Frequently Asked Questions
What is an Appraisal?
An Appraisal is Different Things to Different People.
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 bank's collateral position in the aircraft loan.
To Everyone, an appraisal is an impartial opinion of the value of an aircraft, prepared by experts who know all the factors which make up the current behavior of the Used Aircraft market. It is an opinion of value based upon experience and repeated analysis of these factors. It is an opinion of value which can be substantiated and justified. It is an opinion of value made by a Certified, Recognized, and Professional Aircraft Appraiser.
To be impartial and correct, the Professional Aircraft Appraiser must acquire all the facts about the aircraft in question.
National Aircraft Appraisers Association Members Assure the Best Possible Information by Providing the Following Services.
- 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.
- Sealed Certificate of Appraisal with detailed computerized report submitted to client.
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.
- 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. Should 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.
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.
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. The NAAA 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 NAAA's experience in tracking the aircraft market since 1980 and from performing literally tens of thousands of Certified Aircraft Appraisals during this period.
This difference between the NAAA and the other methodologies can translate into a BIG difference in the real value of your aircraft. Only NAAA appraisers have access to the computer software and data bases to properly account for the impact of historical damage.
Ask your appraiser what method he uses to calculate damage history. If it is not the system described above, walk away!
