Understanding Heavy Equipment Appraisals: A Complete Guide
There are many different things to take into account when doing an expert equipment appraisal. At Bid Equip, we strive to give you the best possible price to support the intent of your appraisal request.
There can be many different reasons why you want to get an appraisal, so our team employs a variety of strategies that can be utilized to meet your specific needs. Our professional appraisers have great experience to help you make this process go smoothly. Learn more about what goes into our heavy equipment appraisal process and what we can do for you.
How to Determine the Value of Used Equipment
We use an appraisal process that accounts for many different factors and circumstances before coming to a conclusion on value. When determining the used equipment’s worth, we first determine the manufacturing date and model number to find out how old it is and its expected service life. Model numbers can tell us if the specific unit identified has any modifications or features that can increase the value, as well as if there are any known performance issues or recalls.
The equipment’s condition and maintenance record are common factors considered when determining value. To help present it in its best light, it’s best to have the equipment serviced regularly until you are ready for the appraisal, keep the tires aired up and store the machine inside to prevent the accumulation of rust. You might also consider giving it a fresh coat of paint. Additionally, having the maintenance records available can help make the valuation process quick and smooth, saving you money on the appraisal.
Other factors that go into determining the value of your equipment include the state of the economy, how the construction market is performing and the value of similar machines. These elements play a huge role in valuation, so you may want to strategically think about the timing of your appraisal request.
What Is the Purpose of Valuation?
There are many different reasons why you might request used equipment appraisal services:
- Buying or selling
- Insurance claims
- Corporate planning
- Financial reporting
- Mergers and acquisitions
- Litigation or bankruptcy filing
- Property tax assessment
Depending on your reason for the construction equipment appraisal, your appraiser will likely use a specific method of valuation that applies to your unique situation. For instance, large public companies often have their assets appraised for compliance with the Sarbanes-Oxley Act of 2002, which protects investors against fraudulent financial reporting.
How to Prepare for a Heavy Equipment Appraisal
If you want the appraisal process to go as smoothly and favorably for you as it can be, it pays to go through a few preparations ahead of time:
- Make sure the equipment is clean and in good working order: A dirty, dingy machine is going to appear older and less valuable than it really is. It’s also a good idea to make sure it works as it should, performing any necessary maintenance before the appraisal takes place.
- Gather all the documentation you have: Any original invoices for the equipment is useful for establishing how old it is and what features it has. Service logs and photos help the appraiser understand its condition, as well.
- Be ready to give the appraiser full access: Make sure the equipment is easily seen and accessed when the time comes for the appraisal. Otherwise, you could give the appraiser the impression that you have something to hide.
- Be honest and transparent: There’s nothing to be gained by trying to cover up details about the equipment that you think may hurt its value. All you’re doing is delaying the inevitable and putting yourself at risk of potentially serious consequences.
Main Methods for Valuing Used Equipment
There are three main methods of valuation for construction equipment appraisals — sales comparison, the cost method and the income method. When appraisers use the sales method, they gather information and study the market on new and used equipment to determine pricing. Appraisers can look to manufacturers, dealers, other auction houses or trade publications for pricing insights. The equipment’s age, condition and remaining life are all taken into account with this method to generate a pricing estimate.
The cost method is used for unique or customized equipment with relatively little market demand. The replacement cost of a new model is taken into account, as well as your machine’s depreciation, remaining life and condition. The income method values the equipment at the level of income it provides, so it is used when the piece of equipment is clearly connected to the revenue stream and yields contributions that can be tracked easily.
Additional Valuation Procedures
Other equipment valuation methods related to buying and selling include:
- Fair market value, which involves two willing parties agreeing to pricing terms.
- Orderly liquidation, which relates to estimating the gross amount the equipment could be sold for with a reasonable amount of time to find a buyer for liquidation purposes.
- Forced liquidation, or selling the equipment immediately for an estimated gross value.
Orderly and forced liquidation are usually associated with bankruptcy.
Valuation efforts that involve insurance are:
- Actual cash used
- Replacement cost new
- Reproduction cost new
Which one you use will depend on your insurance policy and may affect your premium. If you will continue to use the equipment, you may need to have it valued regularly for financial or corporate planning. In this case, it is most common to appraise it according to fair market value.
The Heavy Equipment Appraisal Process
The appraisal process is not overly long, but it can be intensive. Therefore, having all of your information ready for the appraiser may streamline the process and save you money. First, you must have clear intent and know why you are getting your equipment appraised. It is helpful to have a report of all available pricing options and any paperwork associated with the original purchase.
Next, we determine the manufacturer, model number, serial number, hours or miles, specifications and maintenance history. This data will give us the necessary information to determine the equipment’s market value. When moving forward with the process, we must discuss the best valuation method specific to your appraisal intent.
After choosing your desired method, it is time to begin inspecting the equipment by gathering data from a centralized database on productivity, repairs, maintenance records and more while physically inspecting the equipment itself.
After the construction equipment appraisal is complete, our appraisers will create an appraisal report that follows the Uniform Standards of Professional Appraisal Practice (USPAP) guidelines and ensures compliance with the standards set by the Internal Revenue Service, the Small Business Association and other relevant organizations.
Benefits of Partnering With Bid Equip for Your Appraisal
When you need appraisals you can trust to provide you with a fair and accurate assessment of your assets, working with the experts at Bid Equip can give you peace of mind. Our experienced equipment appraisers are all USPAP-compliant, meaning you can count on them to appraise your equipment within the latest and most appropriate standards.
Working with Bid Equip is convenient, as well, because we’re based right here in the Philadelphia Tri-State area. You can be sure our customer-first approach means we will always be up front and transparent with you at all times, and we’re committed to helping our clients receive top dollar for their machinery at auction.
Bid Equip Equipment Appraisal Services Can Determine the Value of Your Assets
At Bid Equip LLC, we have professional appraisers who will work at your side to ensure a smooth, productive appraisal process. Our heavy machinery appraisal experts will come to your location, inspect your used and surplus assets, and provide you with an honest and accurate estimate of the price you could expect at auction. To find out what your heavy equipment is worth, contact our team online or call 484-494-6846 to schedule an appraisal today!
Frequently Asked Questions
What is an equipment appraisal?
This is the process of inspecting and evaluating a piece of industrial equipment to determine its value when selling.
How is the value of heavy equipment determined?
Trained and experience appraisers review all aspects of the equipment as well as any relevant documentation to decide the asset’s value.
Which documents are needed for a proper appraisal?
In addition to the original invoices, it’s recommended that equipment owners submit service logs and photos to provide the most complete information.
