The purchase & sale of Machinery & Equipment can occur under a variety of very different circumstances; each affecting the transaction price in a different way. For this reason “Value Concepts” or definitions of value have been developed to address the value in various scenarios.

When conducting an appraisal it is of the utmost importance to know the proper value concept to be used. Some of the more common types are listed below; however, we strongly recommend you consult with a certified appraiser, as they will know the proper definition for your application.

Request for Appraisal

Market value in continued use.

The most probable amount expressed in terms of money, as of a specific date, that should reasonably be expected in exchange for a property, sold “as is” and “where is”, between a willing buyer and a willing seller, in an arms length transaction, with equity to both, neither under any compulsion to buy or sell, and both being fully aware of all relevant facts. The amount includes the value of all direct and indirect costs necessary for installation and presumes that each individual item appraised contributes to an added value relative to the economically viable, operational facility and that there is adequate earnings to support the indicated value.

  • Commonly used for determining value for the sale of a running business.
Orderly Liquidation Value (OLV)

The most probable gross amount expressed in terms of money, as of a specific date, which should be expected from the sale of the assets, the seller being compelled to sell, given a short, specific, period of time to sell in an orderly manner, “as is” & “where is” with the buyer(s) being responsible for removal cost.

  • Commonly used for determining value for slower recovery on collateral – usually between 6 to 12 months.
Forced Liquidation Value (FLV)

The most probable gross amount expressed in terms of money, as of a specific date, which should be obtained from the sale of the subject assets, sold at a properly advertised and conducted by public auction, the seller being compelled to sell, with a sense of immediacy, on an “as is” & “where is” with the buyer(s) being responsible for removal cost.

  • Commonly used for determining value for quick recovery on collateral. This is the concept most requested by lenders
Replacement Cost New

The current estimated cost in terms of money, as of a specific date, incurred in acquiring a similar new asset having the nearest equivalent utility to the asset being appraised.

  • Commonly used for determining value for an insurance claim on a policy that offers new replacement coverage