Do you have trucks or heavy equipment taking up valuable space in your shop? Do you own equipment that you no longer use, or that is underutilized, providing little value to your business? You’re in luck. Now happens to be a good time to sell used equipment.

Supply chain issues have created a shortage of certain products, including vehicles and heavy equipment commonly used in the drain cleaning industry. Raffi Aharonian, managing director of Rouse Appraisals, says used equipment is generating a lot of interest.

“Secondary market pricing is as good as we’ve seen it in the last five or six years, and so why not seize the opportunity if you’re not using the equipment every day?” he says.

When you consider the decision tree of what to sell, when to sell, why you’re selling, and how to sell, a related question presents itself: Do I need an appraisal?

What it’s worth

“There are many cases when it’s beneficial to have equipment valued prior to sale,” says Aaron Traffas, marketing content manager at HeavyWorth. “When attempting to sell equipment private-treaty — in other words, selling directly to the next end user — it’s quite useful to have a third-party valuation performed so a reasonable asking price can be established.”

While owners have the best possible view of their assets, they don’t necessarily have the most accurate idea of their assets’ value. Oftentimes, an appraisal serves as a reality check, Aharonian says.

“As an owner, I might not have a true market view of what the equipment is worth. Getting that third-party appraisal might give me a little tighter radius to work with.”

He offers an example of a seller who overprices equipment for an online marketplace. Because of the inflated price, the listing doesn’t generate the interest that the seller wants. After a while, the listing gets stale, and the seller runs out of options of what to do. On top of that, the seller might form an emotional attachment to the asking price, and it becomes even harder to reduce the price to move that piece of equipment.

Getting an appraisal before the sale helps set benchmarks — and realistic expectations.

Determining a trade-in value is another reason to seek an appraisal, especially if a dealer is offering a trade-in price that’s far below the current market value.

“A third-party valuation could either confirm or call into question the dealer’s offer,” Traffas says.

Selling equipment at auction is another time to seek an appraisal. An auction with a reserve price sets a minimum amount the owner will accept as a winning bid.

“When selling equipment at auction with a reserve, an appraisal could be used to establish a reserve if the auction company isn’t trusted to achieve a fair-market value,” Traffas says.

“If you consign to auction, you’ll have a rough estimate of what it will bring so you’re not disappointed later on,” Aharonian says. “If you choose to avoid auction and go with a listing option, having an appropriately priced item becomes important because of the interest it will generate and the time it will take to sell.”

Fair valuation

A third reason to request an appraisal is to set the value of equipment when applying for a business loan.

“How does the bank think about it for collateral?” Aharonian says. A bank isn’t likely to paint the rosiest picture of the best possible end user and the best possible circumstances. A third-party appraisal creates a neutral value that’s palatable for both the lender and the borrower.

Another reason to request an appraisal relates to a company’s business operations. For employee-owned companies, appraisals are necessary for due diligence. For fleet inventory management, appraisals help owners make informed business decisions.

To determine the value of a truck, trailer jetter or excavating equipment, an appraiser starts with the most basic information:

• Year
• Make 
• Model
• Serial number/VIN
• Usage meters

“For the HeavyWorth valuations that we perform most regularly, we need all that information, as well as a list of any features, virtues or problems specific to the asset being valued, as well as a fair number of specific photos of that asset,” Traffas says.

Rouse Appraisals uses an extensive checklist to determine an asset’s value and documents all information in a neatly organized way. The appraiser comments on key moving parts and components and assigns a rating to the equipment. Additionally, Rouse takes 360-degree photos to capture all angles of the equipment. When a buyer isn’t able to see and touch the sale item in person, a variety of images are the next best thing.

“If you see a photo of something online, you’re more likely to show interest and buy it than if it comes without the photo and details,” Aharonian says.

Maintain value

He says that top-selling items all have something in common. “I think it’s about having well-kept, well-maintained equipment. Those are the ones we always see doing well.”

He advises sellers to keep maintenance records to show that equipment has been serviced on a proper schedule. Additionally, keep records of any major repairs or replacement parts.

“Be transparent with the audience to inspire more confidence in the buying process, especially if they’ve done a good job with the maintenance,” he says.

Traffas agrees with this advice.

“Maintain equipment in good, clean, working order and keep all shields and accessories in place. Perform preventive maintenance according to the manufacturer’s specifications, and preserve documentation of service intervals,” he says.

He also suggests keeping the owner’s manual and any other documentation that comes with the equipment.

“Replacement owner’s manuals can be expensive,” he says. “While not every buyer is going to want a manual, it’s good to keep the manual with the equipment.”

Businesses can choose from a variety of appraisal types. The simplest, quickest valuations are based on make, model, year, specs and hours. The most complex and costly are Uniform Standards of Professional Appraisal Practice-compliant appraisals, which meet the highest standard of appraisal practices.

“Rarely can the free valuations satisfy many of the business needs, but it’s also rare that a business need justifies the expense of a USPAP-compliant appraisal,” Traffas says. “Thus, most businesses rely on a valuation approach that is somewhere in the middle.”

The purpose of an appraisal and time constraints to sell the equipment help determine the type of appraisal to request. Sellers with a reasonable amount of time to find a buyer have more appraisal options than distressed sellers who need to liquidate inventory quickly.

By hiring an appraisal company, sellers gain buyers’ trust and confidence in what the asset is worth. The appraiser is a disinterested third party, instead of a seller with a vested interested in the outcome of the deal.

“It’s possible for an equipment owner to do a fair amount of research and come up with a reasonable expectation of value, but the equipment market can fluctuate so rapidly,” Traffas says.

While the obvious benefit to having an appraisal is confidence in knowing what your equipment is worth, the obvious downside is the cost, in both money and time.

“Appraisals can be expensive, and for large inventories the cost can be substantial. Also, some appraisal companies can take weeks or months to return their results, which may not fit within the timeline necessary for some business decisions to be made effectively,” Traffas says.

In today’s market economy, used equipment is selling at a premium. Partnering with an appraisal company can help business owners know what to expect when they’re ready to sell.