What Is This Worth? Perks of Professional Appraisal
A professional appraisal provides you with the most accurate valuation of your assets. There are many reasons to calculate the true value of your assets, including when buying or selling items at an auction, determining insurance needs, and predicting property tax liabilities.
Proper Valuation of Assets
One of the biggest perks of a professional appraisal is receiving a proper valuation of assets. Auction Masters is a professionally certified appraisal company with over 40 years of experience using careful techniques that ensure you get an accurate appraisal each time. We use three approaches to properly evaluate your assets: market or sales, cost, and income.
Market Sales Approach
The market sales approach considers an asset’s value based on similar products in the market and what they’re currently selling for. This method also considers the wear and tear of assets by comparing them against others in the market with a similar age and quality.
The Cost Approach
The cost approach considers an asset’s current price minus the depreciation cost. It factors in the age and quality of assets while comparing them against the lifespan of the product and comparable market sales. This method is ideal for assets that can be more difficult to calculate, like unique equipment or antiques.
The Income Approach
The income approach values assets based on economic income, including how much revenue an asset is currently bringing in and how much money the owner expects the item to bring in over a certain period. Newer equipment is valued higher, as it’s more likely to bring in higher revenue in market sales without the need for expensive repairs. Considering each approach ensures you get a proper valuation of your assets. It recognizes many factors that go into a valuation, including market sales pricing, depreciation, and anticipated income. Professional appraisers typically rate assets using one of the following categories:
- Very Good (VG)
- Good Condition (GC)
- Fair Condition (FC)
- Poor Condition (PC)
- Scrap Condition (X)
This can also help you make important decisions about your current assets. For example, this information provides you with the information you need to decide when it's best to replace equipment or begin using it less frequently.
Prepare to Buy and Sell Equipment
Once you have an accurate valuation of your assets, it’s easier to prepare to buy and sell for an appropriate price. You can also use this information when calculating how much you should pay for new, similar assets. Knowing your assets’ value helps you set a fair price while ensuring you don’t accept less than what they’re worth. Having the right asset valuation can also help with negotiations. Interested buyers frequently obtain their own valuation aside from yours. They may use this information to offer a price less than the asset's worth. When you buy or sell assets, it's also important to consider a product's unique implications or conditions. For example, older equipment often leads to buyers offering less. A professional valuation, however, may find that the equipment has had minimal use and frequent maintenance, leading to it being worth more than comparable assets of its age. On the other side of things, a manufacturer selling a brand new piece of equipment may try to charge you a premium price. Upon the completion of the sale, you find that the machine was rarely maintained and was used non-stop for the first two years of its use. A professional appraisal may be especially useful when you buy or sell at an auction. The fast nature of auction sales commonly leads to investors under or overpaying for assets. A professional valuation of an asset can help identify if it’s worth less than its competitors. Professional valuation helps you get the best price when you buy or sell assets.
Property Tax Assessment
Asset value is what determines property tax amounts. If the government believes your assets are worth more or less than their actual worth, you could pay the wrong amount of taxes. While this may seem desirable if they value your assets at less than their worth, it could lead to you owing back taxes and penalties later. If they overvalue your assets, you can have higher tax liabilities. This commonly occurs when appraisers don’t factor things like depreciation into an asset’s valuation. A professional asset valuation at the sale's beginning can help you prepare for your tax obligations. This helps avoid unexpected expenses that can cut revenue and profits.
Determining Proper Insurance
Insurance protects your assets from unexpected damages. However, insurance only covers the proposed value of your assets. A professional appraisal gives you a clearer understanding of what your assets are worth, so you can ensure that you have sufficient insurance coverage. Gaps in coverage can lead to your insurance provider not covering the full cost of a replacement or repairs when filing a claim. Therefore, ensuring that you have proper insurance also helps control the cost of your insurance premiums. This can help you maximize your revenues from your assets. The professional appraisal process also often includes photographs. Detailed photographs of your assets can be useful if you have to file an insurance claim. With these documented images, recorded values, and an appraisal report, you’ll have all the information you need to buy a comprehensive insurance policy.
Work With a Professional Appraiser Today
There are many reasons to work with a professional appraiser when you are looking to buy or sell your assets. The services of a professional appraiser are also useful when predicting insurance and tax liabilities. In addition, you can use a professional appraisal when calculating accurate estimates for budgeting, record-keeping, and maintenance needs. If you need someone to help you manage your assets, contact Auction Masters today for help with all of your auction and asset needs.