Desktop deep-dive
In our previous article, we explained the two types of appraisals – site visit and desktop – and laid out the primary benefits for a client in pursuing a site visit appraisal.
In this article, we provide an overview of a desktop appraisal and highlight some of its benefits.
First, a quick and basic definition: A desktop appraisal is an appraisal without inspection; it’s an assignment where the appraiser is provided all of the information about the machinery and equipment being appraised and does not confirm that information by physically viewing and inspecting the assets.
Desktop appraisals may not offer as many benefits for clients as site visit appraisals do, but the most important ones they do offer are:
Cost: A desktop appraisal usually comes with a lower fee compared with a site visit appraisal, for fairly obvious reasons. The appraiser has no travel expenses, nor does the appraiser bear as much (or any) responsibility for accurate identification of assets. This enables them to provide a more competitive rate quote.
Speed: While we mentioned speed as a benefit of a site visit appraisals, it can also be a benefit of a desktop. That’s if – and it’s a big if – the information is prepared, organized and provided by the client in a timely fashion. If that happens, desktop appraisals can often be completed more quickly because the appraiser can schedule the work more efficiently around other assignments.
Confidentiality: Again, while this was mentioned as a benefit of site visit inspections, it can also be a benefit of desktop appraisals. With desktop appraisals, there is no stranger walking around the business, fending off inquiries from employees and raising suspicions about the company being sold.
Desktop appraisals bring some inherent downsides compared with their site-visit counterparts, of course. These include:
Client involvement: A desktop appraisal requires substantially more time and effort from the business owner compared with a site visit
Lack of independence: No site visit means no independent verification of asset conditions or quality (or actual existence, for that matter). It also means no independent observations for “red flags” like deferred maintenance.
Lower valuations: A business owner will often focus on their large capital investments and ignore smaller assets, which can add up to significant appraised value they’re missing out on. They may also assign the cataloging job to an inexperienced employee who may miss major value factors (such as expensive machine options) in their descriptions.
Skepticism: Desktop appraisals can be more easily challenged in court, audits, reviews, etc. It makes it easier for one side to question an appraisal’s valuation if the appraiser wasn’t able to inspect it in person.
As this and the previous article have hopefully laid out, there are benefits to both types of appraisals. When it comes to deciding which one may be best for your needs, the main determinants are convenience and trust. When you arrange for a site visit appraisal, the appraiser takes care of everything and verifies everything. With a desktop, you might save money and time, but the business owner has to do a lot of legwork – and nothing is verified by an independent party.
Of course, if you’re not sure which may be the best fit for your needs, ask your appraiser to quote both options and to discuss the pros and cons of each for your situation.
If you choose an appraiser who can give you sensible, straightforward discussion about your options, you will be more comfortable as you move forward with the assignment.