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Understanding Aircraft Valuation

thetopaircraftvaluingguideJan 7, 2019, 2:27:36 PM

If you are buying an aircraft for a certain amount then that is its value. Your loan application is not affected by the aircraft values you are paying for the aircraft. If you are buying a business aircraft and you apply for financing, then the bank will probably call accredited aircraft appraisers for the valuation.

Banks and buyers don't want the factors used by aircraft appraisers in determining the value of an aircraft. Appraisers are an independent third part that has its own way of appraising value. When appraisers set the value of an aircraft it is its real value and not influenced by what somebody else wants.

One of the first things that the appraiser needs to determine is the kind of value that the client wants. Usually, the client is an insurance company or a bank, who may be looking for the orderly liquidation value, the fair market value, the scrap value, or the forced liquidation value. The bank policy usually determines what type of value they ask for. Visit https://www.vref.com for more info.

Even if two jets are of the same year and model, the usually don't have the same appraised value. The condition of the aircrafts greatly affects its value. If an aircraft has an engine program and the other has none or if one aircraft is grounded by the other is being flown, then these conditions greatly affect its value. The paint job on both aircrafts will affect their value. So if there are 2 aircrafts of the same year and model, you should not expect them to have the same value but there are many factors that an appraiser considers to give its final value.

it is also important for appraisers to examine logbooks and paperwork. Incidents that affect the structural integrity of an aircraft is looked for by an appraiser in the files. If the records reveal that the aircraft had a heavy landing, then there is a possibility that the aircraft's structure is damaged. Maintenance records are inspected by appraiser since this also affects the aircraft's value. In theory, aircrafts that have no paperwork or logbook will not be given any value. This is why it is important to keep records for the aircraft.

There are only a few people who can truly appraise an aircraft's value. Taking valuation courses is important to be an accredited appraiser and be able to be a member of the American Society of Appraisers. Aircraft appraisers usually have an aviation background but there are some who belong to the finance industry. Aircraft owners should understand the appraisal process even though it is a skill that is specialized. For aircraft owners to better manage the process, it is important for them to know how appraisals are done. Read this article about airplane evaluation: https://en.wikipedia.org/wiki/Aircraft#Civil