05:30
Faizan
Most equipment appraisers discourage desktop appraisals. One reason is that most folks who ask for one are making an assumption that a desktop appraisal, since it wouldn't include a physical inspection of the equipment, would be less expensive, or at least quicker, and usually, it's not.
That's not to say that a desktop equipment appraisal is never appropriate. Some situations are fine for desktop appraisals; some examples would be:
Bankruptcy appraisal for a small pizza kitchen with limited, standard-issue restaurant equipment
Amiable divorce appraisal for small farm with a small inventory of standard, well-maintained equipment
Large trucking fleet appraisal of identical, nearly new vehicles with comprehensive documentation, complete with photos and maintenance records, for a collateral lending situation where a bank officer verified the physical inventory with a site visit
So what circumstances do make a desktop appraisal a good idea? Asking these 6 will help clarify the answer:
Is timing is very short or the equipment location is prohibitively distanced?
Is the equipment is fairly standard?
Can I get a well-detailed asset list and excellent photographs?
Will an authorized person familiar with the equipment be available to answer questions?
Who is the user of the appraisal and does the user clearly understand the limitations of a desktop appraisal?
Is the user or users confident that such an appraisal without an inspection/verification would be appropriate for the purpose of the appraisal?
If the answer to all of these questions is yes, then a desktop equipment appraisal could be appropriate.
It's critical, however, to be sure that the end user of the appraisal is absolutely confident that a desktop appraisal will be suitable for the use of the appraisal, and to establish that, it's important that the user--whether a lending institution, a CPA firm, a business owner, law firm, or insurance company--understand the unavoidable limitations.
Especially in the case of a collateral lending appraisal, the user needs to understand the real possibility of fraud or misrepresentation. The one situation a lending institution must avoid is extending credit on equipment that doesn't exist or isn't as represented. You'll notice that in the one desktop equipment appraisal submitted for collateral lending example above, a bank representative visited the equipment site. In other circumstances, when a deep level of trust has been built between the lending institution and the borrower, such a visit may not be necessary, but it's the obligation of a qualified equipment appraiser to stress to the client (the lending institution) that without a physical inspection of the equipment, confirming that it actually exists or is as represented is impossible.
That's not to say that a desktop equipment appraisal is never appropriate. Some situations are fine for desktop appraisals; some examples would be:
Bankruptcy appraisal for a small pizza kitchen with limited, standard-issue restaurant equipment
Amiable divorce appraisal for small farm with a small inventory of standard, well-maintained equipment
Large trucking fleet appraisal of identical, nearly new vehicles with comprehensive documentation, complete with photos and maintenance records, for a collateral lending situation where a bank officer verified the physical inventory with a site visit
So what circumstances do make a desktop appraisal a good idea? Asking these 6 will help clarify the answer:
Is timing is very short or the equipment location is prohibitively distanced?
Is the equipment is fairly standard?
Can I get a well-detailed asset list and excellent photographs?
Will an authorized person familiar with the equipment be available to answer questions?
Who is the user of the appraisal and does the user clearly understand the limitations of a desktop appraisal?
Is the user or users confident that such an appraisal without an inspection/verification would be appropriate for the purpose of the appraisal?
If the answer to all of these questions is yes, then a desktop equipment appraisal could be appropriate.
It's critical, however, to be sure that the end user of the appraisal is absolutely confident that a desktop appraisal will be suitable for the use of the appraisal, and to establish that, it's important that the user--whether a lending institution, a CPA firm, a business owner, law firm, or insurance company--understand the unavoidable limitations.
Especially in the case of a collateral lending appraisal, the user needs to understand the real possibility of fraud or misrepresentation. The one situation a lending institution must avoid is extending credit on equipment that doesn't exist or isn't as represented. You'll notice that in the one desktop equipment appraisal submitted for collateral lending example above, a bank representative visited the equipment site. In other circumstances, when a deep level of trust has been built between the lending institution and the borrower, such a visit may not be necessary, but it's the obligation of a qualified equipment appraiser to stress to the client (the lending institution) that without a physical inspection of the equipment, confirming that it actually exists or is as represented is impossible.
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