What Affects An Equipment Appraisal
There are a number of things that can affect an equipment appraisal, some are good and some are bad. The good will increase your equipment values and, of course, the bad will decrease them. I will outline the more common reasons and describe how it affects the equipment value in an equipment appraisal.
Lets begin with what can increase your equipment value, the good. We all know about the importance of maintenance. Keeping records of your maintenance and repairs will help you remember what you did to the equipment and when. It also shows that the equipment is being taken care of and repaired regularly. When an appraiser requests the maintenance records, he or she will adjust the value reflecting the condition of the asset. If regular maintenance can be proven, this will increase the value of that piece of equipment.
Another positive factor is if there are any attachments that go along with the piece of equipment. If the attachment is approved or designed by the equipment manufacturer, based on the equipment’s specifications, then the appraiser will notice this and make the necessary adjustments. After market attachments are still improvements to the value of equipment, however having an attachment that is designed by the manufacturer is considered to be more valuable with less wear than a generic fit.
Keeping Your Equipment Clean Can Help
Something as simple as equipment cleanliness can show an appraiser that the equipment has been operated and maintained properly. Keeping a piece of equipment clean gives the owner, or operator, the opportunity to visually inspect the equipment for leaks, cracks, loose bolts, etc, all resulting in proper preventative maintenance of the equipment.
Having a piece of equipment that is free of dents, scrapes, or major structural repairs can also be a benefit. One can argue that scrapes are common to equipment and considered normal wear and tear. This may be partially true, but not totally. Excessive body damage, scrapes, dents, etc are also signs of operator abuse and an appraiser can assume that regular maintenance hasn’t been followed and give a decrease in value of the equipment.
Gauges and instruments are also very important with equipment. Having properly operating gauges or instruments verifies the age and condition of the asset. When an hour gauge shows 750 hours and the machine looks like it has been through a war zone, red flags are raised. The appraiser has to assume that there are other things that are not true also, like the maintenance of the asset. Having gauges or instruments that are inoperable will decrease the value given as it is more difficult to verifying the amount of use on the piece of equipment.
Finding welds on structural components of equipment is another indication of abuse. Steel won’t normally crack when equipment is operated within manufacture’s design and operating limits. When these limits are exceeded, that is when these types of stresses lead to fractures of structural steel and once again, revealing signs of equipment abuse. Sometimes, a piece of equipment is flawed and requires additional welding and steel. In these situations, the appraiser can regard this type of weld as preventative maintenance and make a positive adjustment of value, however this is rare.
What Are You Hiding Under That Paint
Having a freshly painted piece of machinery looks very nice but brings suspicion to the appraiser. The question raised is what are they trying to hide under that new paint. Has something been replaced and the rest of the machine painted so as to not notice new paint on one part of the machine? Has there been some major structural repairs done lately? Have the dents been fixed to hide the abuse that the equipment has been through? In most cases, keeping the original paint on your piece of equipment is to your benefit.
These are some of the more common factors an appraiser will look at when preforming an equipment appraisal. Keeping good maintenance records and repair history is always a good choice for equipment owners. Having them readily available for an appraiser at the beginning of the appraisal process will make the process go more smoothly with no hidden surprises.
By knowing what an appraiser is looking for when completing your appraisal, and having it all ready, will make the appraisal more affordable and allow the appraiser to have the appraisal report
completed in a reasonable amount of time.
Darryl Bilobrowka, CPPA
Owner/President/Appraiser DB Appraisals Ltd