Top 10 Reasons to Get a Machinery and Equipment Appraisal Review
Machinery and equipment appraisal reviews are used by lenders, tax consultants, attorneys, and insurance companies for settlements, compliance, and litigation because appraisals are frequently challenged. Since an appraisal is an opinion of value, that opinion needs to be properly supported for the appraisal report to have credibility.
What is an appraisal review?
An appraisal review is the development and reporting of an opinion about the quality of another appraiser’s work. This work, referred to as the “work under review”, can be an appraisal report, a portion of the report, the supporting workfile, or any combination of these work products. The reviewer provides a separate report that explains the reviewer’s scope of work and the results of the review.
10 ways appraisal reports miss their target
Reports need to be appropriate for the client’s intended use and be understandable. For appraisals to be credible, they must be supported by relevant evidence and logic, as necessary for the intended use. A common weakness in appraisal reports is when they are not presented in a clear and logical way and contain insufficiently supported conclusions. Appraisal reports can lack credibility when they exhibit issues, such as these:
- Vague or missing scope of work summary
- Insufficient explanation of supporting evidence
- Unreasonable market data
- Inadequate or illogical support for conclusions
- Lacking explanation of how methodology was applied to the subject property
- Improper use of an approach to value
- Missing or incomplete USPAP certification
- Errors in grammar, math, logic
- Inconsistencies, contradictions
- Assumptions not clearly stated
Professional Machinery and Equipment Appraisal Review Services
While most of the above-mentioned issues are evaluated in a typical machinery and equipment appraisal review assignment, clients can order an appraisal review to cover a wide range of services. Appraisal review assignments can be “desktop” in nature, which excludes the reviewer’s opinion of value. The reviewer can be requested to review data in the workfile, such as evaluating comparables, market study information, and data and math verification. The client may also request the reviewer to perform an inspection, independent research, a second opinion of value, or any combination of these services.
Watch this video to learn more about appraisal review services.
