Ultimate Guide to Aircraft Appraisers (Cost, Companies, Advice)

August 10, 2020

Private and business aircraft prices go through bull and bear cycles, so you shouldn’t ignore getting a timely appraisal. It’s important to understand what an appraiser does and the accuracy, costs, and sources of aircraft appraisals. Read on to learn more.

What Does an Aircraft Appraiser Do?

It is the job of an aircraft appraiser to understand everything about an aircraft before assigning it a value. Aircraft appraisers must perform a thorough inspection of the craft’s interior, exterior, engines, props, avionics, and instrumentation. They have to read through the aircraft’s logbooks, analyze relevant computer data, and review its maintenance history. Many aircraft appraisers belong to a professional organization. Membership requires board certification and a criminal background check.

Specifically, an aircraft appraiser fulfills the following functions:

• To provide a professional estimate of an aircraft’s fair market value, including craft undergoing modification or renovation.
• To safeguard an aircraft sale transaction from excessive capital gains and tax assessments.
• To verify damage claims resulting from accidents, hail, fire, windstorms, and other incidents.
• To help buyers decide whether to commit funds for aircraft acquisition.
• To assist lenders in assessing an aircraft’s value as collateral.
• To help an estate attorney pay taxes on aircraft belonging to an estate.
• To establish the value of the tax deduction for donated aircraft.
• To assist insurers with pricing policies. Most insurers won’t insure aircraft priced more than 25% off Blue Book value without an appraisal.
• To help sellers distinguish their aircraft from others on the market and help accelerate sales.
• To develop a residual forecast and future value analysis.
• To deliver a sealed Certificate of Appraisal supported by a detailed computerized report.

How Accurate Are Aircraft Appraisals?

The gold standard is a certified professional aircraft appraisal (CPAA) conforming with the Uniform Standards of Professional Appraisal Practice (USPAP). It’s important to use aircraft appraisers affiliated with a recognized professional organization. That’s because there are no legal requirements applying to the aircraft appraisal industry or its professional organizations. In fact, anyone can declare themselves to be an aircraft appraiser, despite little knowledge, skill, or experience. At worst, you may end up with an appraiser who is incompetent, unethical, and perhaps criminal.

A crooked appraiser will bend an aircraft’s value to suit the client. Normally, this means higher values for sellers and lower values for buyers. Banks and insurers relying on sketchy appraisals can suffer losses. Therefore, the person or organization hiring an aircraft appraiser must determine who is legitimate and who is not.

Three professional organizations for aircraft appraisers are the:

• Professional Aircraft Appraisal Organization (PAAO), the successor to the defunct National Aircraft Appraisers Association.
• American Society of Appraisers (ASA), an umbrella organization. Its Machinery and Technical Specialties Division trains and certifies business aircraft appraisers to gain Aircraft Specialty Accreditation.
• International Society of Transport Aircraft Trading (ISTAT), which operates its Appraisers Program to create Certified Appraisers.
If you plan to hire an aircraft appraiser, you may want to limit your choice to a member of these organizations. You may also wish to check that appraisers who say they belong to these organizations are actually members. Alternatively, an appraiser may belong to some other “professional association” that serves as a fig leaf for second-rate appraisers.

Video:  Are “Certified” Aircraft Appraisals Worth It?

Evaluating an Aircraft Appraisal Professional Association

If you want to evaluate an aircraft appraiser professional association, you need to consider certain facts:

• Requirements for membership.
• The knowledge, experience, and skills required for certification.
• Tests required for certification.
• The appraiser’s pilot rating and hours, or their maintenance experience.
• The association’s published methodology, ethical codes, and standards, and whether the industry recognizes these standards.
• Number of legal proceedings against members.
• Enforcement of ethical standards and mechanism for peer review.
• The required training and testing programs that members must complete.

Requirements for an Aircraft Appraisal Report

Naturally, the most important component of an aircraft appraisal report is the price evaluation. However, the report should also deliver the following:
• A statement of which standards guide the report.
• Certification by the aircraft appraiser that the evaluation is unbiased.
• Certification that the aircraft appraiser’s fee is not contingent upon a predetermined valuation.
• A certification that the aircraft appraiser has no connection to the aircraft or any subsequent deal involving the aircraft.
• The appraiser’s statement of physical and records examination.
• Explicit calculations that the aircraft appraiser used to derive the value of the aircraft.
• An inventory of the data that the aircraft appraiser used to establish price.
• Market data related to the craft’s year, make, and model along with comparables from two other aircraft.
• The length of the report as an indication of the scope and detail of the aircraft appraiser’s work.
• A notarized signature on the report by the aircraft appraiser attesting to all certifications and representations.

An aircraft appraisal should be a reliable opinion of a craft’s value using all the information available in a competent manner. If you choose a substandard appraiser backed by a no-name professional association, expect to reap a terrible harvest. Buyers may not be able to get a lender to participate in a purchase backed by a poor appraisal. It’s a good idea to demand samples of an aircraft appraiser’s work and to grill appraisers for facts and details.

Questions to Ask an Aircraft Appraiser

When you interview a prospective aircraft appraiser, consider asking these questions:

• What is your general educational and appraisal background?
• What specific experience do you have with aircraft appraisal?
• Are you a member of a professional aircraft appraisal association? Does that association offer education, testing, and accreditation?
• Do you hold a special aircraft appraiser designation issued by a professional association? Does that designation require written examinations?
• When did you take the accreditation examinations? Did you pass on the first attempt? Second?
• What continuing education in aircraft appraisal have you undertaken to stay up to date?
• Has your appraisal association adopted a required re-accreditation curriculum to guarantee that your knowledge and education are up to date?
• How much do you charge for your services, and how do you justify your fee? Are you willing to take a smaller fee?
• Can we make a field visit to your operation?
• What marketing database do you use for current sale prices?
• Are you mandated by your appraisal association to follow the Uniform Standards of Professional Appraisal Practice (USPAP)?

