The Importance of an Unbiased Third-Party Opinion
To derive a proper opinion of value, no matter what the situation, getting an appraisal performed by an unbiased third party, such as a certified appraiser, is always the best course of action. To be unbiased, the professional developing the opinion of value should not have any vested interest or participation in the opinion of value.
For example, many auction companies advertise that they perform appraisal services when in most cases, their primary business is the performance of an auction and not being an independent appraisal entity. Oftentimes, an auction company will perform an appraisal in lieu of obtaining a certified equipment appraisal as part of an agreement to list and sell the property. However, because the auction company potentially has a vested interest in the outcome of the auction, their appraisal is not unbiased, which could result in an inaccurate estimation of value.
Another example we can look at is how large lending institutions perform and order valuations. The Small Business Administration requires lenders to obtain third-party valuations so there is no appearance of collusion between the appraiser and lender. Furthermore, if the valuation was not properly defined and constructed, this could affect a borrower’s ability to obtain financing for purchase or sale situations, or jeopardize buyouts, refinancing, buy/sell agreements, and anything pertaining to the value of the assets.
Make sure that your equipment appraiser is an independent third party who can truly act and perform in an unbiased manner so that the appraisal meets the requirements of financial institutions, government agencies, buyers and sellers, shareholders, and partners, and so that you really know what it’s all worth.
By: Present Value
Additional Reading
Be Sure to Use a Reputable Appraiser