Determining the Value of Rare or Custom Machinery or Equipment

When determining the value of a farm tractor, restaurant equipment, or something that is considered an out-of-the-box piece of equipment, an appraiser will look at various factors to determine value, including its original price, wear and tear, depreciation, and current market value. It is a relatively straightforward process because there are usually numerous comparable pieces of equipment, which can help determine fair market value. However, it is much more difficult to determine the value of custom-made equipment such as custom-made dies, molds, and machinery, or something that is extremely rare, like a liftboat, of which there are only a handful in the world.

In the case of rare or custom machinery and equipment, an appraiser must take into account that such equipment may be one of a kind, which makes it more difficult to value because there are no other pieces against which to compare it. A whole host of considerations must be taken into account, including the original cost of its production, the value of its usage, replacement costs, depreciation, salvage value, and scrap value. The appraisal of custom equipment requires the specialized skills of a professional who has the expertise and certification to examine all of these factors and more to determine its true fair market value.

It is important to know the true market value of your machinery and equipment for a whole host of reasons, including for insurance purposes, when seeking funding, or when conducting a business valuation. Whether you need to know the fair market value or other standards of value such as liquidation value, salvage value, or replacement cost, it makes good financial sense to obtain a credible certified equipment appraisal report that will hold up under scrutiny with financial institutions, government agencies, buyers, sellers, shareholders, or partners.

Make sure you know what it’s all worth. Check out EquipNet’s  Asset Accuracy Resource Center for more information about appraisal and valuation services provided by EquipNet.      

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