Top 7 Factors Affecting The Value of Used Aircraft!
Have you ever wondered what an appraiser is looking at to determine value? This article will provide you some insight into what an appraiser is thinking and what information is critical to assessing the value of an aircraft and why!
Appraising and learning how to appraise is an exciting topic and one that I get asked about often. Some people are intrigued by appraising and want to know what it takes to become one, and others want to know what we are looking at so they can better position their assets to achieve the highest possible valuation.
Appraising anything requires substantial knowledge and experience. If you are appraising machinery, you must understand the economy, the assets market, and dynamics. Maintaining a pulse on the market is the most challenging part of appraising as most appraisers do not have the volume of business to stay active full time. Firms like VREF conduct thousands of appraisals a year, so you are paying for our expertise as well as our comprehension of a very complicated international market place. Unlike real estate, there is no MLS to hop onto to gather comps, and even worse, most brokers of aircraft will not share the data with you. So what do you need to know about the factors that impact value?
Read on to learn all about what to look for when you're judging the value of aircraft! Getting the best deal means being standing out from everyone else in terms of knowledge and preparation!
1. Total Airframe Time and Age
As with all types of machinery, aircraft depreciate, and appreciate over time. Aircraft values are impacted by the economy, demand, supply, technology advancements, airworthiness directives, modifications, and refurbishment or condition.
In other words, a new aircraft could be greatly depreciated if it has flown more hours then the industry average. While total time and engine status, along with airframe age, tend to be the initial categories people look at for an overall sense of the planes value, it is only providing a small amount of information. This is especially true as an aircraft ages. Overall total time and age have less impact on an aging aircraft; instead of relying solely on this information, you will also need to know the pedigree of the aircraft.
2. Engine Time Since Overhaul and Engine Programs
Engines come with standard recommended TBO (Time Between Overhaul). This is the single most confusing conditional item when valuing an aircraft. Simply put, an engine that is over TBO might be operationally perfect, but the next potential owner should not be penalized for your lack of maintenance, much less utilization. Therefore, it is important to understand an engine, and its value relies on TBO's being followed.
An easy way to accomplish higher value and tackle looming maintenance liability is to enroll in a maintenance program. You'll get the benefit of substantially increased value while removing surprises from future events. More importantly, your engine will always be served based on TBO.
3. Updated Versus Outdated Equipment
There's a wide range of avionics technology installed inside the aircraft. The equipment, along with the date it was installed, is important to know; while you can make assumptions without knowing when the equipment was purchased, it is critical to know the install date to be accurate.
Aircraft with original steam gauges and glass panels have almost identical markets in terms of overall buying populations. Be careful upgrading avionics, especially if it is for resale purposes. Chances are you will not achieve a higher sales price net of your investment.
4.Logbooks and Records
An aircraft and its pedigree are dependent on the records and logbooks being organized. One thing I can assure you is that missing records or logbooks will hurt the overall value. If you are selling your plane, now is a good time to get the logs in order and assist a buyer in reviewing them. If they are missing, it is not the end of the world; contact Jason Zilberbrand, ASA for help!
5. Damage History
This category is easy to understand and very difficult to calculate. Even industry veterans have a hard time determining the loss of value due to an incident or accident. Damage history is based on numerous factors, what happened when it happened, and how it was fixed. There are no formulas to use, and my best advice is to contact me for help.
6. Paint and Interior
Paint and interior condition is essential to the overall value of the aircraft. A plane with dirty paint or visible blemishes is one that most buyers will assume is also poorly maintained. Aircraft suffer corrosion damage and unforeseeable maintenance events due to many things, one of them is not properly keeping your plane clean, dry, and out of the weather. Paint is the very first thing a potential buyer sees, so why not keep it looking as good as possible.
The bigger the aircraft, the more expensive and the more customization you can do. This is not always an increase in value, actually, some floor plans and options are major deductions. At the end of the day, you will need to determine the overall condition for each and then break down the interior into its smaller sub sections like seats and carpet to determine its overall impact on the plane's value.
VREF supplies you this data, so feel free to subscribe to VREF Online if you want the latest and most advanced appraisal tools available to the industry.
Aircraft owners love to tinker and add mods to their aircraft; some models literally have pages upon pages of approved STC's. I have seen piston aircraft converted to the turbine, and more engine conversions then you can imagine. Modifications are important to the appraiser because of their overall impact on value. As aircraft age and then get modified, it gets complicated to know what the baseline value is, so keep proper records of your modifications.
Learn to Value an Aircraft, Used Aircraft, and More Properly
We hope you learned something helpful from this article on how to value an aircraft and used aircraft to ensure that you get the finest product for the appropriate price.
To learn more about how you can assess aircraft or find experts who can help you to do so, take at our available software packages.