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Typical Questions asked by banks

Q:  Do you conform to or abide by the Uniform Standards of Professional Appraisal Practice (USPAP)?.

A:  Yes.  Mike Simmons is one of the few individuals who holds the rating of NAAA Certified Senior Appraiser (NSCA - the highest rating offered by the NAAA).  USPAP compliant reports are available for all aircraft types.


Q:  Why is there a need to have an aircraft professionally appraised?

A:  There are many reasons but here are some of the more important ones:

  • A Certified Aircraft Appraisal Report is an independent evaluation of the collateral in question and the report meets or exceeds FDIC guidelines and/or requirements.  Any legitimate appraiser should be completely removed from the deal itself and the fee paid to the appraiser should not be contingent on a specific value being reported or a percentage of the value being reported.

  • In the event the aircraft's log books are lost or stolen, the Certified Appraisal Report or USPAP Report includes all of the information necessary for an IA (FAA certified inspector) to develop a new set of log books - a starting point if you will.  With many aircraft, lost or stolen log books means that putting the aircraft back into an airworthy condition will cost more than it is worth.  The NAAA Certified Appraisal Report helps to protect the bank and the bank's customer in these situations.

  • The Certified Appraisal Report acts a legal document that not only identifies the market value of the aircraft but also provides a description of the aircraft's condition and its contents.  Typically, the Certified Appraisal Report is attached to the bank's Security Agreement as a description of the collateral thereby meeting the intent of FDIC regulations regarding proof of collateral.

  • A Certified Appraisal Report protects the bank and the customer in insurance disputes.  In the event the collateral is damaged, the Certified Appraisal Report can be used to help determine the aircraft's market value at the time of the incident.  It also helps to ensure that the bank's customer has the aircraft insured at the proper levels.


Q:  Is there a more "inexpensive" option such as a "desktop appraisal" or can you simply provide a number? 

A:  All signed reports provided by Plane Data, Inc. require an on site examination of the aircraft and its maintenance records.  Unsigned reports are not legitimate appraisals.  The "desktop appraisal report" has been used by companies and individuals who typically do not possess the knowledge, skills and abilities to do the job properly and want to give the appearance of a legitimate analysis without any of the field work or research (or accountability of their work).  As a result, desktop reports involve little more than looking up a number in a book since there is no examination of the aircraft in question, no review of the log books and no report detailing the contents and condition of the aircraft.  The information derived from this level of research cannot be substantiated - in other words, you get what you pay for.  Any number that is provided requires research of the subject aircraft and its records.  There are no shortcuts.


Q:  How long does it take to provide a Certified Appraisal Report?

A:  Once the formal Service Request is received, Certified Appraisal Reports are completed within five (5) business days.  Exceptional situations are identified, discussed and agreed to beforehand.


Q:  How much does it cost to get a Certified Aircraft Appraisal?

A:  There is no single fee for appraising any and all aircraft as business jets take much longer to complete than a two seat trainer.  The price for the appraisal is based on the type of aircraft.  The best way to understand the price is to request a quote.  You will need the registration number of the aircraft and its location before any pricing is provided.


Misconceptions

This is a "Good" Customer and there is no need for an appraisal.  The customer's ability to repay the loan is only one area that needs to be addressed.  Regardless of the customer's credit rating, the bank must properly evaluate and document the collateral and secure their lien interest.  This is typically specified in the bank's aircraft lending policy.  Customers and their relationship change over time and your "Good" customer today could be a "Problem" customer tomorrow.  A more professional approach would be to use an independent and unbiased party to document the contents and condition of the aircraft along with its market value in accordance with industry norms and standards. 


We perform our own appraisals and there is no need to have someone outside the bank perform them.  It is unclear why a bank, who has a financial stake in the deal, would elect to take on the responsibility and liability of evaluating an aircraft that they most likely have never seen nor is it likely that the log books and maintenance records have been reviewed or evaluated.  Understanding the market value of a specific aircraft after examining the log books and maintenance records should only be performed by someone who is impartial to the deal and certified by an industry recognized association to perform this analysis and provide the report.  If internal, regulatory or legal questions arise regarding the value and documentation of the aircraft, the bank (and possibly the banker) would be in a poor position to address these issues without some type of independent appraisal report.  However, banks may need to perform an internal preliminary analysis and as an NAAA Professional Member, the banker would have the ability to generate an unlimited number of internal reports using actual sales data.


The customer already has an appraisal.  The bank should determine if this is a legitimate appraisal report provided by an unbiased party who is not connected to the transaction.  In many cases, the "appraisal" is actually a market analysis or "desk top appraisal" and not a certified report.  A review of the article - What You Need to Know Before Hiring an Appraiser may answer several questions.


We use a published guide or customer supplied printout from a website.  There are several problems with this approach beginning with the fact that there is no public database of aircraft market values and aircraft cannot be evaluated like any other piece of property due to the many variables involved.  Also consider the biases of the individual(s) determining the value, the dated nature of the data itself and the fact that the guides clearly state that they cannot be used to appraise a specific aircraft and it is easy to see how numbers can be misrepresented.  Furthermore, much of the material is copyrighted and cannot be used for commercial purposes.  There is a difference between simply obtaining a number (any number) and understanding the collateral that the bank is lending against.

Plane Data, Inc.
P.O. Box 1414 Denver, NC 28037
Phone: 800-895-1382 Website: http://www.planedata.com