The short answer is "Yes;" however, there is much to consider when an appraiser is making this determination.

By: AccuVal Associates, Inc.

An appraiser, whether a real property or a personal property expert, must be able to differentiate between what is real estate, real property, personal property, fixtures and trade fixtures. These terms are fundamental to real and personal property appraisal and can be defined as follows:

• Real estate - a parcel of land and any associated site and/or building improvements.
• Real property - the interests, benefits and rights inherent in the ownership of real estate.
• Personal property - items that are movable and not permanently affixed to the real estate.
• Fixtures - items defined by law as being part of the real estate. Examples include bathroom toilets and sinks, janitor sinks, hot water heaters, drinking fountains, kitchen sinks and garbage disposals, dishwashers, etc.
• Trade fixtures - these are items installed by a lessee in a leased property and are considered items of personal property to be removed by the tenant upon expiration of the lease unless covenants of the lease stipulate that the asset is to be surrendered. Examples include storage tanks or silos, compressed air systems, craneways, buss ducts, etc.

It is not uncommon for a real estate appraisal to be performed in conjunction with a machinery & equipment (M&E) appraisal. If the building is leased, both the real property and the personal property appraiser should read the lease to determine rights of ownership to determine the status of any trade fixtures.

Regardless of ownership though, the two appraisers should be in contact to discuss the type of building being appraised and determine whether certain assets add more value to the real property than if they were removed and made a part of the M&E appraisal. Examples of such assets include craneways and cranes, silos and tanks, compressed air systems, refrigeration equipment, insulated panel walls, and boilers.

Through the market research process and the determination of the highest and best use of the property, the real estate appraiser must provide the guidance to the M&E appraiser as to which items of personal property are to be included in the real estate appraisal and not included in the M&E appraisal. The comparable sales utilized by the real estate appraiser play a key role in determining whether any personal property is to be included in the real estate appraiser's opinion of value. The comparable sales utilized in the report should include the same types of personal property being considered. This would indicate that buyers of properties such as this recognize the added value of these types of personal property. If the comparables do not include the items of personal property, then specific adjustments to the sale price of the comparables need to be made to account for this difference.

It is important to note that just because specific personal property was included in a real estate appraisal in certain market or property type doesn't mean it should be included in a different property of the same type or market. The age and condition along with the functional utility of the building improvements are factors considered by the real property appraiser when determining if personal property assets are included in the opinion of value. Real estate markets and buyers' perception of value added are constantly changing. Buyers and their ultimate use of the acquired property are key indicators of market trends. Assets such as craneways and cranes that previously added value may now be a detriment if included in a real estate appraisal.

Coordination among appraisers at the forefront of a valuation project ensures assets are only included in one report and are not being double counted. If a real estate appraisal is not being performed at the same time as a personal property appraisal, the M&E appraiser should inquire if any previous real estate reports are available for review.

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About AccuVal
AccuVal provides a broad range of valuation, advisory and asset management solutions that contribute to growth or help ensure survival. We appraise the business enterprise and shareholder equity; bonds; intangibles and intellectual property; machinery and equipment; inventory; real estate and accounts receivables in over 100 industries worldwide. Learn more at www.accuval.net.