How Does the Aircraft Appraisal Process Work? What You Need to Know About Aircraft Appraisals
There are roughly 220,000 civil aircraft registered in the United States alone. You can determine the value for over 500 makes and models at VREF. Whether you're looking to buy or sell an aircraft, one of your first steps is to get an appraisal. A proper evaluation will allow all parties involved to know the value of the plane. The aircraft appraisal process is straightforward in most cases and should take a short time to complete. Keep reading to learn more about how aircraft VREF appraises aircraft.
What Is an Aircraft Appraisal?
Before we jump into the process, let's look at exactly what an aircraft appraisal is, and more importantly, why you should only hire an accredited appraiser. An Accredited Appraiser has completed training and follows a strict methodology, and they are required to pass both ethics and USPAP exams. I have written blog posts in the pasty about USPAP and why it is so important. VREF has a large staff of Senior Appraisers with specialties ranging from warbirds to real-property. We can appraise experimental aircraft, LSA, Business Jets, Helicopters, Drones, and Airliners, and we are specialists in determining value with regards to damage history. An aircraft appraisal report should be detailed, outlining the methodology used, and it should include the backup work the appraiser utilized to come to his or her opinions. An aircraft appraisal report contains information about the aircraft that was the subject of the appraisal. Including the avionics and equipment installed, and if the Sales Comparison Approach was used, the report should also provide a matrix of comparable aircraft. Both a desktop and on-site evaluation are accepted and meet USPAP requirements and compliance; however, some financial institutions will mandate the on-site appraisal. Did you know that you might not need a USPAP complaint report? Our VREF Verified Value Reports provide a range of value, along with a ton of data on the aircraft. The significant difference is that they are not USPAP compliant. Many banks and buyers of aircraft rely on them as a "Carfax" report so let VREF do your tire kicking for you. In most aircraft sales, there are three parties involved, each of which has an interest in knowing the value of the aircraft in question. Any or all of these may request an appraisal during the purchasing process. The seller should know they're getting a fair price for their aircraft based on what others are selling theirs. The buyer should know they're paying a fair price and be prepared to deal with any safety issues that are discovered during the appraisal process. A bank or lending organization will want to know the value of the aircraft if it's being used as collateral for the loan.
Aircraft Appraisal Process
Now let's go ahead and get into the process itself. There are four steps to the appraisal process that an ASA-accredited appraiser will follow.
The first step is to provide the documentation to the appraiser for the report. A thorough investigation can often lead to questions or in some cases, new answers and mitigate a potential problem before it occurs.
2. Inspection if it's an On-site
Once the appraiser can get to the aircraft, they'll provide an on-site inspection. Typically, this will take between 3 and 6 hours. Here are some things the appraiser will do during this part of the process:
- Physically examine the interior and exterior of the aircraft
- Take photos of the aircraft to document its condition
- Review logbooks and other records provided
- Take inventory
If it's not possible to get access to the plane, an appraiser can perform what's known as a desktop appraisal. They'll still provide you with a USPAP-compliant appraisal report.
3. Market Research
This part of the process is what the appraiser uses to determine the value of the aircraft by looking at the sales comps from similar aircraft (If a Sales Comparison Methodology was used). While this is the most common type of appraisal, an Accredited Appraiser can also use the Income or Cost approach to generate an opinion of value.
4. Written Report Generated
All of the information from the previous two steps get compiled into one comprehensive report. The report is then provided to the Client and anyone else listed as an intended user.
Ready to Have an Aircraft Appraised?
Now you know more about what an aircraft appraisal is and about the appraisal process. As you can see, it's an essential part of purchasing airplanes, helicopters, and other aircraft. If you require an aircraft appraisal, contact us today. One of our accredited appraisers will be able to quickly provide you with whatever you need, whether you're selling, buying, or insuring an aircraft.