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Valuing Your Equipment

valuing your equipment

What makes a good valuer?

Often we have our clients asking us about how they obtain a valuation of their equipment when we are organizing their equipment finance.

With a number of Valuer’s being able to offer this service we thought we would provide some information in this Newsletter about the process of appointing a Valuer and what should be considered.

In our experience depending on the type and complexity of the Valuation required will then determine which Valuer or Valuation Firm is best suited to undertake the Valuation.  This is where we can help.

We have dealt with a number of Valuer’s and Valuation Firms over the years and can discuss what options might be available.

When we look at recommending a firm or a Valuer within a firm we consider the following:

The qualifications that the Valuer has?

The experience and qualifications which a Valuation firm and its individual Valuer’s have is of the utmost importance.  As a minimum they should be member of the Auctioneers and Valuers Association of Australia (“AVAA”).

If the Valuation is being completed for a Financier (who will then use this to provide funding) it is important to make sure that the Valuer is an approved Valuer with that particular Financier.

What type of Valuation is required?

Typically a formal written valuation is addressed to the party requesting the Valuation. These valuations include an asset inspection by the Valuer and detailed written assessment.

The formal valuation should include:

  • Full description of the assets and the accessories with Market Value and Auction Value.
  • Market research information;
  • Unit or component value depreciation;
  • Market feedback and adjustments; and
  • Reference to comparative sales data.

It is important to know that the true value of an asset is only what a buyer is prepared to pay after a proper sales process has been undertaken.

A common error is to confuse a valuation as a definite market value. A valuation should only ever be considered as a best estimate and used as a guide.

What are some of the factors that should be considered by a Valuer when undertaking valuations?

  • Demand – demand for the item;
  • Condition – area utilised, hours/km’s of an asset;
  • Availability – the popularity leading to availability of an item;
  • Regulatory environment – what regulatory restrictions are associated with the asset E.g. Aircraft, marine surveys, environment emissions, safety mine certifications ;
  • Existing contracts – working contracts that require a particular asset type; and
  • Attachments – any accessories or specialisations.

What is the Cost?

Formal valuations are invoiced based on time taken, or on an asset by asset basis.

What are the Valuation pitfalls and limitations?

Some of the key considerations you should look for when engaging a valuation professional are:

  • A Valuer’s technical knowledge and understanding of a particular asset or market;
  • Ensure the assurance standards of a valuation are listed and adhered too. (AVAA);
  • Adequate comparative sales data should be referred to and recorded; and
  • Lack of availability of sales data reflecting true market values.

If you do need assistance in obtaining a Valuer please do not hesitate to contact one of our team on 02 9453 0300