Prepare for an Equipment Appraisal
How do I Prepare for an Equipment Appraisal?
Our Answer: Preparing the Asset List
The first part of any machinery appraisal is making sure your asset / machinery list is up to date and as complete as possible. Many times we see this list several years outdated and with vague references to the equipment, this often leads appraisers to charge more as they find equipment while on site or worse to inflate the price going in because they know the asset list is poor and they are hedging their bets. Both of these scenarios will cost you more $’s than needed.
Let’s start by looking at what the perfect asset list should look like. There are some key elements to a perfect asset list that if followed could easily save your business thousands of dollars
on a machinery appraisal (at least when dealing with us…). Here are the components of a perfect asset list:
(see the Equipment Data Sheet Form - request a free one at Appraisals@expertequipmentappraisal.com
- General Item / Property Name – Example: Bulldozer, Computer, Address of Property, General Description of Improvement, Etc.
- Location of Item or Property
- Make of Item – Caterpillar, Dell, Etc.
- Model of Item – Example: D-11, Inspirion M17, Etc.
- Year of Item – Year Manufactured if Machinery not purchased
- Serial Number
- Year of Purchase
- Cost to Purchase
- Current Depreciation Amount
- Item Tag Number
- General Specifications of the Machine – I.E. Size, Weight, Specifications, Options
Note: A digital picture with the item tag number should also be on file for every piece of equipment. And some items on the list will not touch every category like Commercial Property, Land Improvements, Etc.
This should be compiled on an excel spreadsheet for easy transfer between your accountant, your banker, your insurance agent, and of course your friendly neighborhood machinery appraiser.
By having a solid up-to-date list like the one described you are able to speed up a machinery appraiser in the on-site visit / data collection phase and also help set some sanity check values for the appraiser. A good example of the sanity check is when appraiser is unsure of a machines options and year - a more conservative value may oftentimes be applied thus possibly lowering your overall appraisal value by thousands of dollars.
This is also a good time to talk about the difference between an appraisal that is prepared where the appraiser comes on-site or where they do the appraisal off-site. There are a myriad of names for these types of appraisals but the basic difference is on-site vs. off-site.
(Summary Appraisal) – This is when the machinery appraiser will actually come to the location and collect the data / establish age and condition / etc. This is usually a more expensive appraisal due to travel costs and time spent collecting data (nearly double in our pricing) and is oftentimes required by banks and suggested by attorneys. This is often also the default for court / when a poor asset list is in place – poor records equal greater risk by a banker and less trust at the time of appraisal.
(Desktop Appraisal) – This is when the machinery appraiser uses data / pictures / descriptions provided by the business to do the appraisal. The appraiser must still research the prices but the time / travel of data collection is removed equaling lower costs.