It is the process of developing and communicating an opinion about the quality of another appraiser`s work.
There are situations particularly involving legal proceedings where an appraisal supporting one or the other litigant’s position is called into question by an opposing council or the presiding Judge. In situations like this, a third-party appraiser is retained to conduct an appraisal review per the Uniform Standards of Appraisal Practice Advisory Opinion (AO-20).
Understanding what an appraisal is and isn’t.
Depending on who you are and what you need the appraisal for, your understanding of what an appraisal is can vary considerably. In some cases, such as preliminary fleet planning discussions where random order of magnitude values are required, a simple market review may be all that is required.
In other instances, when preparing acquisition plans and supporting detailed financial plans, or for legal proceedings a detailed certified Appraisal Report that conforms to the Uniform Standards of Appraisal Practice would be required.
Obviously the level and detail of research and data review are significantly different between a simple market review and a Certified USPAP Compliant Appraisal Report.
The simplest definition of an appraisal is the act or process of developing an opinion of value expressed as a specific numerical benchmark.
An appraisal is not a guarantee that a particular aircraft will sell or could be purchased for the value expressed in a report. A well-researched and written appraisal report is a tool that can be used in a number of ways during the sale or purchase of a particular aircraft.
A Certified Aircraft Appraisal report can serve as the foundation of a seller’s asking price relative to the current market, and it can serve as the basis of a buyer’s offer as well.
Financial institutions rely on an appraisal to support and justify the value of the collateral they are loaning monies against.
In essence, an appraisal is an impartial, independent, and objective opinion of the value of an aircraft, prepared by experts considering the factors which make up the current behaviour of the Used Aircraft market. It is an opinion of value based on experience and repeated analysis of these factors. It is an opinion of value which can be substantiated and justified. It is an opinion of value made by a Certified, Recognized, Professional Aircraft Appraiser.
Specific areas that need to be considered when appraising an aircraft
With the many tens of thousands of airplanes and helicopters in the marketplace, there are no two that are identical, even if they are a single serial number apart, there will be differences. There can be two aircraft that came off the assembly line the same day with the same equipment and options that, once delivered to their respective buyers, begin the process of depreciation/appreciation at different rates depending on such factors as the geographic area of operations, saltwater environment with potential corrosion issues, yearly utilization, is it privately operated or is it used for commercial charter work has it been modified for a specific task or to achieve additional performance capabilities. Very quickly, two identical aircraft become unique when viewed through the eyes of a qualified appraiser who has to consider all of the above and more when determining where a specific aircraft is placed within the marketplace.
Maintenance and avionics are two areas that can create very large differences in values of what to the casual observer might look like identical aircraft. Different avionics suites alone can change a value by hundreds of thousands of dollars in some instances. Times remaining on major components like engines, transmissions, and landing gear are other big-ticket items.