Why Use An Accredited Aircraft Appraiser? see more
NAFA member, Louis Seno, ASA, Chairman Emeritus and Special Advisor to the Jet Support Services, Inc. Board of Directors, discusses why using an accredited aircraft appraiser is best.
Keeping a finger on the pulse of your aircraft’s current valuation is crucial, both for tax and depreciation purposes, and when you seek to refinance or sell your aircraft. (Listen to “Regular Check-Ups,” Above & Beyond Podcast, June 2019.)
The demand for reputable appraisers is increasing throughout the business aviation industry. Original equipment manufacturers (OEMs), banks and leasing companies, insurance underwriters, and on-demand charter operators all need knowledgeable appraisers they can trust. But what makes an individual qualified to become an appraiser?
Due to the complex nature of the appraisal profession, education and experience are crucial. However, there are no legal requirements, nor license needed, so anyone can call him- or herself an aircraft appraiser, regardless of their knowledge, skills, experience, or abilities. In response, the American Society of Appraisers (ASA) established an aircraft-specific discipline and designation program, to help assure owners and financial institutions that the aircraft are accurately valued.
An increased demand for aircraft valuation experts in the early 2000s mandated something more be done. And so a 2016 partnership was formed between ASA and the David B. O’Maley College of Business at Embry-Riddle Aeronautical University to establish a universally accepted industry standard. Together, they developed a series of four courses designed specifically for professional aircraft appraisers, enabling those so committed to achieve a new official accreditation.
Successful completion of the courses provides participants with the necessary fundamental appraisal coursework to apply for professional accreditation through ASA, with a specialty in aircraft appraisal. The curriculum covers commercial, business, and general aviation aircraft, including fixed-wing and rotorcraft, and other aerospace assets, such as tugs and ground power units.
ASA’s coursework and testing builds a solid foundation of aviation knowledge. A thorough peer evaluation of appraisal reports is then conducted before an individual can receive the Accredited Member (AM) credentials for two years of experience, or the Accredited Senior Appraiser (ASA) credentials for five years of experience.
Additionally, there is a 100-hour continuing education requirement to be completed during the five years after receiving ASA accreditation. Courses and advanced conferences are offered around the globe for ASA appraisers to learn more about current issues and prepare for future valuation challenges.
“The accreditation process is detailed and meticulous,” said Johnnie White, ASA’s CEO. “We recognize that your turbine aircraft is a multimillion-dollar asset. To ensure its proper valuation, we set high standards on educating our designated members.”
You can secure a qualified appraisal for your aircraft in one of two ways:
- In a desktop valuation, the appraiser will go well beyond a simple pricing comparison by researching the current aircraft on the market, establishing the average days the aircraft model has been on the market, and evaluating any trending data. The appraiser also will assess the maintenance status, look for any major inspection expenses that could be coming due, and perform a cursory check of the logbooks and specifications for the aircraft without looking at the asset. This is the less costly option.
- A physical, onsite appraisal will consist of all of the above, plus a hands-on inspection that includes a thorough examination of the aircraft, including engine and airframe maintenance logbooks. With this option, you will pay for the appraiser to travel to and from your aircraft, for the time spent on the physical inspection of the aircraft and records, and for research of recent sales of comparable make/model aircraft to establish the asset’s current market value.
When your aircraft needs an appraisal or reappraisal for insurance or refinancing purposes, or to prepare for its disposition, choose an ASA-accredited appraiser who has invested in their profession to become the most accomplished and skilled person to appraise your aircraft and to keep a pulse on its value for years to come.
This article was originally published by Business Aviation Advisor on November 1, 2019.
The Dos and Don’ts of Hiring Aircraft Appraisers see more
NAFA member, Jason Zilberbrand, President of VREF Aircraft Value Reference & Appraisal Services shares what you need to know when hiring an aircraft appraiser.
The joy of taking flight is one like no other. The business of getting to that take off though can be another matter.
The purchase or sale of an airplane isn’t exactly an everyday sale. For many buying or selling an aircraft, it’ll be their first time at the rodeo. That’s all the more reason to be prepared when getting into an aircraft transaction.
Hiring an aircraft appraiser is an important part of the aircraft transaction process. If you’ve never worked with an aircraft appraiser before, it’s essential that you prepare yourself for the experience.
Read on, and we’ll walk you through all the dos and don’ts of working with aircraft appraisers.
Understanding Aircraft Appraisal
If you’re going to get an aircraft appraised, hopefully, you understand why you’re taking such a step. But many potential aircraft owners simply call an appraiser up because they’re told to do so. They don’t take the time to understand the reasons behind the recommendation.
A proper understanding of the aircraft market is hard to get. A big aircraft company is likely to have a team of appraisers on hand at all times who keep incredibly detailed track of aviation industry trends and costs. Those unlucky enough to not own a multi-million dollar company have to outsource to receive such expertise.
An aircraft appraiser uses their unique knowledge of the aircraft and market trends to properly estimate the value of a given aircraft. Appraisers are held to a high standard and must be able to back up their estimates with a huge amount of data.
Their estimates must hold up to scrutiny even in a court of law.
You might need an appraisal for a variety of reasons. You can use an appraisal to properly find the right selling price for an aircraft or to see if the buying price for another is reasonable.
There are many other reasons to have aircraft appraised. You might be refinancing a loan, looking at an insurance policy, or just curious about the current value of your aircraft.
It’s important to understand the purpose of your appraisal. This way, the appraiser you hire can take special care to analyze discuss areas most closely related to those goals.
Do Find Someone Qualified
The aircraft appraisal industry is unregulated. That means that anyone out there can technically give a value amount for an aircraft since there are no required standards for training or experience.
