The Dos and Don'ts of Hiring Aircraft Appraisers
The joy of taking flight is one like no other. The business of getting to that take off, though, can be another matter.
The purchase or sale of an airplane isn't exactly an everyday sale. For many buying or selling an aircraft, it'll be their first time at the rodeo. That's all the more reason to be prepared when getting into an aircraft transaction.
Hiring an aircraft appraiser is an integral part of the aircraft transaction process. If you've never worked with an aircraft appraiser before, you must prepare yourself for the experience.
Read on, and we'll walk you through all the dos and don'ts of working with aircraft appraisers.
Understanding Aircraft Appraisal
If you're going to get an aircraft appraised, hopefully, you understand why you're taking such a step. But many potential aircraft owners call an appraiser up because they're told to do so. They don't take the time to understand the reasons behind the recommendation.
A proper understanding of the aircraft market is hard to get. A big aircraft company is likely to have a team of appraisers on hand at all times who keep incredibly detailed track of aviation industry trends and costs. Those unlucky enough to not own a multi-million dollar company have to outsource to receive such expertise.
An aircraft appraiser uses their unique knowledge of the aircraft and market trends to estimate the value of a given aircraft accurately. Appraisers are held to a high standard and must be able to back up their estimates with a massive amount of data.
Their estimates must hold up to scrutiny even in a court of law
You might need an appraisal for a variety of reasons. You can use an appraisal to find the right selling price for an aircraft accurately or to see if the buying price for another is reasonable.
There are many other reasons to have aircraft appraised. You might be refinancing a loan, looking at an insurance policy, or just curious about the current value of your aircraft.
It's essential to understand the purpose of your appraisal. This way, the appraiser you hire can take special care to analyze areas most closely related to those goals.
Do Find Someone Qualified
The aircraft appraisal industry is unregulated. That means that anyone out there can technically give a value amount for an aircraft since there are no required standards for training or experience.
That doesn't mean you should throw a dart at the wall and hope you hit someone who knows what they're talking about or that has the proper amount of experience.
The Appraisal Standards Board develops and publishes
a set of standards on behalf of appraisers. Ensuring that your appraiser lives up the standards of that publication can be significant.
There are two organizations in the aircraft appraisal world that are known for their excellent reputation. They are the American Society of Appraisers
(ASA) and the International Society of Transport Aircraft Trading
(ISTAT), and they both have long histories. VREF
has a substantial staff of Senior Accredited Appraisers through both the ASA and ISTAT. It is important to note that hiring an appraiser is utilizing his knowledge and experience. If the appraiser is not qualified to appraise the asset, then he/she should bring in an appraiser that is qualified, or the report would not be considered USPAP compliant.
Both organizations provide a wealth of training for their members. A badge of certification from one or both of these organizations can mean a lot in terms of an appraiser's credibility.
Regardless of who you go with, you should ensure that the appraiser you hire qualified and experienced when it comes to the kind of aircraft under consideration. Ensure that a field visit is part of their process.
An appraisal is a tricky business, and there are many ways to come to a final number. The last thing you want is someone who doesn't know what they're talking about, giving you an amount that will lead you in the wrong direction.
Don't Get Too Subjective
A proper appraisal of an aircraft will be an objective evaluation of the plane. You are filling out a balance sheet, not a sales pitch. As such, don't be surprised when specific selling points don't add up to the valuation you might wish for.
Having the wrong floor plan or missing critical equipment for compliance might be a recipe for lower than anticipated values.
Just because you have a particular taste for a design or feature, doesn't mean that aspect will add value to your aircraft. There are certain aspects you might find cool about an airplane that detracts from the cost.
Enjoyment is subjective after all, and it's essential to keep this in mind when it comes to appraisal.
Do Consider Databases Used
An appraiser will need to pull and use a specific market database for their analysis. Publications are consulted frequently by aircraft appraisers, but not all these publications paint the same story about the state of the market or industry.
VREF Aircraft Value Reference & Appraisal Services
delivers aircraft and engine data through online subscription services and published quarterly digests. VREF provides valuations, appraisals, and advisory services to a worldwide client base of aviation professionals including, banks, financial institutions, lessors, manufacturers, aircraft operators, and suppliers. VREF Aircraft Value Reference & Appraisal Services plays a crucial role in informing decisions and identifying opportunities within the aviation industry. VREF is also the Official Valuation Guide and Appraisal company for the AOPA
The database used for reference can have a significant impact on the final estimated value of an aircraft. As such, it's vital that you, as the hiring party, stay well informed.
The Dos and Donts Of Aircraft Appraisers
Aircraft appraisal can be a tricky business. If it's your first time working through an aircraft transaction, it can take a minute to get used to working with aircraft appraisers. But with the above tips, you'll be well on your way to a proper valuation.
Need more info about aircraft ownership? Feel free to contact us
with any questions.