Equipment appraisers often claim expertise in particular markets. And we do often become experts through our experience in valuing a particular industry throughout the years. In many situations, however, it's more important to be an equipment appraisal expert than an industry expert! An expert equipment appraiser knows how to research the processes and equipment lines of a specialty industry, is able to locate and interview dealers and other experts in that field, and understands how to calculate values for specialty equipment that often does not have a viable market for used equipment sales. An expert equipment appraiser is an expert in USPAP compliance, producing a well-written report in compliance with the research standards of USPAP.
As a case in point, our office recently got a call from a tax appeal specialist looking for an equipment appraiser who specializes in - oh, let's say, glass fabrication. Now, that's a pretty large market, even limiting it to this country and yet they had not been able to find an equipment appraiser who fit their definition of "expert." And no, I was not a glass fabrication expert either! But I did the research, did the inspection, talked with industry experts who are actively involved in the trade and now, yes, I can say that I know more than a little bit about appraising glass fabrication equipment. Am I an expert? No, probably not. And yet the appraisal report, produced in compliance with USPAP, convinced the country tax assessor that I knew more about values of glass fabrication equipment than he did. Case closed.
In any number of complex equipment appraisal cases, we've been able to research and calculate defensible well-reasoned values for specialty equipment that does not lend itself to quick & easy market comparison values. By doing our research, by asking the right questions and by considering a variety of inventive perspectives and approaches, we've found that most equipment appraisal puzzles can be solved in an elegant and practical way. The equipment appraisal report explains that puzzle-solving to the client and other end-users! A well-written, comprehensible equipment appraisal report presents the professional research and supports the values listed in the appraisal report. Two important and often overlooked elements of the appraisal process that are critical for legal or tax situations are listing out any extraordinary assumptions and hypothetical conditions in the report and keeping thorough, well-organized workpapers.
The key here is that your equipment appraiser must understand the valuation factors and explain them clearly in the report, creating a logical flow of information that effectively communicates the story of the equipment appraisal to the client and other end users. It's critical as well that the valuation story be told in a USPAP compliant manner.
If you're having difficulty finding an industry expert to do your not-so-straightforward equipment appraisal, maybe it's time to consider an expert equipment appraiser instead. Call an ASA equipment appraisal expert and say you have a complicated situation. You'll know if you've got the right person by the response you get.
Jack Young, ASA, CPA is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers specializing in Machinery and Equipment Appraisals and a Certified Public Accountant (CPA). Mr. Young has also been awarded a Master Personal Property Appraiser (MPPA) designation from the National Auctioneers Association. He has thousands of hours experience as an Equipment Appraiser and is an active member of the Northern California Chapter of the ASA, where he serves as Chapter President.
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