3 Methods to Determine the Value of Your Farm Equipment
When it comes to determining the value of your farm equipment while you are getting ready for an auction, there are several methods to consider. Choosing the right method depends on what kind of result you are looking for and what data you have available. The USPAP lays out guidelines to help everyone who does valuation do so in a consistent manner.
Surprisingly the guidelines don’t change much between different types of equipment. There are a few tried and true evaluation methods that are used by assessment professionals throughout the country to help determine the value of your belongings you’d like to include in a farm equipment auction.
1. Sales Comparison Approach
This approach is familiar to most of us because it’s how we determine the value for what is usually our largest purchase: our home. It’s a method that looks at equipment with matching qualifiers like date of manufacture and model type, and comparisons the units based on physical, functional and economic values. It’s a great method except for the fact that it doesn’t work well on highly unique items. If there are many similar items in your area you can readily ascertain the value, but if you are sitting on a one-off, it can be incredibly hard to determine the value using this method.
2. Cost Approach
How much would it cost to replace your equipment? This is the basis of the cost approach to appraisal. In some cases, it can actually cost far less to purchase a new piece of farm equipment than it would to purchase the used alternative. At many farm equipment auctions in Ohio, you’ll see antiquated equipment that won’t be sold because maintaining the older technology is far more expensive than swapping it out for something new.
3. Income Approach
Sometimes your equipment might be so hard to value because it is unique or old that the best way to know it’s worth is to ask, “How much money can I make from this machine?”. This is not the most accurate approach, but sometimes it’s all an appraiser has to go on.
O’Reilly Team takes care of all the guesswork. From appraisal to auction our team are Ohio’s farm equipment auction experts. Contact O’Reilly Team today to set up your farm equipment auction in Ohio.
