What is an aircraft appraisal?
- To the Buyer: the appraisal is an impartial professional opinion as to the value of the particular aircraft they are planning to purchase. Further, the appraisal can assist in expediting the sale of the aircraft because the buyer and seller know the fair market value and relative condition of the aircraft through the independent appraisal.
- To the Seller: the appraisal gives them the confidence of knowing the condition and the current fair market value of their aircraft.
- To the Banker: the appraisal documents the value and condition of the aircraft. The appraisal also supports the banks collateral position in the aircraft loan.
What is the Purpose of an Appraisal?
- To obtain a professional opinion of the current 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.
- Appraisals are used to assess damage resulting from accidents, negligence, acts of god 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. Should reduce the time required to sell an aircraft by 50%.
Which Factors Affect How Much My Airplane is Worth?
Trying to figure out what your airplane is worth can be mysterious for those who aren’t in the business of buying and selling aircraft on a daily basis. Many factors are taken into consideration to determine the market value of a pre-owned airplane. Some of these factors might include:
- Airframe Hours, Cycles (Landings) and Age
- An aircraft loses a certain amount from its value for every hour it flies over the fleet’s average. That per-hour reduction changes depending on the model and grows smaller as the aircraft ages. Though flying under the fleet average is good for other reasons, the market does not offer a similar advantage to aircraft values when the total number of hours flown is below the fleet’s average. Consequently, early in an aircraft’s lifecycle, total airframe hours have greater impact on an aircraft’s value. Years later, the age of the aircraft affects resale value more.
- Engine Hours and Cycles
- The closer an engine is to its recommended time between overhaul, the less its value. Equally important is a record of consistent use coupled with a good maintenance program.
- Installed, Upgraded or Modified Equipment
- The technology inside the aircraft can have a noticeable impact on values, good and bad. Some owners double the value of their older models by installing new avionics. Conversely, dated technology, including old air conditioning and aging deicing gear can bring down resale value because those systems are generally more expensive to maintain.
- Records Quality and Airworthiness Directives
- Complete records that show prompt responses to Airworthiness Directives and other maintenance needs increase an aircraft’s value. Buyers should review the aircraft’s airworthiness certificate, engine and airframe logbooks, aircraft equipment list, weight and balance data, placards and FAA-approved aircraft flight manual or owner’s handbook. Missing documents, pages or entries from aircraft logbooks may cause significant problems for the buyer and reduce the value of the aircraft.
- Paint and Interior Condition
- New paint jobs can increase the value of an aircraft, but buyers should be careful. The work could hide corrosion under the surface, which can negatively affect value. Interiors that are in good condition and properly fit also enhance the value of the aircraft. Even so, some owners still choose to update their aircraft’s interiors before they sell so that colors and patterns more closely match the latest trends. Choosing to do so can lessen the time the aircraft is on the market.
- Damage History
- A damage history will decrease the value of an aircraft. Buyers should consider the type of accident, nature of the damage, who repaired the damage and the degree to which the issue affected major components. Pre-purchase inspectors should closely scrutinize damage history to make sure it is properly repaired in accordance with applicable FAA regulations and recommended practices.
Some additional factors considered for the appraisal include:
- Days on Market
- Serial number
- Specific manufacture date
- Amount of time a plane model has spent on the market
- Number and nature of previous owners
- Inspection dates
- Type of usage (FAA Part 91 or Part 135 have different operational rules)
- Where the plane is currently located
- Where the plane has been flown
- Where the galley is located and serviced.
- Where the lavatory is located, and if it can be serviced externally without running hoses down the aisle of the plane.
- The condition of external paint
- Type and condition of the entertainment system
- Avionics features like a “heads up” display or synthetic vision
- Cabin management system
- Condition and type of Auxiliary Power Unit (APU)
- Maintenance Accrual Power-By-The-Hour (PBH) Programs
Why Hire An ASA Accredited Appraiser?
- ASA-accredited appraisers provide the best valuation expertise available on the market, and their appraisals provide unmatched credibility in all legal proceedings.
- ASA members earn their accreditations only after completing a rigorous evaluation process that requires years of study, dedication and commitment.
- ASA is the oldest and only major appraisal organization representing all of the disciplines of appraisal specialists. The society originated in 1936 and incorporated in 1952.
- ASA, along with other leading appraisal societies, founded the Appraisal Foundation to set the generally accepted and recognized standards of professional appraisal practice in the United States. The Appraisal Foundation was recognized by Congress as the source of Appraisal Standards and Appraiser Qualifications.
- ASA Accredited appraisers follow both the professional standards set forth by the Appraisal Foundation and ASA’s own stringent Code of Ethics and Principles of Appraisal Practice.
What is USPAP?
The Uniform Standards of Professional Appraisal Practice (USPAP) are the generally accepted standards for professional appraisal practice in the United States. USPAP contains standards for all types of appraisal services including real property, personal property, business valuation and mass appraisal. The purpose of USPAP is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers. USPAP was originally written in 1986-1987 by an appraisal profession Ad Hoc Committee and was donated to the Foundation in 1987.
The Financial Institutions Reform Recovery and Enforcement Act (FIRREA) of 1989 cites USPAP as the standard to be enforced by state real estate appraiser regulatory agencies. USPAP compliance is also required by professional appraiser associations, client groups and by dozens of federal, state and local agencies. USPAP is growing in acceptance throughout the world. Many professional associations in North America, South America, Europe and Asia have accepted USPAP as the standard of practice for their membership.
About The American Society Of Appraisers
Founded in 1936, the American Society of Appraisers (ASA) is the oldest and only major organization exclusively dedicated to serving appraisal professionals. ASA’s membership includes appraisal specialists in all types of property – valuing businesses, machinery and equipment, real property, personal property, and gems and jewelry. To earn the ASA designation, members go through a rigorous testing, training and evaluation process.
ASA is run by a Board of Governors made up of representatives from the disciplines and regions. In addition, ASA has two other affiliated organizations – our Educational Foundation and our Political Action Committee. ASA also has the ASA College of Fellows, which is comprised of Accredited Senior Appraisers who have been recognized by their peers and the College of Fellows for their contributions to ASA and the appraisal profession.