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What to Do with Old Typewriters

August 6, 2014

So let’s say you’re cleaning out your back store room and come across a few old manual typewriters. What’s a business owner to do? Put them out on the curb, right? Not so fast. The best thing to do is call a CMEA and figure out what they’re worth.

According to an recent antiques and collectibles article, manual typewriters are in high demand. Some collectors pay thousands of dollars to add these relics to their collection. And some jewelry makers pry the keys off the typewriters to use in their works of art.

Some electric typewriters are worthless, as are typewriters that were painted. But typewriters made between 1872 and 1930 are collectibles. Ask your appraiser to check the serial number to help determine the typewriter’s age.

The takeaway? Don’t toss ‘em. Failed models and old models are worth a lot, but any model of manual typewriter is worth something to somebody. Call in a specialist to help you figure out what it’s worth.

The 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

While the Kids Are Away, the Appraisers Will Play

July 30, 2014

NEBBI ClassroomThere’s a long-held notion that when school lets out for summer vacation, the last person out slaps a padlock on the door and it remains empty and silent until classes resume in the fall. But summer is often the busiest time for schools, even if it doesn’t appear so to the outside world.

Summer is when many schools do a lot of upgrading, and the reason is obvious — it’s too much of a challenge to put on a fresh coat of paint, install new lockers in the locker rooms, or make the switch from chalkboards to white boards when there are kids running around all day. In the peace and quiet of summer, schools can get quite a bit done in preparation for September.

Of course, when it’s a case of out with the old and in with the new, something needs to be done with the old. And whether the older desks and bookcases are sold to other schools or donated elsewhere, it’s important to know the value. That way, whether the school is realizing money from a sale or accepting a tax write-off, they’ll have a documented appraisal to back it up.

If you’re a school administrator and you’re in need of an equipment or machinery appraisal, start by contacting the NEBB Institute today!

The 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

Depreciation of Machinery and Equipment

July 24, 2014

Different industries assign different meanings to the word depreciation. Accountants say that it’s the allocation of the cost of an asset across its useful life. Depreciation takes into account normal wear and tear over the asset’s life.

Machinery and equipment appraisers, however, assign a different meaning to the term. To appraisers, depreciation is the estimated decrease in value of an asset from its initial purchase price. The estimated decrease is based on a number of criteria, such as physical, functional, and/or economic factors.

From an appraiser’s perspective, even if an asset is 20 years old, as long as it is still functional or still in use, or if there is an active market for it, the asset has value. From an accounting perspective, its worth would be zero, but if the asset owner sold it, it would be worth more than zero.

Because it has different definitions, depreciation can be confusing. If you want to sell an asset or discuss its depreciation, it’s always best to speak to a Certified Machinery & Equipment Appraiser (CMEA).

The 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

Do-It-Yourself Appraisals Are a Bad Idea

July 16, 2014

NEBI DIYThere are many reasons why business owners hire licensed appraisers to handle their machinery and equipment appraisals. A certified appraisal, which only a licensed appraiser can perform, is not only USPAP-compliant, but it will stand up to scrutiny by peers, the IRS, and the courts. More important than any of that, however, is that a certified appraisal will be accurate and properly represent the value of whatever’s being appraised.

One business owner recently learned this lesson the hard way. Todd Jessep, owner of an Atlanta restaurant, decided to close down the business and retire. He sold off all of the restaurant’s assets, including a massive grill that he’d purchased a few years earlier.

When the equipment appraisal came in, Jessep disagreed with the figure quoted for the grill, and instead of speaking to the appraiser and making his case, simply disregarded the official appraisal report and did his own. The highly inflated numbers tipped off the IRS, and now Jessep’s retirement is on hold as he slogs his way through an ugly audit.

Don’t let this happen to you. If you need an appraisal done, hire a certified appraiser. And if you disagree with any of the numbers, talk it out. It’s a lot easier than talking to the IRS.

The 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

 

Summary Appraisal Report Vs. Desktop Appraisal Report

July 9, 2014

After a CMEA performs a machinery & equipment appraisal for your business, he or she will give you an appraisal report that states his or her findings and estimates. You could receive either a summary appraisal report or a desktop appraisal report, depending on the arrangements you made with your CMEA.

A summary appraisal report typically requires an on-site inspection, and details discovered during the inspection are included in the report. The report is USPAP-compliant and will express value as a single figure for each tangible asset valued. The aggregate will be reported as a single number.

If you choose a desktop appraisal report, you won’t have to incur the cost of an on-site inspection and detailed analysis. Instead, the CMEA will use pictures and equipment descriptions to determine the value.

As long as you appraisal report is conducted by a CMEA, you will know it’s fair, accurate, and defensible.

By: NEBB Institute

Preparing for an Appraisal

July 2, 2014

NEBBI ChecklistOne of the biggest mistakes you can make prior to a machinery or equipment  appraisal is not preparing properly for it. If you want  to ensure that your appraisal comes in at the highest possible price point, preparation is key. Here are a few best practices that will help in this regard.

Cleaning & Repair. The best way to demonstrate to your appraiser that you’re serious and conscientious is to make sure your machinery is clean and in good working order. It will appraise better, which will make it easier to sell.

Prepare Your Documentation. To save the appraiser a huge amount of time, put together a comprehensive list of all the machinery and equipment you want appraised, and be sure to include receipts, serial numbers, repair manifests, and owner’s manuals — this is especially important if you have a lot of equipment. If the appraisal is easy, then the appraiser is happy, and if the appraiser is happy, then everyone is happy.

