AVA will discuss your situation with you to determine the best option for your appraisal reporting needs. Every client has unique needs and we will help determine which one will provide you with the most affordable solution in a timely fashion.
There are generally two types of appraisals reports that can be performed:
Field Appraisal Reports
A field appraisal report includes an on-site inspection and data gathering which provides the most accurate and highest quality appraisal report. It consumes more resources than a desk-top analysis because it usually involves more research, travel time, photographing and categorizing, and a property inspection and review of comparable sales. Therefore, it will cost more but will provide far more detail and information in which to base an opinion and render the most creditable results. Most lending situations do not require or need a field report unless there is a reason to support the need for one. However, the Field Review is the most comprehensive and thorough appraisal review available to a lender, CPA, business and a court may require such.
A desktop appraisal solution is usually the most cost-effective and timely way to appraise your equipment. It meets all the standards of compliance with the USPAP and still provides accuracy and detail. When a full appraisal is not required, the Desk-Top review provides the perfect solution.
What’s Included in my Appraisal Report?
- An Independent Opinion of Value that is well-supported and defensible
- Definition of value serving the basis for the valuation
- Statement describing and explaining the purpose, scope, value definitions and asset definitions of the appraisal
- Written narrative of the nature of the company
- Thorough explanation of the methodology, including the approaches to the value and research techniques
- Examination of the potential exit strategies (when applicable)
- Analysis of evaluation considerations affecting the value of the assets such as physical or economic factors
- Complete descriptions of the assets including location
- Statement of general conditions of the assets
- Photographs and video, when applicable of all key assets
Fair Market Value Approach
The fair market value approach (FMV) is the best price your asset could receive in the open market assuming you have the time to sell it. This is known as a “full price sale” where the value is expected to be 100 cents on the dollar vs comparable assets. Generally, you must be able to complete the sale within a reasonable amount of time.
Orderly Liquidation Value Approach
The orderly liquidation value approach (OLV) is the best price your asset could receive if you have to sell more quickly than through the open market. Generally, the rule of thumb is that the assets will bring about 50 cents on the dollar over FMV and the price that is realized from a liquidation sale where the seller compelled to sell on an as-is, where-is basis by a specific date.
Forced Liquidation Value Approach
The forced liquidation value approach (FLV) is the best price your asset could receive in a public sale where the seller is being compelled to sell with a sense of immediacy on an as-is, where-is basis on a specific date. The essential difference between orderly liquidation value and forced liquidation value is one of exposure time and urgency.
Appraisal Analysis Approaches
Income Approach: The income approach weighs the expected benefits and cash flow that can be derived from the asset during its remaining useful life.
Market/Sales Approach: The market approach evaluates assets based on completed transactions of comparable sales of similar assets.
Cost Less Depreciation Approach: The cost less depreciation approach measures the current cost of an asset when it is new and applying depreciation to the asset according to the age, condition and remaining useful life.