This article deals only with the used market, the info derived from it, and how it may be considered by appraisers. Likely the most often mis-cited phrase of appraisers is the term Fair Market Value (“FMV”). David Campbell, a very able machinery and equipment appraiser, many years ago wrote an informative article noting that there are levels of FMV even from dealer information. As I recall (poorly) he addressed the value differences of FMV to a dealer, from a dealer, and perhaps user to user. It is worthwhile to also consider if the FMV indicator is based on dealer “floor plan in stock” assets or is the dealer acting as a broker between users, or even user to dealer (perhaps not taking title to the asset). So, be aware of where the information comes from. Or if speaking to a dealer or vendor ask the information source more than just “what is the FMV”, but ask if the info is to or from a dealer, user to user, etc. Some believe FMV is based on the used market generally represents the value of underutilized or overcapacity assets, that is, no one wants them, could afford to keep the asset, or could not make an adequate return on such assets. There are many other possible reasons why the asset is available. Enough said on this for now. The most obvious place to apply used market FMV information therefore is to appraisals for which used market FMV information is required, say for financing. Why? Simply, the lender may become the unhappy owner of such assets and wants to place the assets into the pool of assets available for sale. This pool of similar assets is the lender’s competition to sell such assets. Historic used market info, as well as current similar asset competitive info is a good indicator of value.  Orderly Liquidation Value (“OLV”) is a value concept for which there is not really much direct market evidence. Usually the value is derived downward from FMV or upward from Forced Liquidation Value (“FLV”). The percentage downward from FMV may be 10% to 35%, or upward from Forced Liquidation may be 15% to say 30%. The % answer depends on the nature of the assets. Lenders most often want to know OLV, cutting the selling time frame to say 6 months with the seller acting under duress to sell. The 6 month time frame may be longer than (say a car), similar to (say a Bridgeport vertical milling machine), or shorter than (say a carpet dying range) the usual FMV selling time frame. If 6 months is longer or similar to the usual FMV selling time frame no downward adjustment from FMV to OLV may be required. But if the usual time frame is 18 months and 6 months is the OLV time frame perhaps a downward adjustment of 10% to 15% per each 6 months additional is an appropriate reduction to FMV. So consider the variance between the usual selling time frame and the OLV time frame (and do such for direct FMV appraisals as well). But what of duress, this is another element of reduction to apply to FMV to derive OLV. Certainly the minimum usually would be 10%, with likely the max being 25%. Another thought, are there different levels of duress, say cajoling, then threats, then demands, then thumb screws. Likely not, but something to consider. Relating to FLV, auction value information is the most easily tracked with some published (paid for and/or Internet) information being available. Also the sale information may be available directly from the auctioneer. Often the data is dynamic and time sensitive with older or even yesterday’s data not reflecting or may appropriately reflect current FLV’s. If such data is not available for the subject asset being appraised then the FMV may be a starting point of consideration. Say dealers will usually not pay more than 50% of the FMV for an asset at auction. This depends on the asset, that is, as it relates to rigging, floor planning, cost of capital, time to sell, etc. Then take 50% of FMV to derive the FLV, or take the FLV and double it for the FMV indicator. An approach when attempting to translate FMV information into OLV or FLV is to simply ask the FMV information provider (say a dealer in the subject assets) the following types of questions: • What is the usual selling time frame for Fair Market Value? • What if the selling time frame is 6 months, what would be the discount from FMV (to get to OLV is your thought)? • What is the maximum that you would pay for this asset at auction? • What do you find is the usual FMV relationship to auction value for this class of assets? And the key phrase on this artful estimating is “good luck”.