Used Equipment and Machinery?
4. What Is Your Experience With This Type of Machinery?
5. How Long Will the Appraisal Process Take?
6. How Do You Document the Appraisal Values?
7. What Value Definitions Are You Using in the Report?
8. Where Do You Get Your Market Data?
9. How Much Is Your Appraisal Fee?
10. What Can I Do if I Disagree With Your Valuation?
Certified Equipment Appraiser vs. Non-Certified
You’re already going to hire an equipment and machinery appraiser, so it’s best to find a certified one. A certified equipment appraiser compiles for you will stand up in court. Hiring a CMEA and USPAP equipment appraiser protects your business the most.
Using a non-certified equipment appraiser doesn’t guarantee anything because they’re not held to industry standards. They might not understand how to properly assess the equipment. If you’re using a local auctioneer or dealer, they might give you a low price in case you trade it to them.
In case your issue goes to court, documents from non-certified appraisers typically aren’t admissible as proof of value. Therefore, you’d have to hire a certified equipment appraiser at a point where time is crucial. It’s better to skip over any non-certified appraisers and get a professional.
Machinery and Equipment Appraisal Services in California
When you find the right certified equipment appraiser for your business, you’ll get a contract outlining their process, timeline, and fee. This document also holds the CMEA to the USPAP standards.
In the Scope of Work section, the appraiser will list the value definition you chose and explain how they research this information. Examples include contacting the manufacturer, checking prices with dealers, searching a used equipment pricing guide, and interviewing professionals in the field.
The appraiser takes notes during their on-site visit. You can help expedite this process by making a list of equipment, location, and manufacturer before they arrive. They will later use all this information to compile a Summary Appraisal Report. The document is lengthy, and they might need up to a week to draft it after their in-person experience.
Though the values assigned come from the appraiser’s opinion, they must back up each figure with professional resources. This data ensures the Summary Appraisal Report will hold up in financial and legal situations.
The Summary Appraisal Report isn’t just a list of your equipment and the current values. They will include pictures of the machines from several different angles. They will cite the sources that helped them assign values.
The document also includes notes about current market conditions. For example, if there’s a machine shortage in the industry and you own this equipment, the value might be higher than it would be in a stable economy.
Summary Appraisal Report vs. Desktop Appraisal Report
A Summary Appraisal Report is a formal machinery appraisal process that includes an on-site visit. The appraiser might visit your business for a few hours or a few days. They look at all your equipment and assess its condition independently.
It takes longer for an appraiser to draft a Summary Appraisal Report because they need an on-site visit to see the equipment and take photographs and notes. Then they put all the information together in a report or spreadsheet and send it to you. Because the process takes longer and is more involved, it only makes sense that it’s almost the more expensive option.
A Desktop Appraisal Report doesn’t include an on-site visit. You provide a list of all the equipment you own and send high-quality pictures, so the appraiser understands the conditions. They research each item on their own and compile a report.
It doesn’t take very long to compile a Desktop Appraisal Report because the appraiser doesn’t have to travel to your business. You send them specs and photos of your equipment, and they do remote research. Though it still requires work and research, there’s no travel time or on-site visit, so the cost is lower.
Both Summary Appraisal Reports and Desktop Reports can benefit business owners in different ways. If you need a quick overview of your business value, a Desktop Report is sufficient. If you need values for insurance, loan, and legal purposes, you’ll want a Summary Appraisal Report.
Hiring a certified machinery and equipment appraiser will benefit your business in many ways. You’ll know how much your equipment is worth and have an expert to call upon if necessary. They’re held to industry standards, so you know they take pride in their work.
With a Certified Machinery and Equipment Appraiser at your side, we feel confident that you will have an equipment appraisal at the highest price.
Part of tips to conduct machinery and equipment appraisal in California series ->