Appraisals: Resources, Terms, & Tips

Arlington Machinery has been in the plastics world since 1987, and in our time we have amassed more knowledge about appraisals than we could write. To make the appraisal process as simple as possible for you, let’s take a look at terms to know, resources to learn more, and tips. 

Value Definitions to Know

One of the most important questions for an appraisal is what value definition(s) to use. There are several standard definitions, but any definition can be used as long as it can produce appropriate and credible results. Equipment owners usually want the definition to be used with the highest value and while banks and lenders want the value with a middle or low range of value in case the customer defaults. And while the appraiser is not an advocate for either side or for a high or low value, he or she is bound by the value definition chosen.

High Values Definitions- the following definitions usually produce the highest values
  • Fair Market Value in Continued Use
  • Fair Market Value - Installed
  • Fair Market Value - Removed
  • Replacement Cost New
  • Reproduction Cost
Mid-Range Values - the following definitions usually produce a mid-range value
  • Orderly Liquidation Value
  • Orderly Liquidation Value In Place
  • Replacement Cost New Depreciated
Low Values - the following definitions usually produce the lowest values
  • Forced Liquidation Value
  • Auction Value
  • Salvage Value
  • Scrap Value
These are not absolutes and the value definition depends on the scope of the project. An appraisal can include more than one of these definitions, which can supply both higher and lower values. 

Appraisal Valuation Definitions

Fair Market Value - In Place: A professional opinion of the estimated most probable price expressed in terms of currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts, as installed for intended utilization, as of the effective date of this appraisal report. 
Fair Market Value - Removal: A professional opinion of the estimated most probable price expressed in terms of currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts as of the effective date of this appraisal report. This assumes the buyer will remove the property. 
Orderly Liquidation Value: The estimated gross amount, expressed in terms of money, that could be typically realized from a sale, as of a specific date, given a reasonable period to find a purchaser(s), with the seller being compelled to sell on an as-is/where-is basis. 
Forced Liquidation Value (Auction Value): A professional opinion of the estimated most probable price expressed in terms of currency which could typically be realized at a properly advertised and conducted public auction sale, held under forced sale conditions and under present-day economic trends, as of the effective date of the appraisal report. Conclusions taken into consideration are physical location, difficulty of removal, physical condition, adaptability, specialization, marketability, overall appearance, and psychological appeal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are to be sold piecemeal.

Pre-Appraisal Questionnaire

A machinery and equipment appraisal is something that you may do every year (which we recommend) or once in the history of your company. Whether it’s plastics equipment appraisal or other types of equipment, here’s what you need to know to secure your appraisal.

  • Who is the appraisal for? For you, for a leasing company, or for a third party?
  • What is the intended use?
  • Are you looking for asset-based lending values, insurance values, acquisition values, disposition values, or values for a taxing authority?
  • Do you need an inspection? Some appraisals don't require an on-site inspection.
  • Within what time frame do you need the appraisal? A few days or a few weeks?
  • Do you need the report in a couple of days or in a couple of weeks?
  • What appraisal value(s) are you looking for? Common values include Forced Liquidation Value – Auction, Orderly Liquidation Value, Fair Market Value, and Replacement Cost.
  • What is the effective date of the appraisal?
  • Appraisals can be backdated to a date in the past as of a specific date if necessary.
  • What equipment are you looking to have appraised?
  • The entire plant, or certain assets only?
  • What is/are the location(s) of the equipment?
  • Are there multiple locations are is all the equipment under one roof?
  • Who is the main contact for the appraisal?
  • And who are the site contacts and/or equipment managers?
  • Are there any special circumstances that the appraiser should be aware of?

Pro Tips: What to Look for In an Appraiser

A Lengthy Database: Equipment values don’t come out of thin air. Your appraiser should have large amounts of data to ensure accurate valuation. 
Experience: Newbies need not apply! Machinery appraisals require the utmost knowledge and expertise within the plastics industry to evaluate equipment of all ages and conditions.
Official Appraiser Status: Recognition from an established appraisal organization is the gold standard in the industry. 

Don’t settle for less! Great examples include:

Learn More about Appraisals

Tailored Experiences for Appraisal Companies, Banks, and End-Users

Appraisers and Appraisal Companies

Arlington Machinery appraisers offer assistance to appraisers in need of expert opinions to assist with due diligence. We can evaluate entire plants, focus on individual pieces of equipment, and assist in onsite inspections or work with the information and photos you provide.

If you're appraising a plant with plastics processes that you are unfamiliar with, call us in advance. We'll give you a one-on-one mini-seminar about the process and explain what information is necessary to gather for valuation purposes. We can tailor our fees and services to mirror what your needs and budget allow. 
We also provide plastics machinery valuation seminars that can be given for small to large groups of appraisers. We can do an overview of all plastics processes or target specific industries. Seminars can be geared towards new appraisers who have never seen plastics processing equipment or can be more advanced for seasoned appraisers who would like an in-depth refresher course.

End-Users and Banks

In the current market, an accurate appraisal is critical for owners, managers, lenders, and investors. Arlington can evaluate entire plastic processing plants or individual pieces of equipment for refinancing, budget allocation, leasing, or any other numerous reasons that you need to know what your equipment is worth.

Whether you need a desktop appraisal or an onsite inspection, we can provide a report to match your needs and budget.

Arlington Appraisals

The Arlington Machinery team has been raising the bar across the plastics industry since 1987, and we aren’t stopping. In all of our services, we strive to deliver accuracy and efficiency so you can have peace of mind. When you work with Arlington, you’re in good hands. Call us today at (847) 956-7300 to learn more about what we can do for you.