Hiring an appraiser can be a daunting experience, and finding someone with the proper expertise and knowledge to appraise your aircraft can be difficult. Most aircraft owners’ first experience with an aircraft appraiser is at the time of purchasing, assuming financing was required. Did you know that there are many reasons why you need your aircraft appraised beyond financing? I am often asked what the reasons are to hire an appraiser, what differentiates one appraiser from another, and, more importantly, why you should only hire an ASA appraiser to appraise your aircraft. Keep reading to learn more about why you may need to hire an appraiser.
Whatever your needs may be, hiring a professional and experienced appraiser in aviation will give you an accurate assessment of an aircraft and its value. It can also help you avoid a few things that an inexperienced or biased appraiser might otherwise miss.
Need an appraisal for your aircraft? Contact VREF to get started today.
4 Benefits & Reasons To Hire An Aircraft Appraiser
It’s important to know that all the American Society of Appraisers (ASA) Accredited Senior Appraisers, including real property, gems, and jewelry, business valuation, as well as personal property, all adhere to the Uniform Standards of Professional Appraisal Practice (USPAP), which was established to provide oversight as well as the standards applicable when appraising. Uniform Standards of Professional Appraisal Practice (USPAP) are generally accepted and recognized as the ethical and performance standards for the United States’ appraisal profession. Adopted by Congress in 1989, it contains standards for all appraisal services, including real estate, personal property, business, and mass appraisal. USPAP compliance best ensures that your appraisal is unbiased with thoughtful opinions of value.
Since 2006, USPAP has been updated every two years, and you should ask if your appraiser is both compliant and current. If so, they should be able to send you a certificate of completion, as USPAP requires testing and completion of coursework to earn a certificate. If you are a bank or financing aircraft, accepting an appraisal that does not meet USPAP compliance could be disastrous.
One of the more troubling issues everyone, including lenders, faces when hiring an appraiser is knowing what to look for. Even though common sense plays a significant role in mitigating misleading and inaccurate data, there are a few things you need to know.
Before jumping into the top four reasons you might need to hire an appraiser, I want to point out that no one should ever hire or rely on appraisal advice from a broker, dealer, or repair facility.
Why, you ask? The answer is simple; it’s called a bias, as a broker or dealer will have an incentive in valuing the aircraft and a vested interest in the sale via a paid commission. A dealer will be purchasing your aircraft; therefore, they have a vested interest in the outcome of their value. A repair facility is just that, and they do not have the experience, knowledge base, or understanding of proper methodology to assess the value of an aircraft accurately; they should, however, be relied upon to inform you of maintenance repairs and their associated costs.
It’s even worse than it might appear, as USPAP prohibits anyone from having a vested interest, beneficial interest, or financial interest from appraising, period!
This is not to say that a broker or dealer does not know the market but who they are looking out for. An independent appraiser is there to protect your best interests. A broker or dealer is there to protect their best interests. Understandably, machinery dealers play a crucial role in inventory availability and take a substantial risk by purchasing that inventory for resale.
By relying on a neutral, independent, and unbiased appraiser looking only for your best interest (fiduciary), you are guaranteed to have more accurate results, allowing you to keep more of your hard money where it belongs in your bank account!
Reliable Accuracy & Proven Industry Experience
VREF’s team of the American Society of Appraisers (ASA) Accredited Senior Appraisers ensures that the appraisal follows a particular set of standards, methodology, and ethical guidelines.
What Is the ASA?
For many years, people would claim to be professional appraisers, giving the public their best guess on what an item is worth. But for many, it wasn’t simply enough for someone to say they knew what they were talking about. Mistrust, bias, and a lack of regulations for appraisers drove individuals to come together and establish a professional affiliation for appraisers in 1952. The organization built the bridge between appraisers and others by outlining a few crucial understandings based on experience, knowledge, and moral ethics.
Currently, the ASA is the only professional appraisal organization accrediting professional appraisers from all six appraisal disciplines, including:
- Personal property
- Business valuation
- Real property
- Machinery and technical specialties (Aircraft are part of this discipline)
- Gems and jewelry
- Appraisal review and management
An ASA accreditation is considered the highest level of training with the highest level of a proven methodology. This is because there are many minimum requirements to achieve this accreditation. Some credentials include proven years of experience, testing, and other professional evaluation methods. And while anyone can say they are a “certified appraiser,” only genuine ASA accredited appraisers have proven knowledge of their industry that an international organization has evaluated. So, it’s critical to remember that a “certified appraiser” does not exist, as no one can certify the value. Many appraisers use the word certified, which should be a red flag. You are only genuinely looking at comprehensive aviation appraisals with those who have an ASA accreditation.
What To Ask Your Appraiser
An ASA aircraft appraiser with genuine credentials will be able to give you the following when asked:
- Proof of being an ASA Accredited Senior Appraiser (You can look it up on the ASA website HERE.
- Referral list and recently completed appraisals (full-time appraisers are completing dozens of appraisals a month)
- Proof of USPAP compliance
- Proof of insurance, including Errors and Omissions, as well as General Liability
If your appraiser is not insured, neither are you regarding mishaps, mistakes, and negligence. Anyone you let into your hangar needs to be insured, and you’ll have the most seamless and timely experience with an ASA Accredited Senior Appraiser in aviation.
Learn more about ASA Accredited Senior Appraisers with VREF.
Extensive Aircraft Knowledge
Choosing someone with extensive experience in aviation means they’ll know what to look for when it comes to your aircraft and apply the proper methodology based on the scope of work. A seasoned and experienced appraiser follows specific criteria to determine the value of the aircraft. A professional appraiser should have in-depth knowledge of your aircraft model and be able to demonstrate it. The knowledge required to complete the appraisal is equally important, depending on the type of appraisal you need. For example, assessing the diminution of value on a damaged aircraft is a much different approach and report than determining the current market value for financing purposes. Professional appraisers should be able to provide proper guidance based on the scope of work and not be swayed to produce a result for the desired outcome for a client.
Reasons You Might Need to Hire an Appraiser
There are, of course, many reasons why you may need to have your aircraft appraised. Insurance renewal, estate planning, damage, and litigation are other reasons you may be required to hire an appraiser. But you may also want to donate an aircraft to a flight school instead of reselling it. If this is the case, an appraiser will help you determine the fair market value for donation purposes and supply you with a signed IRS Form 8283. You may have a tax bill that seems higher than it should be, and only an appraiser can help you appeal and fight the bill if this is the case. Most insurance companies will want to see an appraisal to support any increase in coverage, which is a popular subject in my office as aircraft values have skyrocketed in the past 18 months. Estate planning is critical, as I have spent a fair amount of time in probate court assisting clients, and only a seasoned, experienced appraiser should be trusted with helping in these matters.
VREF Completes Thousands of Aircraft Appraisals Annually
VREF has over 28 years of hands-on aircraft experience. Our appraisers have owned, operated, and supported aircraft, not just read about them in a book or online. VREF offers aircraft and engine valuation services for aircraft of all types. Whether you’re searching for an appraisal for a small experimental aircraft or an entire fleet of aircraft or commercial assets, we can help.
If you need an appraisal, ask for Jason Zilberbrand, ASA, when you call.