Appraisal vs Pre-buy Inspection

7 Replies

Appraisal vs Pre-buy Inspection

Posted by Paul Mayer on Mar 1, 2019 6:38 pm

I've never bought a plane before and was wondering if it's typical that the pre-buy inspection would generally include some form of an appraisal or are those generally completely different things with completely different costs?
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Re: Appraisal vs Pre-buy Inspection

Posted by Ronald Levy on Mar 2, 2019 10:15 am

Typically separate jobs done by different people - a mechanic versus a qualified appraiser.  Sometimes you can find both in the same place, e.g., if you're looking at a Grumman Tiger and you get it to Grumman specialist shop Fletchair in Texas, their mechanics can do the pre-purchase inspection while David Fletcher can tell you pretty much what it's worth, since David's been buying and selling Grummans for a few decades.  But your local IA mechanic probably doesn't have a good grip on purchase prices, and appraisers work pretty much off paper, not the airplane.

To find a certified appraiser, contact the National Aircraft Appraisers Association or the American Society of Appraisers.  See https://www.tasanet.com/Knowledge-Center/Articles/ArtMID/477/ArticleID/161/What-You-Need-to-Know-Before-Hiring-an-Aircraft-Appraiser for more.

Re: Appraisal vs Pre-buy Inspection

Posted by Christopher Gordon on Mar 4, 2019 1:37 pm

AOPA members can access a free version of the Vref Aircraft Valuation Service that provides a good starting point for attempting to determine the general retail value of an airplane.

https://www.aopa.org/go-fly/aircraft-and-ownership/buying-an-aircraft/vref-aircraft-valuation

You can find many people online pointing out the limitations of this valuation tool, however it does give you a starting base price based on recent sales activity, corrections for total airframe time and engine time since last overhaul, and a clear view of what items and conditions add or subtract value with a benchmark for the amounts.  And Vref will readily identify a wildly overpriced listing, which is fairly common on Trade-A-Plane and Controller.  

We used the Vref tool in exactly this way when buying our airplane, and it provided a common ground to start negotiating.

Re: Appraisal vs Pre-buy Inspection

Posted by Michael Simmons on Mar 4, 2019 5:13 pm

Understand what the publications are and what they are not.  First, publications are in the publishing business, NOT the aircraft appraisal business.  They are not response for the data or how it is used or misused.  The base data is submitted by subscribers who have a vested interest in how that data is displayed.  There is no validation of the information because they are in the publishing business NOT the aircraft appraisal business.

Checking boxes (which most evaluators do) tends to double count items such as avionics thereby misrepresenting the aircraft.  There is no evaluation of the log books, maintenance records or airframe nor is there any analysis of the FAA records.  This analysis is beyond the scope of the publication. 

There is the continued argument about "accuracy" but accuracy is a relative term.  It is more important to understand and obtain the "right" value based on research and analysis.

Use with caution.

Good luck.

Mike Simmons
President & Chairman
The Professional Aircraft Appraisal Organization
888-995-0441
704-498-4722 (International)
704-978-8066 (Direct)

 
Mike Simmons President, Plane Data, Inc. 800-895-1382 www.planedata.com

Re: Appraisal vs Pre-buy Inspection

Posted by Ronald Herold on Mar 11, 2019 10:07 am

Paul,

The posts prior to this one have provided some valuable information.  I have done 100s of appraisals and worked with many clients to purchase their first or next airplane.  In general, I would recommend that you get someone to provide knowledgeable assistance and do the process in this order.  First define your mission.  Do you mainly fly solo?  Do you want to carry a family?  How far?  What weather do you consider flyable?  There are a whole lot more criteria you can use to define your mission.  Then use a commercial tool like Vref to try to define what airplane that matches your mission that can also match your budget.  You can define groups of airplanes based upon your usage and your budget.  Now that you have a reasonable expectation of what you can find that will satisfy both parameters you begin your search.  Here is where you generally engage help.  What you want to do is find potential aircraft that satisfy your mission and evaluate if there is any hope they can be purchased for your budget.  I like to do remote evals of the aircraft prior to traveling to seeing them or making a written offer.  If you like the airplane and are ready to move forward, a contract is next.  The contract is the key.  It defines what you will do and what you expect.  It defines the monetary terms as well as condition of the airplane.  This condition is often verified by requiring a pre-buy.  The contract also defines time frames, closing agent and what happens if the aircraft doesn't meet up to you expectations.  Again - finding the right resource to help you with this is key.  After all a contract is a contract and you don't want to default or get stuck.  Next your advisor needs to help you find that pre-buy mechanic.  I work with with a wide swath of appraisers and use them in the local areas to recommend good shops.  It really helps to know a good shop.  We also need to define for that good shop what we want done during the pre-buy and often the concept of turning the pre-buy into an annual is considered.

