Do You Need a Certified Equipment Appraiser?

Did your banker, attorney, or accountant tell you that you needed a “certified equipment appraiser”? It is a common request, but the word probably does not mean what they think it means.

They were likely thinking of real property appraisers, where certifications are issued in the U.S. by state governments and where certification is a legal requirement for many land and building appraisal projects. It does not work that way for machinery and equipment appraisers. There is no state certification for equipment appraisers anywhere in the United States, which means nobody in this field holds one.

Instead, equipment appraisers earn professional designations from appraisal organizations. Some organizations call their credential “certified.” Others use “accredited.” Some appraisers hold both.

That does not leave you without a way to judge. It just means that what makes an equipment appraisal acceptable to a lender, a court, an auditor, or the IRS is something other than a state license. We will explain what that something is, so you can go back to whoever asked and tell them you found the qualified equipment appraiser they said you needed.

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The wording often comes from real estate.

Real property appraisers work within a state licensing and certification system. Federal law requires appraisers working on certain federally related real estate transactions to be state-licensed or state-certified, and every state administers that through its own appraiser regulatory agency, with examinations, experience requirements, and a license number.

People who handle lending, litigation, estates, or tax matters know that system, so “hire a certified appraiser” becomes familiar shorthand. In those worlds, an uncertified real property appraisal may not be usable. There is no comparable state credential or certification for equipment appraisers.

The same gap exists in every other appraisal discipline. Business valuation, fine art, jewelry, aircraft, and other specialties use credentials created by their professional organizations. Depending on the organization, a qualified member may be called accredited, certified, designated, or something else.

That does not mean there is no way to determine who is a qualified appraiser. It means you need to look at designations issued by those professional organizations, as well as experience and independence, rather than search for a government-issued equipment appraisal license.

These terms overlap, but they are not interchangeable in every setting.

Certified. While it is the same word as used in real property, it means something different here. Outside of real property, “Certified” is usually the name of a credential awarded by a professional organization. The Association of Machinery and Equipment Appraisers, for example, awards the Certified Equipment Appraiser, or CEA, credential.

Accredited or designated. “Accredited” and “designated” usually refer to credentials awarded after an appraiser meets an organization’s requirements. The American Society of Appraisers awards the Accredited Member, or AM, and Accredited Senior Appraiser, or ASA, designations in disciplines like Machinery & Technical Specialties.

“Certified,” “accredited,” and “designated” all refer to a professional credential. They are not a license or certification issued by a state or federal agency.

Qualified. “Qualified” can be an everyday description, but it also has a defined meaning in federal tax rules governing certain charitable contributions. Those rules use the terms “qualified appraisal” and “qualified appraiser.”

A qualified appraiser must have verifiable education and experience with the type of property being valued. The appraiser must also regularly prepare paid appraisals and cannot be a person excluded under the tax rules. A recognized designation for that property type can help satisfy the education-and-experience test, but the appraiser must still meet the other requirements for the assignment.

Here is the part that makes the whole subject confusing.

Outside real property, certified and accredited are simply words that associations chose for their own designations. The American Society of Appraisers named its senior grade Accredited Senior Appraiser. The Association of Machinery and Equipment Appraisers named its senior grade Certified Equipment Appraiser. Both are professional credentials awarded after an appraiser meets a set of requirements, although those requirements are not identical.

Garrett Schwartz holds the Certified Equipment Appraiser designation from AMEA, alongside his ASA accreditation. Matthew Edelstein does not, and it makes no difference to the quality or the acceptability of his work. Part of the appeal of AMEA’s CEA designation, frankly, is being able to answer this exact question, “Are you a certified equipment appraiser?” with a yes.

But it is a membership credential, not a license, and that is the key takeaway. If you were told to find a certified equipment appraiser, what you actually need is not that word. It is an appraiser with a recognized designation in machinery and equipment, working to the standards described below, delivering a report scoped for the use you have in mind. That is what the person who sent you looking will accept.

Three things do the work here that a state license does in real property.

What the designation required. This is the question to ask about any appraiser, and here are our answers. The ASA senior grade in Machinery & Technical Specialties calls for a series of valuation courses with examinations, a USPAP course and examination, documented appraisal experience, and submission of a demonstration appraisal report for peer review, maintained through continuing education and reaccreditation. AMEA’s Certified Equipment Appraiser credential calls for five years of experience appraising or buying and selling machinery, the 15-hour USPAP course and examination, 70 hours of continuing education every five years, and submission of an appraisal report to AMEA’s review committee every four years. Both put someone else’s eyes on the actual work, which is the part that separates a credential from a membership.

USPAP. The Uniform Standards of Professional Appraisal Practice are the recognized standards for appraisal work in the United States. They are written by the Appraisal Standards Board of The Appraisal Foundation, which Congress authorized as the source of appraisal standards and appraiser qualifications. While real property gets its rules through state licensing, machinery and equipment gets them through appraisers choosing to work to USPAP, and through the professional bodies that require it. Outside of the U.S., International Valuation Standards serve a similar purpose to USPAP in the U.S.

The certification inside the report. Every USPAP-compliant appraisal report includes a signed certification. In it, the appraiser addresses the accuracy of the reported facts, impartiality and bias, any interest in the property or parties, contingent compensation, personal inspection, and significant appraisal assistance. That is a real, signed component of the report, and it is what a reviewer looks for. Our reports carry it.

Taken together, that is what a lender, an auditor, a court, or the IRS is actually checking. Not a state license, because none exists for this work, but a credentialed appraiser, a recognized standard, and a signed certification with a name on it.

• Which organization granted the designation, and what did it require? Testing, documented experience, peer review of real appraisal work, continuing education, and a code of ethics are what give a designation weight.
• Which discipline does it cover? A real property or business valuation credential does not qualify someone to value machinery. Ask specifically about machinery and equipment.
• Who signs the report, and will that person testify? The appraiser who signs is the one who has to defend the work in deposition or at trial.
• Does the appraiser deal in the equipment? Some appraisers also buy, sell, broker, or auction the assets they value. You should know that before you engage anyone.
• Will the report meet the requirement you actually have? A lender, an auditor, a court, and the IRS each want something different. The intended use drives the value definition, the scope of work, and the report format. See our page on types of equipment appraisal reports.

If the person who asked you for a certified appraiser wants to hear it from us, we are glad to speak with them directly. It is a short conversation and it usually settles the question.

Prepared by Garrett Schwartz, FASA, CEA, managing partner of Sencer Appraisal Associates, past International President of the American Society of Appraisers and editor of the fourth edition of the ASA’s Valuing Machinery and Equipment.