The Price Is Wrong

Todd Huvard, president of AircraftMerchants, a North Carolina-based aircraft brokerage, is a commercial pilot with multi-engine, instrument and seaplane ratings and is typed in Cessna 500 and Falcon 20 jets. He founding editor and publisher of The Southern Aviator.

When aircraft buyers and sellers are afoot, there’s one place their paths cross: online valuation guides. They work up wrinkled brows on the webpage, entering values willy-nilly until the program submits to their wills. Sellers include every upgrade and wire while buyers tend to limit what they add for just about anything attached to the airplane.

It is a conundrum for the bewildered, an exercise in futility augmented with The Fine Print. Seldom do combatants meet in the right place. And the most woeful onlooker is the hapless, unappreciated professional aircraft broker. His opinion is relegated to the junk pile of snide remarks, his motives suspect and tarnished.

That is life for those Buyers and Sellers wandering in the desert of the aircraft market, left thirsty for an understanding as to why the object of their passion has been neither bought nor sold in the past eight months of trying.

Others, however, are winging their way happily on high, content with a fair deal — a good price for a good airplane — brought to them by an earnest broker.

Allow me to pontificate. As a full-time, dedicated, hustling, busy aircraft broker, I have come to certain conclusions about aircraft valuation, which I am happy to share with you.

The worst offenders in setting wrong prices or price expectations are casual users of AOPA’s online version of the vRef valuation guide. The data and format is truncated from vRef’s normal subscription service used by professionals in the aircraft sale, financing and insurance markets. The AOPA version is a membership benefit, subject to a contracted service level, and it is fraught with mistakes, misinformation and misdirection.

Novice users seldom get the input correct due to using incorrect data — the wrong model, the wrong serial number range, the wrong year — and are returned bad pricing from the beginning.

The errors compound with improper addition for avionics upgrades. For example, as a rule of thumb, a brand new Garmin 430 WAAS installation, the day you fly it away from the avionics shop, is only valued at about 60% of its retail cost. But we often see users adding avionics premiums for radios that are three, four, five or even many more years old. The amounts added by these folks are often as much as 50% too high. The online tool on the AOPA site is simply too limited to be effective. It does not take into account the nuances of the condition of the aircraft or its maintenance, the actual effect of damage history or type of damage, or the vagaries of an ever-changing marketplace.

“The vRef product offered to members is not intended to be a complete service. It is a reference tool only, and is not offered as a substitute for a professional appraisal,” wrote an AOPA official responding to industry complaints about the vRef service on its site.

Most professionals — brokers, dealers, lenders, and insurers — depend on expensive subscriptions to the industry-standard Aircraft Bluebook Price Digest for developing a baseline value for an aircraft. The data comes from actual report sales, and even though it is typical for the market to lag or lead the valuations, the pricing is more dependable and thorough.

The National Aircraft Appraisers Association tool is a proprietary software product to which only members of the NAAA are privy. I think the NAAA model is cumbersome, archaic and does not work very well. I have seen many NAAA “professional” appraisals using this software that are totally off the charts against the real market value of an aircraft.

The NAAA organization is a for-profit enterprise that actively recruits self-described aviation experts and bestows the vestments of a NAAA Appraiser upon them — as soon as their check for a $1,350 membership clears. The NAAA is a business-opportunity business designed to create the air of legitimacy for its minions. While many NAAA appraisers are certainly qualified and knowledgeable, there are others that spend time decrying other independent appraisal methods that are just as legitimate.

Here are some other often-overlooked areas of the valuation process:

Paint and interior: If the paint job is less than six months old, you may generally add around 60% of the cost when it rolls out of the paint shop. If the paint is older than that, it is not considered new and you add bupkis.

Engine time and overhaul type: Buyers tend to think factory remanufactured engines are superior, but this is not necessarily true. The actual condition of the engine is what is important. A field overhaul that is carefully documented by a reputable shop or engine facility won’t detract from the value. An obvious shade tree job might.

Damage: In general, damage that is well documented and properly repaired, with complete log entries and FAA Form 337s, should not be a factor when the incident is more than eight years old. But some damage, depending on the make and model, can be treated more serious. A wheels-in-the-wells gear up, where some belly skin is replaced, is a lot different from a moving gear collapse with wing damage. The true nature of the damage — and the corrections made — determine whether there is nothing to deduct or if a 20% hit to the base value is called for.

Condition adjustment: On the other hand, some airplanes are head-and-shoulders above the rest and deserve a premium adjustment for excellent condition. I have seen aircraft clearly superior to average and these beautiful birds are worth more than their nondescript counterparts.

For what it’s worth:
My claim of expertise is derived solely from my 31 years in general aviation and time working in flying, reviewing, financing and selling aircraft and avionics. My opinion is an informed one, but not an infallible one, and I don’t claim to know it all. I am a student of the art — as many professional aircraft brokers are — and spend a significant amount of time assessing a specific aircraft in trying to “price it right.”

When the time comes to figure out what to sell your current airplane for, or what to pay for your next one, take it slowly and make sure you have considered the genuine condition of the airplane, using pricing guidelines, market trends and common sense to set the price. If you are unsure, the market at large knows. Or you can do what smart buyers and sellers do: Ask a professional aircraft broker — Bob Barker can’t help you.

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