That doesn’t mean you should throw a dart at the wall and hope you hit someone who knows what they’re talking about.
The Appraisal Standards Board develops and publishes a set of standards on behalf of appraisers. Ensuring that your appraiser lives up the standards of that publication can be important.
There are two organizations in the aircraft appraisal world that are known for their great reputation. They are the N American Society of Appraisers (ASA) and the International Society of Transport Aircraft Trading (ISTAT) and they both have long histories. VREF has a substantial staff of Senior Accredited Appraisers through both the ASA and ISTAT. It is important to note that hiring an appraiser is hiring his knowledge and experience. If the appraiser is not qualified to appraise the asset then he/she should bring in an appraiser that is qualified, or the report would not be considered USPAP compliant.
Both organizations provide a wealth of training for their members. A badge of certification from one or both of these organizations can mean a lot in terms of an appraiser’s credibility.
Regardless of who you go with, you should ensure that the appraiser you hire qualified and experienced when it comes to the kind of aircraft under consideration. Ensure that a field visit is part of their process.
An appraisal is a tricky business and there are many ways to come to a final number. The last thing you want is someone who doesn’t know what they’re talking about giving you a number that will lead you in the wrong direction.
Don’t Get Too Subjective
A proper appraisal of an aircraft will be an objective evaluation of the aircraft. You are filling out a balance sheet, not a sales pitch. As such, don’t be surprised when certain selling points don’t add up to the valuation you might wish for.
Having the wrong floor plan or missing critical equipment for compliance might be a recipe for lower than anticipated values.
Just because you have a certain taste for a design or feature, doesn’t mean that aspect will add value to your aircraft. There are certain aspects you might find cool about an aircraft that actually detract from the value.
Enjoyment is subjective after all, and it’s important to keep this in mind when it comes to appraisal.
Do Consider Databases Used
An appraiser will need to pull and use a certain market database for their analysis. Publications are consulted frequently by aircraft appraisers, but not all these publications paint the same story about the state of the market or industry.
VREF Aircraft Value Reference & Appraisal Services, delivers aircraft and engine data through online subscription services and published quarterly digests. VREF provides valuations, appraisals and advisory services to a world-wide client base of aviation professionals including, banks, financial institutions, lessors, manufacturers, aircraft operators and suppliers. VREF Aircraft Value Reference & Appraisal Services plays a key role in informing decisions and identifying opportunities within the aviation industry. VREF is also the official Valuation Guide and Appraisal company for the AOPA.
The database used for reference can have a huge impact on the final estimated value of an aircraft. As such it’s important that you, as the hiring party, stay well informed.
The Dos and Don'ts Of Aircraft Appraisers
Aircraft appraisal can be a tricky business. If it’s your first time working through an aircraft transaction, it can take a minute to get used to working with aircraft appraisers. But with the above tips, you’ll be well on your way to a proper valuation.
Need more info about aircraft ownership? Feel free to contact us with any questions.
This article was originally published by VREF Aircraft Value Reference & Appraisal Service on April 18, 2019.
Why You Should Involve a Professional Aircraft Appraiser During Purchase see more
NAFA member, Jason Zilberbrand, President of VREF Aircraft Value Reference & Appraisal Services, shares his tips on using a professional aircraft appraiser when making your next aircraft purchase.
Depending on the type, an aircraft can cost as much as $21,000,000.
That’s a heck a lot of money!
So why would you want to risk all that for an aircraft with hidden damages?
Getting an aircraft appraiser is the best way to ensure that you get value for your money. You get to avoid overpaying for insurance and other related taxes. The appraiser will also help you better understand the type of aircraft you want to buy and what you can expect in terms of performance.
That aside, here are more reasons why you should seek an appraiser’s professional help during purchase.
1. Appraisers Have a Better Understanding of the Market
Appraisers are well-versed with the aircraft market. They’ll analyze the market and give comprehensive findings on the actual market value of an aircraft. This is something you’ll hardly find in most publications or websites.
Additionally, an appraisal report can provide a basis for negotiating the price. It’ll vividly highlight the issues to be addressed before making any transaction.
2. Aircraft Appraisers Are Experts in What They Do
Determining an aircraft value involves more than plunging the model, make, and manufacture year of an aircraft into a publication or web tool.
Before an appraiser can attain the accredited member designation, they’ll need to have a college degree or its equivalent and at least two years’ experience.
Appraisers with more than five years of experience qualify for an accredited senior appraiser designation. With such experience, you can expect better appraisals for your big investment.
3. Aircraft Appraisers are Certified
Before appraisers are able to give any report to the public, they should have undergone special training. They also have to meet the minimum requirement for certification set out by the ASA.
This organization is one of the oldest and largest global institutions that focuses on documentation and evaluation of aviation aircrafts including helicopters, business jets, and turboprops.
Members of this association work on a strict code of conduct to ensure that they act in an unbiased manner. These requirements are unique and vital in the appraisal industry. They make the difference between an accurate valuation and an estimate.
What’s more, members who receive training as “buyer’s agents” help buyers with the selection of aircrafts that are in line with their requirements and budget. While at it, they maintain impartiality in their analysis. This isn’t the case with most traditional dealer/brokerage agreements.
Choosing an Aircraft Appraiser: Final Thoughts
Considering the benefits above, an aircraft appraiser will certainly help you make a good buying decision on your huge investment. Without an appraiser, you may spend money on a faulty aircraft, which is not only a loss of money but also a safety hazard.
If you’re looking for professional appraisal services, look no further than VREF. We offer USPAP-complaint aircraft appraisals and full inspections to ensure you get value for your money.
This article was originally published by VREF Aircraft Value Reference on May 13, 2019.