The amount that you are paying for an aircraft is it worth. However, when you are applying for a loan, it is not affected by the price you pay for an aircraft. Your loan application will highly depend on the value given by aircraft appraisers if you are buying a business aircraft.
Banks and buyers don’t want the factors used by an airplane valuation in determining the value of an aircraft. However, appraisers are not influenced by the buyer or the bank since they are an independent third party. When appraisers set the value of an aircraft it is its real value and not influenced by what somebody else wants.
The appraiser would first determine the kind of value the client is looking for. There are many types of values that clients, who are usually the bank or an insurance company, can look for including 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. Check www.vref.com to learn more.
Even if two jets are of the same year and model, the usually don’t have the same appraised value. It will depend on the condition of the jets. 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. Even the difference in paint jobs affects the aircraft’s value. So, the same year and model of 2 aircrafts does not give them the same value, but there are many different factors that need to be considered.
it is also important for appraisers to examine logbooks and paperwork. These files contain incidents in the aircraft’s life that can affect its structural integrity which an appraiser looks for. If the records reveal that the aircraft had a heavy landing, then there is a possibility that the aircraft’s structure is damaged. The aircraft’s valuation is also affected by its maintenance records which the appraiser inspects. Theoretically, an aircraft will have no value if it has no paperwork or logbook. And this is why records are very important when it comes to aircraft appraisal.
A true appraisal of an aircraft’s value can only be done by a few people. Taking valuation courses is important to be an accredited appraiser and be able to be a member of the American Society of Appraisers. Although most aircraft appraisers are from the aviation industry, there are also some who belong to the finance industry. Aircraft owners should understand the appraisal process even though it is a skill that is specialized. They can better manage the process if they know what is involved in an appraisal. Read this article about airplane evaluation: https://en.wikipedia.org/wiki/Aircraft_classification_number