Posted By: Southern Fabricating Machinery Sales | Posted On: April 20, 2020
How to Determine the Value of Used Heavy Equipment
Whether you’re buying or selling, the ability to get an accurate idea on used heavy equipment value is imperative to your successful sale. Countless businesses find themselves in one of two situations. The first scenario is one in which a business no longer has a need for a piece of heavy equipment, wanting to sell it, but doesn’t know its true value. In the second scenario, a business wants to buy a piece of heavy equipment without paying more than they should have to. Here’s a quick equipment value guide with the info you need and how to estimate used heavy equipment value .
Understanding the Fair Market Value of Equipment
Estimating used equipment value is not as easy as one might think. Sure you can search eBay or other sites and see what like items are selling being offered for, but that doesn't tell you what they are actually selling at nor does it tell you how long the equipment in general takes to sell. Getting the real used heavy equipment value whether it applies to machine tools or tractors is a bit tougher and requires insider knowledge of someone working daily in the sale of that equipment.Many times the best way to find out the real value of your machinery or equipment is to source a used machinery dealer that is actively selling like equipment. The dealer will be able to tell you the market value today as opposed to just someone's asking price online. They will take into consideration market conditions, available similar equipment, past auction sales and many other factors when giving you a solid value for, or offer on, your heavy equipment and machinery.
What Affects Heavy Equipment Values?
There are a number of critical factors that affect equipment values. Used heavy equipment pricing can be difficult to understand, but it’s much easier when you know what to look for.
First and foremost, you should make an effort to look up the average longevity of the piece of machinery you’re interested in. In other words it’s life expectancy. Sometimes that is rated by years and other times by hours depending on the piece of equipment you're considering. Some manufacturers are known for excellent quality, and the equipment they produce can be expected to last a long time, while others of lower quality give out and break down much faster. Therefore, if the piece of equipment you’re looking at was poorly made and has already been in use for 10+ years, it might not be a good buy. Conversely, if the machinery was well-made and has only been used for 5 years, it could be a great bargain.
While the average expected longevity of the equipment is important, it’s not the only thing to look for. Even a well-made piece of machinery will give out or perform poorly if it’s been abused or exposed to the elements. When examining the equipment, look for signs of environmental (exposure) damage or abuse from improper or excessive use. If you find evidence of either, machinery values go down precipitously. Heavy equipment values are multifaceted and should be determined carefully. In general the common factors affecting values are:
- Availability of like Equipment
- Continued Support/Parts availability
Lastly do not forget to include the value that item may have to you if purchasing once it is in your possession performing the work it's capable of. You may wisely choose to pay a bit over market for a system that is readily available or local to you as the benefits may far outweigh the costs.
Now that you know some of the most important factors in used heavy equipment pricing, it’s time to examine how to determine fair market value of equipment.
How to Determine Used Heavy Equipment Pricing
Any time you’re looking to purchase used heavy equipment, you’ll need to see the fair market value. Fair market value refers to what someone would ordinarily pay for the same thing providing there are no extenuating circumstances. For example, if you desperately need a forklift and there’s only one used forklift available in your area and the seller knows it, they can sell it for a higher price. Fair market value assumes that there are no extenuating circumstances and is an estimate that refers to the equipment’s natural value. As you might have guessed, knowing the fair market value is crucial if you don’t want to overpay.
How do you determine the fair market value of equipment? By asking a certified equipment appraiser designated by the initials ‘CEA’ . Heavy equipment values are best determined by an impartial certified appraiser. Certified equipment appraisers have years of training and know how to value used machinery with utmost accuracy utilizing all the tools of past auction, independent sales and market demand. That means that if the seller is telling you a piece of used equipment is worth $70,000 and a certified equipment appraiser tells you that it’s worth closer to $50,000, listen to the appraiser.
Tips and Tricks
If you’re looking to sell some used heavy equipment and want to get the best value out of it, there are some things you can do to help fetch a better price.
First of all, you should make an effort to clean the machine and make it veritably spotless. Also clean the area around it as many times the cleaner your shop space is the perceived better you care for your equipment and thus the more valuable it will appear and will make any imperfections less damaging to its perceived value.
You should also make a video of the equipment, showing it in action. Videos are preferable to demonstrations as they can be viewed on-demand.
Make sure you have a clear understanding of the true value of your machinery and why factors lead to that valuation. It';s important to know in order to negotiate effectively and come out on top, you’ll need to know just how low you can go in terms of price without doing yourself a disservice.
If you're buying a machine or heavy equipment you will need to know the same as any request for discount or concessions on price should be provided with substantive reasoning such as; "Well the factory no longer supports this model" or "This control is obsolete and must be upgraded before it fails in production to avoid costly downtime etc." Whatever your reason for asking for price concession are, they should be backed up by a solid knowledge of the equipment, market value and never by comments like "Well that's just what I think it is worth."
Finally, the most important factor of all is that you work with a qualified and trusted machine dealer whether you are buying or selling.
At Southern Fabricating Machinery Sales, Inc we strive to provide our clients the best value in machinery sales whether you are buying, planning to buy or looking to sell equipment or machinery we can assist you with our staff of Certified Equipment Appraisers and machine tool specialists. We have the know-how, the experience, know how and a network of experts to get you the right value on your machinery each and every time. Contact us today for more information on how we can help you get the right used heavy equipment value.