The Dos and Don'ts of Hiring Aircraft Appraisers
Having an aircraft appraisal completed depends on many factors, like whether the aircraft appraiser will conduct a desktop or physical evaluation. The importance of an aircraft appraisal can’t be overemphasized, especially where there’s a financial transaction involved. Hiring an Accredited appriaser is important, and locating an appriaser with the knowledge base is just as important. Be sure to read on to learn more!
What Does an Appraisal Entail?
An aircraft appraisal is an objective opinion about the value of an aircraft. Aircraft appraisers are experts who very well understand the factors that make up the trends in the used aircraft market. The opinion is based on experience and repeated analysis of these factors. The opinion of value should be easy to substantiate and justify. For the appraisal to meet all the required standards, the appraiser must acquire all the relevant facts about the aircraft in question. Some of the factors to keep in mind are the aircraft logbooks and the interiors and exterior of the plane. Another important factor is the maintenance history of the aircraft. Here are some other dos and don’ts to consider as you hire aircraft appraisers.
1. Know the Reason for the Appraisal
All aircraft appraisals aren’t created equal. The purpose of the assessment determines the area the appraiser will look at and analyze. An appraisal for refinancing a loan is different from one that gives value for what the aircraft might cost post damage or modification. Some other purposes of aircraft appraisal include
- To get the value of the aircraft as a safeguard against the capital gain and tax assessments
- Provides a basis for decision-making in committing funds for the acquisition
- Provides independent evidence of the aircraft’s condition
- Distinguish an aircraft from others that may be listed for sale.
- to mitigate a loss due to damage from an accident
- to refinance an existing aircraft
Later, the aircraft appraisers may be required to justify what they said in the context of the purpose of the report.
2. Find Qualified Aircraft Appraisers
The aircraft appraisal industry is mostly unregulated. There are no required standards for training and experience. This means that anyone can technically give a value amount. However, this doesn’t give you a leeway to pick any appraiser that comes your way. Aircraft appraisers are governed by the Appraisal Standards Board, which stipulated published standards for appraisers. The board regulates the functions of appraisers, ensuring they live up to the standards of the publication. Two organizations to find lists of accredited appraisers areAmerican Society of Appraisers (ASA). and International Society of Transport Aircraft Trading.
3. Find Out How Much Time the Appraisal Will Take
You should allow enough time for the aircraft appraisers to finish their task. They may spend a short time inspecting the aircraft but take long researching data. You'll only be issued with the Certificate of Appraisal and Appraisal Report after the physical evaluation is complete.
4. Understand the Different Types of Appraisal
Aircraft appraisals are on three levels, with each one being more in-depth than the previous one. The more detailed a report is, the more expensive it becomes. The three types of appraisals are
- A pricing reference guide like VREF
- A desktop appraisal
- An onsite or physical appraisal
How thorough is each type of appraisal? Let’s have a look.
Pricing Digest Appraisal
This is also known as a VREF analysis, which works well for the needs of most buyers and sellers. Most types of transactions can take place based on the VREF evalution through the spoftware platofrm or published book. However, this type has its downsides. First, the data that goes in determines the value that comes out, so if you are not accurate neither is the value. The actual value of avionics may be hard to determine, for most this is a major obstacle to determining an accurate value. Thirdly, this type of appraisal doesn’t accurately incorporate fluid factors like supply and demand, or market fluctuations. This is one factor that makes the desktop type of appraisal a better option.
An Accredited aircraft appraiser (ASA) must be able to generate this type of appraisal. The methodology is first determined based on the work scope, and then research is conducted. In the sales comparison approach the appraiser evaluates an individual aircraft to see where it is in its maintenance schedule compared to similar aircraft. This way, he's able to give a more accurate assessment of value. The desktop appraisal is mostly used for general aviation, light jets and turboprops. The appraiser will check if the aircraft has maintenance expenses coming up. Is the aircraft enrolled in any engine maintenance program? Is it compliant with ADS-B? These, among other factors, will help an appraiser do a cursory check of the logbooks and specifications. Note that they don’t physically look at the aircraft when doing a desktop appraisal.
This type of appraisal is the most invasive. In the aircraft industry, it's considered the gold standard of appraisal products. The aircraft appraisers must get into the aircraft, and do a thorough investigation of the engine and maintenance logs. The appraisal is recommended for the unique types of aircraft. Unfortunately, it’s also the most costly type of evaluation.
5. Don’t Get Too Subjective
While you now know what to do when looking for aircraft appraisers, there’s also something you shouldn’t do. It’s advisable that you don’t get too subjective. The best kind of appraisal is an objective one. This means that you need to be open for any outcome in the evaluation. Some specific selling points of the aircraft may not add up to the valuation you expected. Missing critical compliance equipment could be a recipe for values lower than what you expect.
Aircraft Appraisers - Final Thoughts
Aircraft appraisal can be a tricky affair. If you're having an assessment done for the first time, it can be a while before you get reliable aircraft appraisers. For you to be on the safe side, ensure the appraisers you hire are accredited, experienced, and have knowledge in the field. You also need to know and distinguish between the types of appraisal available. The different types attract different costs. This will help you plan a budget beforehand. With the right kind of assessment at hand, all the parties to the aircraft appraisal will have some level of comfort. Keep your options and expectations open. By being objective, you’ll easily be able to manage any disappointment that arises from the final evaluation. Are you interested in an aircraft valuation guide? Be sure to place your order here.