What Farm Equipment Appraisals Mean for Lenders
The appraisal process for farm equipment can be an interesting process to navigate, however, it can help to have a trusted and experienced company to partner with. Let’s walk through what the process looks like.
What is a farm equipment appraisal?
An appraisal for farm equipment is an unbiased valuation from an accredited professional that is accurate and defensible. Appraisals can be used for a variety of things such as balance sheets, estate planning, risk management, divorce settlements, partnership interests, or assist in making the decision between financing new or buying used equipment. They can also help determine what a future picture might look like for a farmer and decide whether an auction is needed.
How does the appraisal process work with an auction company?
The auction company acts as the unaffiliated third party between the bank and the farmer. An appraisal is typically the first step of the broader auction process. An appraiser from the auction company will document the fair market value for the specific pieces of equipment using standardized data and methodology in the industry. The appraiser will then use that information to help the farmer and the lender decide the best solution.
Once the appraisal is done, the auction company meets with the farmer and lender on the utilization of certain equipment. They can help decide whether it makes sense to sell and purchase something different that is less expensive, or if it makes more sense to own or lease equipment. An auction company has tremendous amounts of knowledge of the market and can help make decisions on what the best scenario is for the farmer to free up cash.
A roadblock that a farmer can be faced with is when the lender thinks of an auction as a last resort. An auction company can act as a consultant and should be involved as soon as there is a possible issue or concern so all parties can avoid scenarios such as forced liquidation or bankruptcy. They have the best in-the-moment snapshot view of what the market is doing and can offer the best predictors for what is to come in the next seasons.
Work with an expert
Steffes Group is a leader in the agriculture world and performs appraisals daily. Performing over 620 auctions in 2020, we are a trusted auction company that has been in business for 60+ years. Our long-standing reputation and exceptional team are what drive our growth and opportunity.
For information on appraisals, visit our contact us page here and find our location nearest you: https://steffesgroup.com/Home/Contact.