How to Get the Best Result from Your Equipment Appraisal?

By Dian Kohoutek, CPPA

July 4, 2023

It is important for a lender to consider whether a business is truly sustainable, especially when the business heavily relies on its equipment to continue operating. In loan transactions, lenders may request or require a dedicated equipment appraisal.

The value of equipment is determined by various factors, including age, usage, wear and tear, major upgrades (such as engine or undercarriage rebuilds), and the overall maintenance that reflects the equipment’s condition.

What to prepare for your equipment appraisal, in the event that a physical inspection is required, and the appraiser personally visits your equipment to take necessary photos:

  1. Gather all original purchase invoices (if applicable).
  2. Ensure that the equipment is in good operational condition.
  3. Verify that the S/N plate and the odometer (if applicable) are clear and readable.
  4. Provide documentation of regular maintenance and repairs performed on the equipment.
  5. Include any relevant certifications or inspections conducted on the equipment.
  6. Organize any supporting documentation related to upgrades or modifications made to the equipment.

 

These steps will help the appraiser gather all the necessary information to determine the best value of your equipment.

Information Gathering in Equipment Appraisals

When a lender agrees to a desktop appraisal, where you provide photos of your equipment to the appraiser, along with all the points mentioned above, typically these photos are required:

  1. Overall equipment photos from the front right side.
  2. Overall equipment photos from the front left side.
  3. Overall equipment photos from the rear right side.
  4. Overall equipment photos from the rear left side.
  5. Overall interior photos including seats, front and rear
  6. Tire/Undercarriage photos showing the condition.
  7. Overall engine photos.
  8. S/N manufacturing plate photos, fully visible and readable.
  9. Odometer/Hour Meter photos, fully visible and readable.
  10. A video or photos showing that the equipment is in good operational condition.
  11. Any photos of damages that may affect the equipment’s value.

By following these steps and providing comprehensive information, you can increase the accuracy and reliability of your equipment appraisal, leading to better results and potential loan approvals.

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