The answers to these questions will strongly indicate the aircraft appraiser’s merit. Due diligence requires that you verify any statement of fact that the candidate professes. You should inform the ASA and perhaps the FBI about those caught lying.

The Role of the Uniform Standards of Professional Appraisal Practice (USPAP)

USPAP are generally accepted standard for professional appraisal practice in America. USPAP contains all types of standards, including those for aircraft appraisers. USPAP promotes public trust by enforcing requirements for appraisers. USPAP appeared in 1987 by an appraisal profession committee.

The 1989 Financial Institutions Reform Recovery and Enforcement Act (FIRREA) designates USPAP as the standard for professional appraiser associations and by dozens of governmental agencies. USPAP is slowly extending hegemony throughout the world as the standard of member practice.

Typical Cost of Appraisals

There are three types of appraisals, each with a different cost structure. The one you pick depends on the level of comfort you require or your lender requires regarding the aircraft’s true market value.

In order of ascending cost, they are:

1. Pricing Digest Valuation: This is an analysis based on published data in a value reference (Vref) or Blue Book. Many people find this approach satisfactory. While certainly the cheapest, bear in mind that the information is general and often stale. It’s difficult to use this approach when the aircraft sports significant upgrades. Additionally, a pricing digest cannot incorporate the latest supply and demand conditions for an aircraft, which can greatly impact value. Typical cost: $400 for a one-year subscription.
2. Desktop Appraisal: A certified appraiser can perform a desktop appraisal by adding supply/demand conditions and trends to the pricing digest valuation. The appraiser also looks at recent prices and the number of days on market to refine the value estimate. Additionally, the aircraft appraiser can include upgrades and maintenance records within the appraisal. Desktop appraisals often cover light jets and turboprops. It should include information about the craft’s specifications, logbooks, and upcoming maintenance expenses, Typical cost: $500 – $600.
3. Physical Appraisal: This is the kind of hands-on appraisal we’ve been discussing in this article. It is clearly the most complete and precise. An appraiser will be all over the aircraft, opening panels, inspecting engines, checking logs, and generally digging deep. Additional deliverables include aircraft photos, cabin layout drawings, maintenance tracking, and a copy of the Registration and Airworthiness Certificate. Recommended for expensive and/or unique aircraft. Naturally, this kind of appraisal is more costly. Typical cost: $2,000 – $3,000+.

How to Find the Best Aircraft Appraisal Companies

There are several online aircraft appraiser directories you can search. These can identify local resources as a starting point for finding candidates. Also check the directories of the appraisal associations we recommend above. The PAAO has an online tool to help you locate a credentialed appraiser. Word of mouth is also a good technique to identify aircraft appraisers who have satisfied people you know.

Some of the best aircraft appraisal companies include:

• Air Appraisal Company
• Aircraft Assurance Services
• AvAppraisals Inc.
• Aviation Management Consulting, Inc.
• Avitas
• Eagle Aviation
• Elevate Jet
• Elliot Aviation
• Flight Level Partners
• Plane Data, Inc.

Advice for Buyers

The best advice to buyers is to hire the top available aircraft appraiser. Try to interview several candidates and ask them the tough questions. Check their qualifications and accreditations, including their memberships in appropriate associations.

It’s important for buyers to remain unemotional and vigilant. Insist on access to the craft’s pilot(s), logbooks, caretaker, and director of maintenance. Do the logbooks reveal a preference for preventive maintenance or after-the-fact catch up? Did the aircraft subscribe to fixed-cost tracking tools that provide easy sharing of the craft’s status, history, and upcoming spending plans? Objective information about times, components, equipment, and cycles should displace subjective feelings about the craft’s cosmetics.

Advice for Sellers

Make sure the appraiser understands any special features and upgrades you’ve made to the aircraft. In addition, the appraiser should inform the seller if any problems crop up. This will give the seller the opportunity to fix things before the appraisal is complete.

It is easy to overestimate the value of your aircraft, especially if you upgraded or redecorated it. For example, you may find the furnishings exceptionally comfortable, but a buyer may find them dysfunctional. You may not be able to recoup the money you spent on customizing the aircraft’s interior.

Frequently Asked Questions

Which organizations are important to aircraft appraisals?

The most important are the Professional Aircraft Appraisal Organization, the American Society of Appraisers, and the International Society of Transport Aircraft Trading. All three have respected education, training, testing, and accreditation services for aircraft appraisers.

How long does it take to perform an appraisal?

It depends on the complexity of the appraisal. For desktop appraisals, you shouldn’t have to wait more than one or two days. However, a physical appraisal typically requires three to five business days to complete, sometimes longer. If you need an immediate, if imprecise, appraisal, you can try a pricing digest valuation.

What is depreciation?

It is the wear and tear on capital equipment such as aircraft. You expense business aircraft by deducting the annual depreciation expense over a defined period. Depreciation is a non-cash expense.

How do appraisers set the value of an asset?

For aircraft, appraisers carefully inspect the interior, exterior, engines, and all other components. An appraiser should also check all logbooks, flight records, upgrades, accidents, and any other factor that might affect the craft’s value.

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