Ask four people what a CNC lathe is worth and you may get four defensible answers, because they are answering four different questions. This is the single most common source of confusion in equipment valuation, and the single most common defect in equipment appraisals prepared elsewhere.
Fair market value in continued use assumes the machine stays installed and operating as part of a going concern. Fair market value removed assumes it is sold and taken away. The difference covers installation, rigging, and the value of an operating configuration.
Orderly liquidation value assumes a reasonable marketing period. Forced liquidation value assumes an auction on a compressed timeline. Across those four premises the spread on identical equipment routinely exceeds fifty percent.
The lender, the trustee, the divorcing spouse, and the insurer each need a different one. The report must state which premise was applied and why — and an appraiser who does not ask the intended use before quoting is not going to get it right.
Written by
Jeremy C. Johnson — President / Valuation Specialist. AQB Certified USPAP Instructor, Certified Residential Real Estate Appraiser, 21+ years and 7,000+ valuation assignments. Statement of capability →
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What the work actually looks like
Real assignments, client details removed — what each engagement actually turned on, rather than how it felt.
A house, a workshop of machine tools, a forty-year firearms collection and a stake in the family company — four disciplines that three appraisers had only partly covered. One engagement, one effective date, one set of assumptions.
A donation the regulations would have aggregated past the appraisal threshold, which the donor had assessed item by item. One qualified appraisal covering the group, itemized, signed inside the window the regulations allow.
An opposing report whose number was not obviously wrong — which is what made it dangerous. It failed on its own certification, and was answered section by section with an independent valuation to the correct definition of value.