Definitions of a Valuation
We understand that the objective of any machinery valuation is to define an accurate market value.
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Valuation Definitions
This Valuation Guide will assist you in expertly navigating the valuation process. Reference this document to ensure that you are evaluating and listing your equipment at the most accurate true market price possible.
We use the following definitions of value to guide all of our certified valuations and appraisals:
Source: Machinery & Technical Specialties Committee of the American Society of Appraisers – July 25, 2018
Reproduction Cost New
The cost of reproducing a new replica of a property on the basis of current prices with the same or closely similar materials, as of a specific date.
Replacement Cost New
The current cost of a similar new property having the nearest equivalent utility as the property being appraised, as of a specific date.
Fair Market Value
An opinion expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date.
Fair Market Value in Continued Use with Assumed Earnings
An opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date and assuming that the business earnings support the value reported, without verification.
Fair Market Value in Continued Use with an Earnings Analysis
An opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date and supported by the earnings of the business.
Fair Market Value – Installed
An opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, considering market conditions for the asset being valued, independent of earnings generated by the business in which the property is or will be installed, as of a specific date.
Fair Market Value – Removed
An opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, considering removal of the property to another location, as of a specific date.
Liquidation Value in Place
An opinion of the gross amount, expressed in terms of money that typically could be realized from a properly advertised transaction, with the seller being compelled to sell, as of a specific date, for a failed, non-operating facility, assuming that the entire facility is sold intact.
Orderly Liquidation
An opinion of the gross amount, expressed in terms of money, that typically could be realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.
Forced Liquidation Value
An opinion of the gross amount, expressed in terms of money, that typically could be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.
