FAQ
How do you determine the fair market value of equipment?
Fair market value for equipment is the price a willing buyer and willing seller would agree on in an open market transaction, with neither party under pressure to act and both having reasonable knowledge of the relevant facts. Our appraisers arrive at that figure through a defined process rather than a guess, and every conclusion is documented so the report holds up for lenders, insurers, attorneys, or the IRS.
How the value is determined
The core method is the sales comparison approach: identifying recent sales of comparable machines and adjusting for differences that affect price. Key factors we weigh include:
- Make, model, and year, along with serial number and factory configuration
- Physical condition, maintenance history, and any rebuilds or damage
- Operating hours or mileage relative to the equipment's expected service life
- Regional demand, parts availability, and continued manufacturer support
- Sale date and location of the comparable transactions used
When comparable sales data is limited, such as for highly specialized manufacturing or medical equipment, we cross-check the result using a cost approach: estimating replacement cost new and then subtracting depreciation for physical wear, functional obsolescence, and economic obsolescence.
Fair market value versus book value
Fair market value is not the same as book value. Book value reflects an accounting figure based on original cost and depreciation schedules, while fair market value reflects what the equipment would actually bring in today's market. This distinction matters most in estate settlements, SBA loan collateral reviews, and insurance claims, where an outdated book figure can significantly understate or overstate what the asset is truly worth.
Every Houston equipment appraisal we prepare is documented in accordance with USPAP, with the methodology, comparable data, and condition findings laid out clearly so the conclusion is transparent and defensible. If you have questions about a specific piece of equipment, our FAQ page covers additional details on inspections, credentials, and report contents.