By Dian Kohoutek, CPPA

June 13, 2023

Have you ever wondered how businesses figure out the value of their machinery and equipment? It is not as simple as looking at the book value. When it comes to knowing the real worth of your assets, a restricted appraisal report comes into play. It’s a special type of appraisal document that gives businesses concise and confidential valuation information meant exclusively for internal use. Let’s dive into the world of restricted appraisal reports and see why they matter for making important decisions within a company.

What’s a Restricted Appraisal Report?

A restricted appraisal report is an appraisal document that’s only meant for the client who commissioned it and any other party that are listed as an intended user by name. Unlike a full appraisal report, which is more detailed and can be shared with others, the restricted one keeps things private between the client and the appraiser.

Keeping It Confidential:

Confidentiality is a big deal with restricted appraisal reports. They’re like top-secret files. Only the client and any party that are listed by name as one of the intended users gets to see the report, and nobody else should rely on it. The appraiser makes it crystal clear who the intended users are and ensures that no one else tries to sneak a peek.

Why You Need It:

So, why bother with a restricted appraisal report? Well, it’s all about making smart internal decisions. This snappy report gives you the lowdown on the value of your machinery, equipment, or other assets. It’s like having a cheat sheet for strategic planning, financial analysis, and day-to-day operations.

Now, let’s take a peek at what you’ll find in a restricted appraisal report:

The Quick Summary: Consider it the crib notes version of the appraisal as a concise summary that delivers the key highlights and conclusions in a quick and efficient manner. It provides a convenient snapshot of the appraisal’s main points and ensures you can grasp the essential information swiftly.

Asset Deets: While you likely have the best understanding of your equipment, your partner, shareholders, and banks may not share the same perspective. By acquiring an appraisal report you’ll get all the information about your machinery and equipment, such as their make, model, condition, and any noteworthy features worth mentioning.

How They Calculate: The report will reveal on how the appraiser came up with the value. They’ll talk about the methods, approaches, and sources they used to figure things out.

The Bottom Line: This is the moment you’ve been waiting for – the estimated value of your assets. They usually use the Fair Market Value (FMV), but sometimes they throw in other values like Orderly Liquidation Value (OLV) or Forced Liquidation Value (FLV) if they’re relevant.

Fine Print: To ensure transparency, the report will mention any assumptions made during the appraisal process and any limitations or conditions that might affect the value.

Restricted appraisal reports are the go-to when you need concise and confidential valuation info for making internal decisions. They’re like your secret weapon for smart planning, analysis, and operations. It is all about efficiency and flexibility. Just make sure you work with a qualified appraiser to get a reliable and customized restricted appraisal report that fits your needs.