Elements of an Appraisal

Types of Appraisals

There is only one type of appraisal. The items must be verified and identified. Physical condition must be ascertained. All pertinent information must be obtained and noted in the appraisal, including manufacturer, model, serial number, options or modifications to the equipment, as well as condition and photographs. This may only be accomplished by an On-Site inspection by the appraiser. A Desk-top Appraisal, which consists of a listing of the equipment supplied by the customer, is an “opinion of value based upon the materials and information supplied, and is evaluated without the benefit of physical inspection.” The more information supplied to the appraiser allows him to better estimate the value. However, since the items were never visually inspected, the condition of the equipment cannot be ascertained and the existence verified.

Definitions of Value

The definitions of value noted below are the most generally accepted, but vary slightly between different appraisal associations and financial institutions. The term “Days to Re-market” is an important concept. This refers to the amount of time allocated to re-market the item and determines the Definition of Value used for the appraisal. The “Days to Re-Market” time varies with the Definition of Value and the collateral type. Typically, telecommunications equipment is valued assuming 60 days to re-market utilizing a Forced Liquidation Value, 120-180 days utilizing an Orderly Liquidation Value and no time limitation utilizing a Fair Market Value Sale.

Financial Institutions usually require an On-Site inspection of the items to be appraised. The Definitions of Value most often requested are an Orderly Liquidation Value and a Forced Liquidation Value.

Comments are closed