Get to Know Your Appraiser. Before you schedule the appraisal, find out if the appraiser you’re considering is an experienced certified machinery and equipment appraiser (CMEA). A CMEA’s appraisal will always be performed to standards set by USPAP. Also, learn what the appraiser’s report should look like — typically, a CMEA’s appraisal report will include model numbers, pictures, serial numbers, and other descriptive information.

This prep work will take a little time, but it should mean an easy and painless appraisal.

The 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

 

Hypothetical and Extraordinary Assumptions in USPAP

June 25, 2014

The Uniform Standards of Professional Appraisal Practice (USPAP), to which every CMEA adheres, discusses two types of assumptions professionals make when performing appraisals. These are extraordinary and hypothetical assumptions.

Extraordinary assumptions are directly related to an appraiser’s specific assignment. If these assumptions are discovered to be false, the appraiser would be forced to change his opinion or conclusion. Extraordinary assumptions take uncertain information, such as physical, legal, or economic characteristics of equipment, and presume that information to be fact. Market conditions and trends also fall under extraordinary assumptions.

Hypothetical assumptions are contrary to fact, but are still entertained for an analysis. They take facts about physical, legal, and economic conditions, and assume the contract. Hypothetical assumptions about market conditions or trends can also be taken.

These distinctions are important ones, so make sure if you need an appraisal you work with an experienced and well-trained CMEA.

TheNEBB 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

 

The Pros and Cons of a Desktop Appraisal

June 18, 2014

NEBBI desktopIn a perfect world, a certified machinery and equipment appraiser shows up at a business or job site, performs an appraisal with no snags or hiccups, and delivers a detailed and USPAP-compliant report to the client.

In the real world, however, there are so many variables that an appraisal almost always has a curveball or two thrown in to keep things interesting. An appraiser can get stuck in unexpected traffic. A job site can get hit with bad and even dangerous weather. A piece of machinery that worked perfectly the day before and the day after an appraisal can choose the day of the appraisal to function poorly or not at all.

That’s why, as an alternative to on-site machinery and equipment appraisal, there’s a desktop appraisal. In a desktop appraisal, the client sends all the relevant information and photos of the equipment to the appraiser, which serve as the basis for the report. In essence, it’s an on-site inspection without the appraiser needing to be on-site.

There are, of course, disadvantages to desktop appraisals. The appraiser is used to seeing the machinery first-hand and in action. Pictures can’t really re-create that. Also, the photos the clients takes might not be ones that the appraiser would take, or they could be blurry, too dark, or otherwise unusable. Also, relevant information about the equipment might occur to the client in person, but not in the write-up.

Still, desktop appraisals have their useful applications, and an experienced CMEA should be able to do one just as well as an on-site.

The 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

 

The Difference Between Orderly Liquidation, Forced Liquidation, and Fair Market Values

June 11, 2014

Liquidation value is the estimated amount of money a company’s assets could quickly be sold for if the company went out of business. In a growing company that shows profit, the liquidation value would be much less than the company’s share price. In an unprofitable or shrinking industry, the liquidation value would likely exceed the share price. Though not always the case, if the liquidation value exceeds the share price, the company will go out of business.

An orderly liquidation value is based on the idea that a company can afford to sell off its assets to the highest bidder. It assumes an orderly sale process in which the seller can take a reasonable amount of time to sell each asset in its appropriate season, and through channels of sale and distribution that fetch the highest reasonable price.

However, the circumstances are different in the case of forced liquidation value. Forced liquidation value assumes that a business owner is being forced to sell his machinery, equipment, and other assets. Forced liquidation value implies a reduced sales value because buyers are taking advantage of a seller who is being compelled to sell. The forced liquidation value of a company’s assets will always be lower than the fair market value.

Fair market value is based on the best price you’d receive for your machinery or piece of equipment if it were sold in the open market. When an appraiser determines fair market value, he or she operates under a set of assumptions: the market is open to and accessible by a large number of buyers and sellers, all rights and benefits attributable to the asset are included in the sale, and neither the buyer nor the seller is being forced into the transaction and both are knowledgeable about the asset in question.

Other factors can also be taken into consideration when determining fair market value, such as sales of comparable assets, cost to replace the asset, and expert opinions. Because fair market value depends on the availability of sales data for comparable assets and can be affected by place and time of the sale, the value tends to be subjective. This is why it’s so important to rely on an experienced, certified appraiser who understands how to compile and analyze appropriate data so that you can be confident that the asset values you are given are reliable.

The 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

Machinery and Equipment Valuation Steps

June 4, 2014

NEBBI ChecklistWe’ve blogged quite a bit about valuations and appraisals — who does them, why they’re important, and so forth — but we’ve never really broken the valuation process down step by step. So in case you’re curious, here’s how the magic happens.

Step 1: Assessment

This is where the appraiser identifies who the client is, exactly what needs to be appraised, the purpose of the appraisal, intended use, and the definition of value.

Step 2: Collection

In this step, the appraiser collects information relevant to the valuation. He or she establishes and classifies each equipment asset, and describes each by specific characteristics like serial number, manufacturer, and hours/miles.

Step 3: Application

The appraiser determines which of the three approach should be used — sales comparison, cost, or income —  and applies that to the valuation at hand.

Step 4: Valuation

Using the approach chosen in step 3, the appraiser develops an opinion of market value for the equipment.

Step 5: Wrap-Up

Finally, the appraiser will put together the appraisal report in accordance with Standard 8 of USPAP. After any reconciliations are made, the report is delivered to the client identified in step 1.

Of course, this is just a general formula and each case is unique, but it should give you a good idea of how the process works.

The 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