Equipment Appraisals for Your Business-Why Accreditation Matters
Equipment Appraisals for Your Business-Why Accreditation Matters
Lots of folks, when they need equipment appraisals, search the internet for a "certified" equipment appraiser.
As a Certified Public Accountant, I certainly understand the appeal of certification, and looking for a "certified" appraiser makes a lot of sense if by a certified machinery and equipment appraiser you mean an unbiased trained and knowledgeable professional who provides a report supporting an impartial opinion of value based on expert knowledge, adjusted comps and market research, in line with USPAP guidelines, ethics and appraisal procedures. Yeah, that's what you want! Reports of this type will gladden the heart of your banker, lawyer, business partner and CPA.
An independent, comprehensive, certified, qualified appraisal report from an accredited equipment appraiser is irrefutable, defensible and withstands scrutiny--unlike the estimates of value you might receive from an auctioneer or an equipment dealer. While these folks may have a remarkable grasp of the market, and be able to pinpoint values for machinery and equipment, they will usually not be able to provide you with a report that will satisfy the requirements a lender or stand up in court.
ASA Accredited Senior Appraiser Roger Durkin (J.D., M.S., ASA, GG) tells the story of a noted judge, who, after reviewing an equipment appraisal recently prepared by an auctioneer, looked up from the paperwork, shook his head, and declared, "Ipse dixit!" That sure sent the lawyers running for their Latin dictionaries. A qualified equipment appraiser knows that any value provided must be substantiated. "Cuz I said so," isn't good enough.
Here's an example of what concerned the judge: Early in my equipment appraisal career, a real estate appraisal friend of mine called on me for a golf equipment appraisal. A gated community golf course was being donated to a county parks and recreation department in the Sacramento Valley area and the developer wanted a qualified valuation (per IRS requirements) for tax purposes. When I walked onto the golf course, the fellow in charge handed me a spreadsheet of all the equipment--with values conveniently provided by the local equipment dealer.
You might not be surprised to hear that my research indicated substantially higher values for Fair Market Value as defined by the IRS than those provided by the equipment dealer who was not a certified or accredited equipment appraiser.
When I submitted the draft report, the boss of the-fellow-in-charge remarked upon the significant difference in equipment appraisal values. He asked me why my values were higher. I answered with my favorite question: "What do you think?"
He grinned. "Reckon he was hoping to buy all that stuff himself?" Yep, reckon he was.
A certified or accredited equipment appraiser is unbiased, impartial and will never have a financial interest in any machinery or equipment being appraised. You can take that to the bank--or to your CPA, attorney or business partner.
To verify that the equipment appraiser you're talking to will provide a take-it-to-the bank appraisal, be sure first that your equipment appraiser has a title from one of the several associations such as ASA or AMEA that provide accreditation or certification and then verify current USPAP education. That should put you on the right track.
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