How is the value of an aircraft set?
The market sets the value. With the exception of desktop reports, our appraisal reports combine the information garnered from the on-site evaluation and combines that data with a comprehensive market study using proprietary databases to arrive at a researched and reconciled opinion of value. It is interesting that some appraisers simply add up what their opinion of value is by calculating the residual values of the airframe, engine(s), avionics, landing gear, special equipment, etc., arriving at a value based on the sum of the aircraft's parts. While that derived total may have some value in certain situations, it does not result in a "market value" as that calculated figure may be drastically different due to many other external factors than what a willing buyer might pay to a willing seller. To repeat the above, the market sets the value.
How is an On-Site appraisal performed?
The following services are provided:
In order to determine where a particular aircraft's value will end up in comparison to those having been sold or actually for sale, an Aircraft Appraisal begins with a thorough examination of the exterior and interior of the aircraft. Special attention is paid to the condition of the airframe, paint, engines, propellers and instrumentation. The avionics and related flight instruments are inventoried to insure they are properly accounted for in assessing the value of the aircraft. The panel layout, optional systems, deicing systems, cabin and interior condition are also evaluated. Airframe and engine modifications as well as signs of present damage are documented. Service Bulletin status, Airworthiness Directive (AD) status, FAA Form 337's, Time and Cycle life items and maintenance programs such as JSSI, ESP, TAP and MSP are reviewed as is the status of any historical damage repairs. The condition of "wear items", e.g. tires, paint, interior, etc. are compared to comprehensive and detailed written VREF standards.
The logbooks and paperwork are carefully reviewed because these document the historical care or abuse that was given to this particular aircraft. This review documents whether maintenance was done to keep the aircraft in top condition or just to maintain a minimal level of air worthiness. Frequently what is not recorded is important, e.g. missing annual inspections, missing or defaced pages, and undocumented modifications. Special attention is given to any incidents of past damage as this may or may not have a significant impact on the aircraft's value.
After the evaluation of the aircraft and paperwork examination is complete, the process of establishing the aircraft's value begins. Using the results of the reviews described above, and utilizing the databases and proprietary software developed by VREF, as well as several other proprietary databases when deemed appropriate, such as Jetnet, AMSTAT, the Airliner Price Guide, Helivalue$, the Aircraft Bluebook Price Digest and of course, actual aircraft sales prices and/or those listed for sale, we can establish an accurate and credible market value. You will know exactly where your aircraft's value stands in relation to others that have been or are currently listed in the market. A detailed Aircraft Appraisal can be anywhere from 20 to 100 pages in length.
Detailed examination of airframe, engines, props, instrumentation, avionics and all relative systems.
Careful review of aircraft documentation including log books etc..
Computer analysis of relevant data.
A Certificate of Value with detailed report submitted to client in PDF format. Of course a printed and bound copy with an original signature is available on request.
What is the purpose of an appraisal?
To obtain a professional opinion of the present fair market value on an aircraft.
To obtain a professional opinion of the value on an aircraft to be renovated or modified.
An expert opinion of the value of an aircraft is useful as a prudent safeguard against excessive Tax Assessments, Capital Gains and other taxes.
To obtain a professional opinion of the value of the aircraft for donation and support for IRS Form 8283.
Appraisals are used to verify Damage Claims resulting from fire, hail, windstorms, accidents and other disasters.
An appraisal may provide the basis for decision-making in the commitment of funds for acquisition.
Provides persuasive independent evidence of the condition of an aircraft.
Assist a prospective purchaser in obtaining financing or insurance.
Assist the financial institutions by substantiating the nature and value of the aircraft as it relates to collateral.
Assist the financial institution by supporting the Loan Portfolio for examination by the Loan Committee and/or Bank Examiner.
Distinguishes sellers aircraft from others that may be listed for sale. Could possibly reduce the time required to sell an aircraft by 50%.
How much will the Aircraft Appraisal Cost?
Fees will vary depending on the size of the aircraft and the length of time involved in completing analyses of all relevant data. Please call or email for a quote on your particular aircraft today. An engagement letter delineating the scope of work and pertinent details of the assignment will be sent when requested. Appraisal fees are customarily paid in advance and a required deposit amount will be included in the agreement.
APPRAISAL FEES DO NOT INCLUDE ADDITIONAL EXPENSES SUCH AS TRAVEL, LODGING, MEALS OR MILEAGE. THESE EXPENSES ARE NORMALLY BILLED AT COST.
How long will it take to complete the report?
One must allow sufficient time for the appraiser to do a thorough job. The appraiser may spend a short time actually inspecting the aircraft, but will spend considerable time researching data. The Certificate of Appraisal and Inspection Data Sheet Analysis of the Appraisal is issued after the physical inspection of the aircraft has been completed. In most cases the finished Appraisal Report can be delivered no later than 72 hours after the on-site aircraft evaluation has been completed.
Standards of Professional Practice and Conduct.
The American Society Of Appraisers has established rigid standards of professional practice and conduct to which every ASA Member must adhere. It is essential to all parties receiving and relying upon appraisals that these standards be meticulously maintained. Most aircraft appraisals are now completed in compliance with USPAP (Uniform Standards and Practices of Appraisal Professionals), insuring unbiased and accurate reports.
Of course, all client information is confidential.
What is the real effect of Damage?
Consider that you have the opportunity to buy either of two aircraft you have been dreaming about owning. They are identical in every respect except that one had a hard landing that resulted in damage to one of its landing gear. The damage was repaired and except for the paper documentation, there is no evidence that the event even occurred. Both aircraft are identical in terms of flight worthiness. But, would you be willing to pay the same amount for either aircraft? Unlikely!
Most price guides simply deduct a fixed percentage from the total aircraft value. As is this example, most damage events only affect one or two items, e.g. landing gear, wing, propeller, windshield, etc. and most components that account for an aircraft's value are unaffected by the damage. If you deduct 10% or 20% of the aircraft's value due to the past damage event, your are deducting that percentage from potentially high value item like the avionics, and engines that were unaffected and may even be new since the event. Does this make sense? Of course not. But still the two aircraft will clearly not command the same amount at resale! It's not that the two aircraft differ in terms of flight worthiness, but the market will not treat them as equivalent due to the stigma associated with the prior damage.
The marketplace decrease in value depends on the type of aircraft, the extent of the damage, and the method of repair. There are other factors as well. The market is less accepting of damage history on certain classes of aircraft. For example, the stigma of damage is far greater to a corporate jet than it is to a single-engine piston aircraft. And in the case of a helicopter, due to their unique nature, repairs can actually result in an increase in the aircraft's value. VREF analyzes the current market for each particular type of aircraft when calculating value reduction for the type of damage incurred. The values of unrelated components are not affected. This approach is based on the VREF's experience in tracking the aircraft market for over 25 years and from performing literally tens of thousands of Aircraft Appraisals during this period.