Expert Article Library

Choosing a Machinery & Equipment Appraiser

by Randy Stewart, ASA

By Randy Stewart, ASA  Email: aaiassociates@aol.com

Locate a professionally accredited appraiser before disclosing any confidential or sensitive information. Ask other types of appraisers for references if necessary. Verify that the professional designation is the result of testing and other significant criteria, and requires continuing education. The designation is evidence that the appraiser is a professional and serious about his profession. Some non-professional appraisers provide this service only as a sideline or part time, and are limited in scope regarding valuation theory and methodology. Avoid an appraiser who implies advocacy, or who bases his fee on contingencies such as percent of value or outcome of transaction, as these are normally considered unethical within the profession.

Define the appraisal question, property to be appraised, premise of value, how the appraisal will be used, possible implications to third parties, etc. A competent and accredited appraiser will maintain a professionally confidential relationship, so do not withhold information. If the appraiser is well informed, he should be able to provide a firm quotation and proposal prior to engagement.

Ask for a copy of his/her qualifications, looking for evidence of professionalism and experience in valuation. It is not always important that the appraiser have a track record with the specific industry or type of equipment, since his expertise is in valuation of machinery and equipment in general, not within a narrow specialization. It is not necessary to know how to repair or operate the equipment to estimate its value. It is possible that an estimate of value will be more objectively obtained if the appraiser must investigate the current market, versus using only his limited personal and possibly out-dated experience. However, an appraiser holding a professional designation within an area of specialty is advantageous, since the academic as well as technical aspects will be united. This would apply to such areas as aircraft, maritime, classic autos, etc.

Watch for and avoid the possibility of a conflict of interest. As an example, a used equipment dealer who might have a subject property owner as a present or potential customer may not be the best choice for an impartial opinion of value. A liquidator serving as an appraiser "guaranteeing" his appraisal could tend to be overly conservative due to anticipation of profiting from a future sale.

Until relatively recently, the public had to rely on tradespeople for appraisals of machinery and equipment on smaller scales (smaller businesses), since the professional machinery and equipment appraisers were mostly employed by large appraisal firms dealing with large projects. But there is presently a growing trend toward adding education to the experience, resulting in the availability of professionalism within this area of lesser "exotic" property appraisal. The leader of this emphasis has been the American Society of Appraisers, offering college courses and degrees, on-going educational seminars and programs, providing professional accreditation and designations to those qualified. They will help you in your search at (800) ASA-VALU, or web site www.appraisers.org.