An appraisal is a self-contained opinion of value, and if it is an ASA – USPAP appraisal it will contain the reasoning, market values, income analysis, cost analysis, and other facts you need to determine applicability and validity. You should rely on the value I state as my conclusion of value in my appraisal because I followed ASA appraisal guidelines and USPAP methodology.
The appraisal is written with an as of date, as in an estimate of the value of the equipment as of 8/1/2020. The appraisal might also contain a forecasted conclusion of value – expected value, as of years 1 through 10, as in the planning horizon for an equipment lease. The answer is that the value is good as of the appraisal date, and the validity will be as invalid as developing events change. A 9/11 attack tomorrow, a sudden regulatory changing making diesel vehicles illegal, or gradual changes in consumer preferences. If you are looking at a somewhat dated appraisal and need to make a decision about a transaction, call your appraiser and ask if the values are still OK.
Depends on the scope, timing, travel requirements, purpose, quantity of assets, type of assets. A desktop appraisal requiring no inspection of a few familiar construction assets may cost only $2,000 – $3,000, whereas an appraisal of exotic energy assets located in Alaska may cost $15,000 – $20,000.
I could write a book, and I have done many trade show sessions and journal articles on this topic. You can download a guide from our website www.bcamasset.com . The basics: get the contract right with a clearly stated purpose and premise of value, meet with your appraiser regularly to review progress, set a reasonable schedule, maintain clearly delineated expectations.
The purpose is defined by the Client up front – here are some common appraisal purpose statements:
- Loan collateral analysis
- Lease residual forecasting
- Litigation / dispute resolution
- Property tax valuation
- Purchase price allocation
- Regulatory portfolio impairment review
Professional appraisal practice requires adherence to an internationally recognized body of methodology to develop a credible and correct conclusion of value. USPAP (Uniform Standards of Professional Appraisal Practice), followed by all ASA certified appraisers, is this primary standard that is used. USPAP requires the consideration of three primary approaches to value: the market approach, the cost approach, and the income approach. The appropriate approach depends on the asset type and on may other factors which your appraiser will discuss with you. In the market approach, recent auction results and sales listings offers for directly comparable assets are analyzed. In the income approach, the present value of the future economic benefits associated with the asset are calculated, as in day rates times utilization for a gulf service vessel. The cost approach is often used when market and income information is not available, and depends on the original purchase price of the asset, its useful life and salvage value, and expected economic and functional obsolescence.
Yes. This is required by USPAP and by normal professional services standards. This confidentiality is written into the appraisal report. I was recently asked by an FBI agent if he can get a copy of an appraisal report I recently completed and I told him “No, sorry, you are not my Client. If you want to get a copy of the appraisal you should ask the Client”.