Every now and then a client asks about our California appraiser license and certification pursuant to Assembly Bill 527. The regulations of Assembly Bill 527, we explain, were established by OREA (Office of Real Estate Appraisers now called the Bureau of Real Estate Appraisers) and so are only applicable to real estate appraisers. Machinery and equipment appraisers are not subject to the regulations of Assembly Bill 527.
Machinery and equipment appraisers are not, therefore, technically certified. Machinery and equipment appraisers are, instead, accredited. The difference is that a government entity acts as a certifier, while professional organizations provide accreditation. There is, despite widespread confusion on this point, no certification of machinery and equipment appraisers by the state of California.
This distinction is particularly interesting to me because I am both certified and accredited. As a Certified Public Accountant (CPA) I am certified by the California Board of Accountancy to “certify” financial statements. Many people are under the false impression that the AICPA or the Financial Accounting Standards Board (FASB) certifies CPAs, but in fact, it’s the state in which a CPA practices that provides certification.
On the other hand, as a machinery and equipment appraiser, I am accredited by the American Society of Appraisers as an Accredited Senior Appraiser. That’s what the ASA after my name means. And yes, equipment appraisers are accredited by other appraisal organizations as well, but the American Society of Appraisers accreditation process for machinery and equipment is by far the most rigorous and intensive accreditation process in the industry – That’s why ASA accreditation is so highly regarded by courts and banks. It’s even mentioned in the federal registry!
Still, Google searches for appraisers of manufacturing equipment or farm equipment, for example, are generally more likely to include the words “certified equipment appraiser” than “accredited equipment appraiser.” And the search engine will find someone for you. It might even find me! Because although I’m not certified, I do understand how search engines work. And I understand that when a potential client is looking for a certified equipment inspection, what that person really wants is a qualified, experienced, reputable and dependable equipment appraiser.
Barring certification, then, how can you know if your equipment appraiser has the necessary education and experience to reach a supportable opinion of value on your construction equipment or vineyard equipment or the equipment in your grocery store chain?
You can’t go wrong starting with the IRS definition of a qualified appraiser. You could call this the Rule of 2:
Rule 1. The equipment appraiser’s appraisal designation has been earned from a recognized professional appraiser organization on the basis of demonstrated competency in valuing the type of property for which the designation is given.
In other words, an equipment and machinery appraiser has a designation related to competency in appraising equipment and machinery … not in appraising real estate, gems & jewelry, or fine art.
Rule 2: The equipment appraiser’s background, experience, education, and membership in professional associations demonstrates that the appraiser is qualified to make appraisals of the type of property being valued.
Rule 2 reminds us that it’s not enough just to have a professional designation that purports an equipment appraiser knows what he or she is doing. It’s also important that other factors support that designation. Which brings us to the Rule of 5 … Let’s take that up in the next blog. Maybe after that I’ll have discovered the Rule of 7 as well, which will provide you with everything you need to to be sure that your equipment appraiser is qualified, objective and experienced, despite not being covered by Assembly Bill 527!
Jack Young, ASA, CPA
Accredited Senior Appraiser with the American Society of Appraisers
NorCal Valuation Inc.
