Why onsite inspections are critical to equipment appraisals

As appraisers, at Rouse Services we often get asked, “Do you do desktop appraisals, or do you require onsite inspections in order to prepare your appraisals?”

While appraisers are often equipped for either approach, the answer to this question is typically dictated by the use case and scoping requirements of the company requesting the appraisal. For low-risk situations, it’s not uncommon for companies to order a desktop appraisal in the interest of saving time and money, as well as being minimally disruptive to their day-to-day operations.

However, there are many situations that drive inspection needs, each with their own needs.

• Sample inspections: in some cases, inspections are requested on a sample basis. For example, an equipment rental operation with a big geographic footprint with equipment that is routinely coming and going from branch locations.
• Full-scale inspections: other cases dictate a full-scale inspection. For example, there could be higher risk from a credit perspective, or there is an imminent asset sale dictating the need for a full catalog of equipment conditions and values.

Breaking down the benefits

Whatever the case may be, there are clear-cut benefits to ordering an appraisal with inspections.

First, users of the report will benefit from “on the ground” intelligence provided about the quality, condition, and existence of assets. Appraisers will record their work through photographs, condition notes, and other pertinent bits of information, which flows downstream to the appraisal conclusions and reporting.

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Along the way, there will be an opportunity to confirm details, such as serial numbers, year of manufacture, make, and model. An onsite inspection will also enable appraisers to record the prevailing meter reading on inspected assets to ensure asset values are reflective of the usage at the time of the appraisal.

In addition, onsite work enables some key risk identification by identifying “down” units at the time of inspection (i.e. units unavailable due to a parts or maintenance need).  An outsized or growing percentage of down units could indicate maintenance negligence or other operational deficiencies.

Likewise, an onsite inspection affords the opportunity to audit the asset listing for completeness. If there are assets that appear on the listing but are unavailable on site, it gives appraisers and inspectors the opportunity to ask questions to establish a single source of truth when it comes to the asset pool.

There are also some investigations which take place onsite that go beyond the inspection. Maintenance recordkeeping and maintenance protocol can be investigated to identify gaps in maintenance programs and whether OEM-prescribed recommendations are being followed. Alternatively, onsite work enables appraisers to inquire about equipment not onsite at the time of the visit. This provides an opportunity for the company to provide rental contracts or other evidence to support the existence of equipment, as well as the current whereabouts on the basis of the prevailing contract for that item.

To learn more about appraisals, please contact us today!

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