What Is the Income Approach to Aircraft Appraisal?

When it comes to learning the value of anything you own, the process seems to become more difficult by the year. One thing that you’d probably be having trouble with is how to appraise the value of your aircraft.

It can be difficult to find out the process that goes into learning the value of an aircraft, and that leaves many aircraft owners confused as to what steps they should take, especially when they need to know the income approach.

Luckily, the actual process isn’t very challenging at all to do. In fact, we’ve managed to break it down for you and place it into this article for you to learn the proper steps for the appraisal. Keep reading to learn more.

Learn the Income Approach by Knowing Your Definitions

For every piece of personal property, there is an official way of determining its appraisal or value. The ASA Personal Property Committee is the one that determines the value of personal aircraft.

There are three ways to determine aircraft value are known as definitions. These are the sales comparison approach, the cost approach, and the income approach.

We will be focusing on the income approach definition in this article.

Determining Aircraft Appraisal Through Income

The income approach method is unique in comparison to the other two definitions.

Whereas the sales comparison approach and the cost approach determine value through the property price of a similar property or through the cost of the materials it takes to build the property, income appraisal does things differently.

By appraisal through income, one doesn’t determine value through the property itself. Instead, they look at the anticipated monetary benefits of the property.

Let’s break it down. Every piece of property comes with a certain amount of value attached to it. In this manner, each of these properties has the ability to bring in a certain amount of income based off of its current value.

There a number of things that factor under these anticipated monetary benefits, such as the current market price, the expected increase or decrease in value over the years, and the stream of income.

If we were to summarize this appraisal method, it’s basically looking into the future to determine the value of the property and how much money it could bring to the owner using mathematical and statistical calculations.

Though it’s an indirect way of gauging the value of your aircraft, this method of appraisal still serves as one of the most popular ways to find property value.

Get the Right Appraisal

In order to get your income approach appraisal done right, you need to go to the people who have the knowledge and experience to do it right the first time. You won’t have to look any further than us.

At VREF, we take our valuations seriously. We’ve helped to appraise thousands of personal aircraft and know everything there is to know about determining the value of each and every aircraft.

Make sure to get one of our valuation guides so you can determine the price of your aircraft. We look forward to helping you with your appraisal!

By |2019-05-17T14:31:00+00:00May 17th, 2019|Educational|