Every evaluation of equipment falls into one of two categories: a desktop appraisal or an on-site appraisal. The former refers to a situation where the appraiser doesn’t physically inspect the equipment, instead, they depend on the client to furnish the relevant data required for a comprehensive description, identification, and valuation of the property. On the other hand, an on-site appraisal entails the appraiser personally examining the assets at the beginning of the project to gather all necessary information firsthand.
Each method has its own advantages and disadvantages, and the most suitable choice can depend on various factors pertaining to each project. These could include cost, efficiency, logistics, or the unique circumstances of a project. An appraiser with ample experience can often recommend the better choice, taking into account their understanding of the work scope and the asset composition. Regardless, both methods are reliable, defendable, and substantiable, provided the appraiser has all the required data to accomplish the task.
Let’s delve into some crucial factors that influence the decision to choose between a desktop equipment appraisal and an on-site equipment appraisal:
Data Quality: The decision could hinge on the level of detail that the client can provide, as well as their capacity to acquire necessary specifications and images of the equipment. If these aspects are uncertain, an on-site appraisal might be the most effective method.
Asset Quantity and Total Value: As a rule of thumb, if the transaction is substantial and the assets numerous, an on-site appraisal might be more suitable. This method can account for adjustments such as the acquisition of new assets or the retirement of old machinery, which might not be evident from the available listings. Furthermore, the elevated appraisal fees tied to personal inspections can be more justifiable in relation to the project’s overall scale.
Cost: The expenses related to the appraiser’s travel and time spent on-site for inspection, photography, and interviews with key personnel need to be considered.
Locality: The ease of travel to the facility can also play a significant role. Whether the business is in proximity to a major city or situated in a remote rural area can affect the decision.
Timing: A tight deadline for the completion of the valuation might make a desktop appraisal the more feasible option. Planning and conducting on-site work could take a few days to a couple of weeks.
Potential Obstacles: The need for an on-site personal inspection by the appraiser may arise, depending on the client’s requirements and the work scope. This could be relevant for financial institutions, Small Business Administration (SBA), legal cases, business disputes, and tax authorities.
Completing an on-site inspection gives the appraiser a deeper understanding of the specific business application of the assets and offers greater control over data collection, with a hands-on personal experience. Nevertheless, if the information provided to the appraiser is of satisfactory quality, a desktop equipment appraisal will suffice. In all situations, the machinery & equipment appraiser should be capable of guiding you through the work scope process, ultimately helping determine the best option for you.