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Auction Appraisals

October 6, 2010

Last week on our Facebook page, we asked you: Have you ever considered appraising for an auction? So, we thought we would follow up with a post about machinery and equipment appraisal for auctions.

The goal of an equipment auction for a struggling or failing company is to quickly sell off equipment with as high a profit as possible. And, for any company considering an equipment auction, the first step should be to have its equipment appraised by an equipment and machinery appraiser. An appraiser should provide its client with at least three different values for the equipment – the orderly liquidation value, the forced liquidation value, and the fair market value – because the client should have an idea of how much money it could get for its equipment at auction.

Many auction companies may claim that they perform appraisal services; however, in reality, their primary business is the performance of an auction, meaning they are not an independent appraisal entity that is looking out for the interests of the seller. While an auction company often will perform an appraisal in lieu of obtaining a certified equipment appraisal, it is in the best of interest of the seller to get a third-party opinion. Because the auction company potentially has a vested interest in the outcome of the auction, their appraisal is not unbiased, which could result in an inaccurate appraisal.

NEBB Institute endorses and strives to observe the highest standards of professional ethics to preserve the public trust inherent in the professional appraisal practice. The Institute provides initial and monthly comprehensive education, ongoing support, and a dynamic international network, and certifies professionals in the art of machinery/equipment appraisal and brokerage.

By: NEBB Institute

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