It’s a Smart Idea to Reappraise or Revalue Your Assets within the Next 24 Months…Here’s Why
The next few months should be interesting in the business world.
As we all emerge from the unprecedented global chaos of the last 24 months, companies across the world are rapidly restructuring while divesting themselves of real estate and other assets, such as the equipment or machinery that was formerly housed within their properties. At the same time, an increase in fires, floods, and heatwaves has endangered property and caused costly business interruptions.
Whether you are purchasing or selling assets, reassessing your insurance coverage, or simply looking to clean up your balance sheets and reduce your property tax burden, it is a smart idea to reappraise or revalue your assets within the next 24 months.
In an increasingly uncertain business landscape with rising supply costs, your company must be certain about the value of the assets you own or want to purchase.
Performing a valuation / appraisal of your largest assets can help you weather the storm because it cleans up your balance sheets to improve financing opportunities, helps you right-size your insurance premiums and coverage, and increases your decision-making confidence for new investments.
The 3 top assets to focus on in the next 24 months are:
- Real Estate Market Value Appraisals
Fact: whatever your property was worth before the pandemic, its value has likely increased by now. But how much?
With an experienced real estate valuation and appraisal expert who knows your type of property and understands the relevant factors to consider in an appraisal, you can answer key questions about real estate values such as:
- What is this property worth in the market now?
- What would it be worth in liquidation?
- What will the property be worth after renovations?
- What is the market value vs. the assessed value?
- What is the value of replacement property?
- What is this property worth to the business?
- (For undeveloped properties) What developed use would provide the largest future value for this property?
- What are the property’s easement or right-of-way rights worth?
When assessing a property’s value, it is important that you work with fully qualified, licensed, and certified valuation and appraisal professionals. We recommend that you seek out experts who are Chartered Surveyors or Members of The Appraisal Institute (MAI).
- Property Insurance Appraisals
Some companies over-insure their property, some under-insure, and some companies are simply unsure about their property’s value.
Amid today’s rising insurance costs and increased climate events, “guessing” is a poor strategy for risk management. You deserve to pay the right premiums for the right coverage – and that’s where an experienced property insurance appraiser can help.
A high-tech, advanced insurance appraisal can answer key questions about your property’s insured value, such as:
- What are the true values of your assets?
- Are your square footage valuations accurate for your business uses, geography, climate, building codes, quality, and labor rates?
- Do you have ghost assets that are driving up your premiums?
When commissioning a property insurance valuation and appraisal, it is critical that you work with an experienced professional who performs a detailed study and delivers a comprehensive report with accurate, supportable documentation. You do not want to be left without important details in the event that you do need to file a claim.
- Machinery & Equipment Appraisals
Supply chain delays have unexpectedly boosted the used equipment and machinery market, which can significantly impact your business valuation for a merger or acquisition or may change expectations for a forced liquidation. If you are in the market for new machinery or equipment, if you are looking to divest yourself of excess supplies, or if you simply need to know how your assets have changed in value, you need a way to properly understand the true, current value of your assets.
Equipment and machinery value is determined by cost, income, and market approaches appropriate to the assets, which is why an experienced valuation and appraisal professional will build your value indicators by thoroughly investigating 3 critical areas:
- What is the replacement cost of the asset new, less depreciation from all causes?
- What does the current market data suggest from recent sales or offerings by used equipment dealers of comparable equipment?
- What does the data from recent auctions suggest about the value of comparable equipment?
Working with an expert in machinery and equipment valuations can also help you identify fixed asset depreciation flexibility for usable piping and electrical connections. This helps you comply with GAAP, SFAS 141, and SFAS 141R regulations and can improve your financial position.
Why Expert Valuations and Appraisals Matter Right Now
If you are selling your property, you deserve a fair price. If you are looking to buy, you should pay only what each asset is worth. “Rule of thumb” assessments based on Net Book Value are merely inflation-adjusted guesswork at the best of times – and right now in our age of skyrocketing inflation and market uncertainty, let’s just say guesswork is about as accurate as a shot in the dark.
The most effective way to ensure you understand the true value of your assets (or assets you are considering purchasing) is to work with an experienced, independent valuation and appraisal professional who is impartial, detailed in their documentation, and can support their opinion under challenge.
Serving clients since 1985, Paragon International, Inc. provides independent, impartial and accurate cost segregation analyses, and property valuations and appraisals to assist in and support decisions related to taxes, risk management, investment, financing and corporate planning. Our consultants have extensive fixed asset experience – they’re fixed asset experts. Because of that we are able to offer a unique combination of irreplaceable human resources and advanced technology. We have specialists experienced in valuing closely-held securities, patents and other intangible assets, business enterprises, buildings, equipment and real estate. In addition, Paragon provides complete inventory and asset management services and solutions, including software customization and training, barcode labels and scanners, and tailored inventory services such as data conversion and integration, asset inventories, asset policies, cost reconciliation, and appraisal services. Contact Paragon International to discover how we can help you.