The business aircraft market is ever-changing. What does this mean for you, the aircraft owner? If you are interested in monitoring the value of your aircraft, whether for financing, refinancing, or sale—or to verify hull value for insurance coverage, you will need an aircraft appraisal. This will ensure that you have the most accurate and lender-acceptable valuation.
After the savings and loan crisis in the 1980s, and again in 2008, the banking industry responded with new rules and additional safeguards for better risk management. One of the most significant changes involves aircraft appraisals.
Prior to 2008, a simple market valuation by a resale broker, often with just a quick look at the current edition of the Aircraft Blue Book, was sufficient to secure as much as a 90% loan-to-value ratio for a pre-owned aircraft. That is no longer so.
Now, the lender is required to have a certified aircraft appraisal. Today, most banks, leasing companies, and insurance underwriters require that all loan collateral, including business jets, have an aircraft valuation performed by a qualified, certified appraiser before financing is approved. Those appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), which was created in 1989 by the Appraisal Foundation, and is the generally accepted standard in Canada and Mexico as well as the U.S.
Expect an aircraft appraisal to take about one week, with the physical inspection process usually taking one full day on-site, and the remaining time used for reviewing records. The appraiser will conduct a systematic inspection of the interior and the exterior of the aircraft including engine, airframe, avionics, instrumentation, and other systems; as well as provide a methodical review of your aircraft’s flight and maintenance log books, FAA registration, title, and owner’s documentation. We avoid desktop-only aircraft appraisals because the inspection and review of the records are extremely important. The desktop version of an aircraft appraisal is likely not a USPAP Certified Appraisal.
The average cost of a Certified Business Jet Appraisal is between $3,500 and $7,500 depending on the project, plus expenses. Be aware however that a standard aircraft appraisal is not the same as a pre-buy inspection for purchase, which can run between $10,000–$50,000 depending on the size and scope of the work. The USPAP Certified Value is a reliable opinion of value.
Lending rules have changed dramatically in the past six years. If you have not been in the market recently, know that a proper aircraft appraisal will ensure that you secure the right equipment at the right price.
If the aircraft has encountered an event that requires the insurance to come in and pay for the damage it may very well impact value. Without an appraiser looking at the repair, one may never know if the claim or work will impact the value. We are experts at looking at all types of repairs and how it was repaired to determine if a diminution of value will occur. The aircraft appraisal cost of a damaged vehicle may vary.
Our Citation was extensively damaged. We needed an expert appraiser, Bloom understands the diminution value issues and provided a comprehensive appraisal report. we’re very satisfied with the results!
–EVP California Car Dealer
We understand that an aircraft appraisal process can seem daunting and complex. However, at Bloom Business Jets, we are committed to ensuring that your experience is smooth. We communicate with you throughout the process to ensure we keep you in the loop. If you have any questions about our appraisal process, please feel free to contact us.
Let Bloom Business Jets introduce you to the flexibility, privacy, and increased security of private aviation. With more than 35 years of experience, our professional staff is your trusted aircraft appraisal resource.
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