I hope the above was helpful.  There are a lot of steps and each has its pitfalls.  You might consider reading through the posts on the Facebook Group Airplane-Appraiser.  The link is after my signature.   Please let me know how I can be of further assistance.

Ron Herold

-Ronald L. Herold, Ph.D., NSCA, MEII
Senior Certified Aircraft Appraiser
USPAP Qualified
Sustaining Member – Lawyer-Pilots Bar Association
EAA Lifetime Member
AOPA Lifetime Member

http://www.airplane-appraiser.com
(703) 573-2222

Check out the new Airplane-Appraiser group on FaceBook
https://www.facebook.com/groups/1884233435215877/

 

Re: Appraisal vs Pre-buy Inspection

Posted by Richard Russell on Mar 18, 2019 11:04 am

Pick your mechanic to do the pre buy inspection 

Re: Appraisal vs Pre-buy Inspection

Posted by Doug Wietbrock on Mar 30, 2019 1:17 pm

The responses you've received contain great information, but I suggest it's also a matter of scope and scale. If I had been in the market for a King Air, I would have certainly retained the services of a reputable appraiser, but I was buying a Cessna for under $45k.

I got a complete list of avionics, features and logbook times from the seller and used the AOPA valuation tool to get a good idea of the value. In my case, the seller's price was exactly what the AOPA calculated. We quickly agreed on a price - contingent upon a successful inspection - and then I sent my trusted A&P to spend a full day inspecting the 172N. I used a title service and escrow service to protect myself. The title service also offered some helpful suggestions during the transaction. For a lower cost airplane these services are very reasonably priced and provide great peace of mind. In the end I spent almost $2,800 for all this. Most of it was for two days of my A&P's time plus our combined travel expenses. Yes, I could have hired a local A&P and saved money, but this A&P later performed a complete overhaul and is now taking care of my airplane. His pre-buy inspection provided us with a definite cost to get the plane in excellent condition. There were very, very few surprises once he took it all apart.

Re: Appraisal vs Pre-buy Inspection

Posted by Michael Simmons on Apr 1, 2019 10:24 am

Let me focus on the valuation thoughts because there are a number of misconceptions to consider.  While the value of an aircraft may be a factor in determining how much to invest, the more important question is - how much do you wish to overpay?  Is knowing how much the aircraft is overpriced worth the price of an appraisal report?  As an aside note, King Airs and bizjets are purchased every day without an appraisal that involved a field visit too.  In my professional opinion, I don't think this is a smart decision on the buyer's part but this is their call.  Their mistake in judgement becomes obvious when they get ready to sell.  In cases where I am assisting a buyer, the information in the report (such as damage history) can be a deal killer or a reason to renegotiate the price.  It is a question of making a financial decision with less information versus more.

Number agreement between a broker's numbers and the buyer's analysis using a web based tool is also a common mistake.  Usually, brokers know how these tools are misused and simply repeat that mistake thereby misleading a buyer into thinking they have completed a through analysis of the subject aircraft.  For example, when using the online tool, was an effort made by the evaluator to mathematically adjust or remove all of the factory original avionics equipment before configuring the tool with the avionics list provided?  If not, then it is very likely that several pieces of equipment were double counted and the aircraft over-valued to a degree.  Most evaluators will not take the time to perform a detailed evaluation of the numbers and do little more than check boxes - the same boxes checked by the broker thereby leading to a similar conclusion.  Two numbers that are in agreement do not mean that the analysis was correct.

I have run across ads from "appraisers" stating how accurate their reports are but "accuracy" is something of a false argument.  In other words, a broken analog clock is accurate twice a day but this point does not make it a credible, reliable clock.  From the appraiser's standpoint, it is important to provide the right opinion of value based on research and this may or may not agree with a negotiated price or number from a website.  Simply providing a number someone wants to see is an easy (albeit unethical) assignment but that is the business model for some appraisers.

Good luck.
Mike Simmons President, Plane Data, Inc. 800-895-1382 www.planedata.com