Appraisal 101 -  Definitions

The following are approved definitions from the American Society of Appraisers M&TS committee for Machinery & Equipment appraisals.  Deviations from these definitions are allowed; however,  we suggest having the definition and its limiting conditions prominently spelled out  in the appraisal report so as not to be confusing or misleading. 

It is important to review the definitions of value with your appraiser and have an understanding of how they apply to your present needs to avoid any confusion that would necessitate proving out in a court of law.

Fair Market Value - Removal (for offsite use): The estimated amount, expressed in terms of money, that may reasonably be expected for an item of property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, considering removal of the property to another location, as of a specific date.

Fair Market Value - Installed (In Place): The estimated amount, expressed in terms of money, that may reasonably be expected for an installed property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date.  This amount includes all normal direct and indirect costs, such as installation and other assemblage costs, necessary to make the property fully operational.

Fair Market Value In Continued Use: The estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date and assuming that the business earnings support the value reported.  This amount includes all normal direct and indirect costs, such as installation and other assemblage costs to make the property fully operational.

Orderly Liquidation Value: The estimated gross amount, expressed in terms of money, that could be typically realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.

Forced Liquidation Value : The estimated gross amount, expressed in terms of money, that could typically be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.

Liquidation Value In Place (Bulksale): The estimated gross amount, expressed in terms of money, that could typically be realized from a failed facility, assuming that the entire facility would be sold intact with a limited time to complete the sale, as of a specific date.

Replacement Cost New: The current cost of a similar new property having the nearest equivalent utility as the property being appraised, as of a specific date.

Reproduction Cost: The current cost of producing a new replica of a property with the same, or closely similar, materials, as of a specific date.

Salvage Value: The estimated amount expressed in terms of money that may be expected for the whole property or a component of the whole property that is retired from service for use elsewhere, as of a specific date.

Scrap Value: The estimated amount expressed in terms of money that could be realized for the property if it were sold for its material content, not for a productive use, as of a specific date.