SkyMachines: Airplane Appraisals brokerage dealer broker aircraft values flat-fee brokerage

The SkyValue appraisal:
The only way for certain to know an aircraft's REAL value

If you want to get an idea of an aircraft's value in today's marketplace, you have several options: You can check advertisements for similar aircraft (which are inflated by 15-30%); you can ask a broker-dealer for their opinion (and then they'll try to steer you towards one of their aircraft); or you can check an online service.

But the fact is, none of these options will give you an accurate picture of a specific airplane's value: You must correct any general price estimate for the details of the specific aircraft, and you can only do that by first physically inspecting the aircraft's condition and its logbooks. (Damage history or missing logs can reduce the value of an airplane by as much as 20%)

To determine aircraft values, SkyMachines starts with a certified appraisal performed by that member of the National Aircraft Appraisers Association who is closest to the aircraft. Unlike appraisals performed by dealers, mechanics, and other pilots, an NAAA appraisal involves much more than simply checking a price guide. The NAAA-member appraiser will:

Examine the airplane to make certain its airframe, paint and interior are rated according to rigid NAAA-assigned grading standards (in other words, that an “8” is really an “8” and not a “6”).
Examine the airframe, engines, props, instrumentation, avionics and all relative systems to make certain that all components are accounted for.
Examine all of the the airplane's logbooks and records, checking for hidden details that the pilot or mechanic might miss but which could significantly affect the value of the airplane. Things like damage history, amount of recent flight time, tachometer changes, missing logbook pages and much more.
Enter the aircraft data into sophisticated software developed by NAAA which will compare the airplane with others which have sold recently.
Prepare an extensive appraisal report, which includes an official "Certificate of Appraisal." You can literally take this report to the bank to prove the value of an aircraft you are trying to finance.

To determine the values of aircraft, NAAA does not use price guides like the Aircraft Bluebook Price Digest or the Vref Aircraft Value Reference. Published quarterly, these books use value data obtained by surveying aircraft brokers about airplanes they've sold in recent months. Private sellers who didn't use brokers are not surveyed. The information brokers are requested to provide is also somewhat suspect because it does not include damage history, lost logbooks, unique aircraft modifications or features, or even the condition of the aircraft. In addition, reporting broker-dealers have a financial reason to inflate the actual selling prices somewhat in order to support higher future selling prices.

NAAA takes a better approach to obtaining aircraft value data. Every month (not every quarter), NAAA surveys its 5,000 client banks for the latest data on aircraft which they have actually financed. The data they report includes sales by both dealers and private individuals and is incredibly detailed. This information is then put into an extensive computer database and sent to all 250 NAAA member appraisers. (Old data is never used because it expires and is automatically purged from the appraisers' computers.)

Who uses NAAA appraisals?

Aircraft Sellers: More and more aircraft owners are seeking an appraisal before they sell their planes, for a variety of reasons:

Many banks will require one anyway, so why not get it over with before hand? If a bank won't finance it at the sale price, then there's no point in listing it for that price.
To increase trust of the seller by the buyer. An appraisal is an independent valuation, based on hard facts, not on the seller's hunches. So buyers are more likely to trust a seller whose airplane is valued by an independent appraisal.
Appraised aircraft sell for more. Sellers of appraised planes can defend their asking price simply by referring the Buyer to the appraisal.
Appraised aircraft sell faster, up to 50% faster, according to the NAAA. With most aircraft taking 4-12 months to sell these days, reducing the time to sale means substantial savings can be realized through fewer payments on the loan, hangar, and insurance.

Aircraft Buyers: You wouldn't buy a house without getting it appraised first, so why would you buy an airplane, which might cost as much as more than a house, without taking the same precaution? Airplanes are significantly more complicated than houses, yet most pilots buy an airplane the same way they do a used car…with a “bluebook” style price check and the simplest of pre-purchase inspections by a local mechanic. The fact is, few pilots or mechanics have the expertise at valuing an aircraft that an appraiser does.

To the Buyer, an appraisal:

Provides an independent opinion regarding the non-mechanical condition of the aircraft.
Eliminates the risk that the lending institution may not finance the sale at the purchase price. Conversely, if the purchase price is below the appraised value, the appraisal helps the Buyer to convince the bank to accept a lower down payment.
Is the ultimate negotiating tool to use with a Seller. If the Buyer believes an aircraft is overpriced, the appraisal and prove the point to the Seller. A Seller is less likely to argue with a valuation provided by an independent appraiser with no financial interest in the aircraft.
Supports an aircraft's value to insurers so that there is no danger of the aircraft being under-insured. It can also be used to verify damage claims resulting from fire, hail, windstorms, accidents and other disasters.

Lending Institutions: As they do with houses, most leading banks now insist on seeing a certified appraisal before they'll loan on an airplane. They understand that, if any property is to serve as collateral for a loan, that property must actually be what the buyer and seller say it is. The appraisal:

Verifies the true value and condition of the airplane, instead of basing the value solely on the Buyer's or Seller's claims. Bank loan officers are the first to admit they aren't experts in the airplane business, so they turn to the appraiser for an expert third-party opinion.
Provides the loan officer with proof that the loan will be properly collateralized.
Provides clear defense of the value of the collateral for the loan officer defending his loan portfolio to a loan committee or examiner.
Verifies that the lender's interests will be fully covered by the insurer in the event of loss or damage to the airplane.

That's why over 5,000 lending institutions are already under contract to request appraisals from NAAA members, with more coming on board all the time. (In fact, over 60% of NAAA appraisals are performed for clients in the banking industry.)

Aircraft Insurers: Most aircraft insurance companies perform aircraft valuations using one of the printed quarterly price guides. As we've already seen, these guides don't provide detailed or accurate information about the specifics of a particular airplane. Many aircraft have been highly modified by their owners with the addition of sophisticated avionics and modifications. These modifications can dramatically increase the value of an airplane far above what would be shown in a book-based price evaluation. This leads to an aircraft owner being significantly under-insured. Therefore, many owners will obtain, or insurance companies will request, an NAAA appraisal in order to support a higher hull value. Only an NAAA appraisal will show the current fair market value of an airplane.

Government Agencies: NAAA-certified appraisals are accepted by all U.S. government agencies, including the Internal Revenue Service, Dept. of Homeland Security, Coast Guard, and DEA: When they want to know what an aircraft is worth, they hire an NAAA apprsaiser.

Attorneys and Accountants: In the event of disputes arising from divorce, death, or business, an appraisal can provide the certified third-party opinion necessary to settle the dispute fairly and equitably. Only NAAA-certified appraisals are accepted by all state and federal courts in the U.S.! (Attorneys, please note: "Expert Witness" testimony and support is available from SkyMachines for cases where aircraft value is an issue.)

Our SkyValue appraisal picks up where an NAAA appraisal leaves off... click here for details.

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