How to Assess the Value of Used Spray Rigs and Equipment
Steve Eddy instructs students on the properties of different coatings.
Equipment technology is changing at a rapid pace as well as the increased demand for more affordable spray rigs. As with any technology, older equipment is often viewed as obsolete and less desirable. Shoppers of used spray equipment often worry about the availability of parts as time goes on. This is especially true as spray rig manufacturers produce spray rigs to accommodate the new, more compact, portable spray machines as well as creating modest versions of the higher-priced rigs to make them more affordable. This means that new spray rigs can be purchased at comparable price to used equipment, and in some cases, even less than used spray rigs. Moreover, the buyers of new equipment are getting a warranty, free training and tech support. Buying used is a higher risk for less experienced contractors. While there is still a viable market for used rigs and equipment, new equipment and spray rigs have become much more competitive with the used market.
You know what you paid for it when new. Now, you want to sell it. But, what is it actually worth? Can you be honest with yourself about the value of your used equipment?
When selling used rigs or equipment, ask yourself the following questions:
- What is the Fair Market Value?
- How much does the age of the equipment reduce its value?
- Who is your target buyer (contractor, builder, roofer, flooring contractor etc.)?
- What are the current market trends (next 5 years) for the capability of the equipment? Is there a demand in the economy for this equipment’s capabilities? Is the demand growing, steady, or Shrinking?
- What are you willing to spend, in the way of time, money and energy, to adequately market your equipment to your target purchaser? This is not free.
- What sources of money will the purchaser most likely have available to him/her to pay cash? Many lending institutions shy away from used equipment.
- What costs will you incur procuring and purchasing the parts and maintenance to bring your spray rig and its equipment up to Fair Market Value?
- What will the costs be to transport the equipment from its current location to the buyer’s new location? This is another real consideration that must be addressed or agreed upon between the seller and buyer. Should those costs be included or deducted from the Fair Market Value?
Determining Fair Market Selling Price
What you really want to determine is the “Fair Market Selling Price”, which is defined as the Fair Market Value minus the depreciation due to age and the cost to bring the equipment up to Fair Market Value. I talk with people, who are buying and/or selling SPF, Polyurea and coating equipment, nearly every day. Each situation has its own unique set of considerations. That’s why it‘s best to speak with someone who can provide you with a professional appraisal.
Over the years. it has been my experience that sellers who try to hold out, in the hopes of getting their ideal price, end up keeping their equipment a lot longer than they had anticipated. Had they sold their equipment sooner, they would have been able to put that money toward their interest-bearing loans; thereby, saving money in the long run. Some may have over-paid for their current rig; therefore, they will have a difficult time making the finances balance between what they paid and what they still may owe. Those who still owe money on their used equipment sometimes base their selling price on what they still owe as opposed to what it is worth. Again, getting the best fair market price today enables sellers to utilize that money to pay down their debts, reduce or eliminate what they would have paid in more interest, had they hung on to the bitter end, and perhaps still not sold it. See example and other cost considerations below:
Fair Market Selling Price means “the replacement value of each piece of equipment minus the costs of cleaning and repairing the equipment to bring it up to 100% operating condition, exceeding the manufacturer’s minimum specification”. All the equipment must be the correct size to operate the complete rig independent of outside power source (except for temporary heat while not in use).
Example: Amount paid when new (not including taxes) = $68000. Assuming the equipment is 4 years old, (deduct 30% the first year and 10% each year after) = $34000)
Cost to repair and clean (labor and materials) 40 hours (@$50)
plus $2000 for materials = $4000
Marketing costs = between $1000 to $2000
Delivery cost = $1500
Actual Fair Selling Price = $29500
Looking for a Fair Market Appraisal for your used rig or equipment?
Looking for advise before making a potentially expensive purchase?
Contact Steve Eddy & Associates at 616-514-8359
About Steve Eddy: Steve Eddy is the CEO of Steve Eddy & Associates. He has been a professional SPF, Polyurea and coating equipment, material provider, industry consultant and trainer for over 30 years.
Steve Eddy Associates
2815 Wausaukee NE
Grand Rapids, MI 49525
Phone: 616-514-8359
email: steve@steveneddy.mygbiz.com
web: www.steveeddyassociates.store
Copyright 2020 by Steve Eddy Associates