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Appraisals For Liquidating Business Equipment

You have business equipment you need to sell and you know it’s valuable. But how do you determine that value? Before you dive down the rabbit hole of the internet looking for comparisons of your equipment, read this article. It will give the insight you need to make the right decisions when figuring out how to price your business equipment.  

In the sections below, you’ll learn what the term ‘fair market value’ means, how it differs from a ‘liquidation value’, the appraisal process for business equipment, and the different categories appraisals fall into. You’ll also learn how to choose the best appraiser for your selling situation. 

We’ll begin with a topic that’s important to understand when you begin the journey of selling your equipment, the fair market value.

 

Fair market value, also referred to as FMV is defined as an “estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.” 

When selling your business equipment, the primary goal is to reach a fair market value. The FMV can be determined by an appraiser using an array of tools. The most important tools a good appraiser offers are experience in your industry and/or a trusted network of experts in your niche who can estimate the fair market value of your equipment.

 

Important note: An estimate of fair market value is usually subject to the variable of place, time, existence of comparable items, and the evaluation process of the people involved. Opinions on value are always based on the appraiser’s access to available information at the time of the assessment.

So what does all of this mean? In short, reaching fair market value for your business equipment relies heavily on the timing of your liquidation and the resources your chosen seller has at its disposal. Finding experts with access to a network of qualified buyers is extremely important. 

 

The challenge: If you’re looking to sell the equipment or real estate of a business, you’re likely on a tight timeline. This is where you’ll first encounter the idea of liquidation value, a competing factor for fair market value. 

 

Liquidation value is defined as “the likely price of an asset when it is allowed insufficient time to sell on the open market, thereby reducing its exposure to potential buyers.” Liquidation value is usually considered to be lower than fair market value. 

In other words, the liquidation value is your floor. Fair market value is your ceiling. If you can obtain a selling price for your equipment between these two values, you’re doing great. Receive a selling price above your ceiling and you just hit a homerun!

This is where an expert appraiser with the resources of a trusted network can help you immensely. Let’s dive into the appraisal process and learn how you can employ the best appraiser for your specific situation.

The appraisal process is usually a straightforward set of actions that help you determine the value of your products. We’ve broken it down into five, easy to understand steps.

 

  1. Identify the equipment to be appraised.
  2. Understand the equipment’s use, select the market, and best selling conditions.
  3. Collect all of the relevant information to determine your equipment’s value.
  4. Use the appraiser’s available resources to find comparable pricing for similar equipment.
  5. Provide estimates of the fair market value and liquidation value for your equipment.

 

Here is where you learn about the different categories an appraisal can fall into. They’re important to understand because they indicate your best course of action in getting the most value for your equipment. 

 

The field Inspection: For field inspections, it’s best to have an expert appraiser visit your place of business and gather all of the critical information needed to make your sale a success. He’ll determine the condition of your equipment, manufacturers and models, serial numbers, and he’ll also have insider knowledge that helps match your equipment with qualified buyers. 

 

The desktop inspection: These are also called non-inspected reports. They are very similar to field inspection, except desktop inspections rely on information supplied by the seller of the equipment. 

The type of inspection you’ll need depends on the equipment you plan to sell. Some types of equipment fit perfectly with a desktop inspection. Other types are best handled with an in-person inspection from an expert appraiser.

So how do you find an appraiser who is right for your business? First, you want to find an appraiser who is USPAP (Uniform Standard of Professional Appraisal Practice) certified. This certification assures that the appraiser’s report meets industry standards and is in compliance with the laws of jurisdiction regarding the appraisal report.

Second, you want an appraiser who provides you with accurate and credible values for your equipment. As you have probably realized, employing an expert appraiser is paramount. Finding an appraiser with extensive experience, a far-reaching network of sales support and qualified buyers, and a reputation of integrity is critical.

This is why so many businesses choose Auction Masters to help them with appraising and liquidating their equipment. Our team of industry experts offers a series of comprehensive services to get you the most value for your sale. We work with you from the beginning of the auction process to the very end, and we’re extremely effective when it comes to meeting urgent timelines.

Our goal is to reach the fair market value of your business equipment. Four decades of success in the auction industry gives you the peace of mind that your equipment is the best hands available. We’ve helped business owners from countless industries reach their selling goals, and often, we exceed them! If you’re looking to get a solid, informed appraisal for your business equipment, give Auction Masters a call. We’ll help you determine the value of your equipment and set you up for successful results!