Finance: Before you buy

Determining that may involve a conversation with your lender and should also involve a conversation with AOPA Aviation Finance. Here is an analysis of the three types.

Pricing guide appraisal is the least expensive, least comprehensive type of the three appraisals. A Vref or Aircraft Bluebook analysis is good for 90 percent of aircraft transactions, and a basic Vref valuation service is available free to AOPA members. That’s the good news. The bad news is the analysis is only as accurate as the information put into it, and therefore subject to biases (lender perspective, seller perspective, buyer perspective). Also, what isn’t part of a book appraisal are the nuanced differences between actual market values (based on current demand) versus costs for things such as STC modifications, avionics and engine monitoring upgrades, not to mention interpretation of paint and interior quality.

he physical appraisal combines all aspects of the desktop and pricing guide appraisals with an actual on-site inspection of the aircraft.Desktop appraisal by a certified appraiser. Certified appraisers may start with the pricing digests, but they then expand their analysis to include market data. That means looking at comparable sales, type-specific trends, as well as average “days on market” for similar aircraft. More sophisticated, more powerful aircraft garner additional appraisal criteria. For example, if the aircraft is a Malibu recently re-engineered into a JetPROP, that means the aircraft’s maintenance schedule must be evaluated differently. This is also true for turboprops and light jets. The appraiser will have to sift through even more paperwork than normal. Does the aircraft have maintenance expenses coming up? Is it enrolled in an engine maintenance program? Is it up to date with this program? How much life is left in those programs? A desktop appraisal typically runs $500 to $600.

Physical appraisal is the most extensive, most hands-on, most precise way to appraise an aircraft. Not surprisingly, it’s also the most extensive at a cost of $2,000 to $4,000. In a lot of ways, it’s like a prebuy inspection. The physical appraisal combines all aspects of the desktop and pricing guide appraisals with an actual on-site inspection of the aircraft.

This is an ideal inspection for unique, “orphan,” or highly modified aircraft. In the case of those airplanes, comparing them to the more standard, more generic market may prove insufficient. Despite the cost, it’s also an ideal way to create a
bulletproof assessment of an aircraft’s true value.

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