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How to Choose an Aircraft Appraiser: Comparing Appraisal Credentials
There is a lot of confusion around the different appraisal organizations. ASA, NAAA, PAAO, ISTAT - what do all these letters mean to you? We take a close look at the organizations that credential aircraft appraisers and what it takes to become one for each.
Aircraft Appraisal Organizations
In our previous article we gave our top 4 things to know before getting an appraisal. Hiring an accredited appraiser is critical and there are only 3 major accrediting organizations for aircraft appraisers. The next reasonable question is, which organization’s appraisers are best for your valuation?
Here are the facts:
American Society of Appraisers
The ASA has been in existence since 1936 and was one of the founding members of the Appraisal Institute, which created and continues to disseminate the Uniform Standards of Professional Appraisal Practice (USPAP) which is the congress-recognized guideline for appraisal development and reporting. Today, the ASA is the largest, multi-disciplinary, non-profit appraisal organization and its members are recognized worldwide as a cornerstone of ethical and professional appraisal practice.
The ASA has a specialized program for aircraft appraisers taught in conjunction with Embry-Riddle Aeronautical University. The ASA requires successful completion of 4 Principals of Valuation courses for a total of 120 classroom hours, which each have an exam component that tests for comprehension of aircraft systems, finance, and valuation methodology. Candidates must then submit verifiable proof of experience in the aviation appraisal field, a 4-year college degree, and an appraisal report that all is reviewed by an international board of examiners. After receiving an accreditation, ASA appraisers are required to comply with USPAP and the ASA’s code of ethics. Appraiser’s must also fulfill the 120 hour continued education requirement every 5 years, proof of which must be submitted to the society. Flight Level’s appraisers hold their designations with the ASA.
International Society of Transport Aircraft Trading
ISTAT was founded as a non-profit educational and networking organization for professionals working in transport aircraft trading in 1983. Since then, ISTAT has developed an appraiser education and credentialing program for the valuation of transport category aircraft (think: airliners, commuters, etc…). ISTAT has varying levels of credentials that each require different levels of experience, and examination. At minimum, ISTAT Appraisers must have 5 years of experience in aviation with 2 years of full-time appraisal experience, pass a series of exams, provide proof of a 4 year college degree (or equivalent) and provide an appraisal that will be reviewed by a Board of Governors. After credentialing, Appraisers must complete on-going mandatory continued education.
ISTAT requires its members to adhere to the Uniform Standards of Professional Appraisal Practice (USPAP) development and reporting standards and uphold societal ethics.
Professional Aircraft Appraisal Organization, LLC
The PAAO was created from the remnants of the now defunct National Aircraft Appraisers Association (NAAA). PAAO was founded at the end of 2018 and is currently only accepting appraiser membership from former NAAA Appraisers. The NAAA previously certified appraisers at varying levels dependent on experience in aviation and after attending in-person training courses. The PAAO is currently working on an education pathway for future appraisers, but does not have one in place at the time of writing. The PAAO requires its members to adhere to a societal code of ethics and states that its members should adhere to USPAP development and reporting guidelines when valuing “turbine” aircraft. There is currently limited information regarding what requirements there will be for incoming candidates and what will be required for re-accreditation.
Picking an Appraiser
It’s important that the consumer understands what type of appraiser they are hiring since it may influence the credibility of a given report. An appraiser that has a credential restricted to valuing piston aircraft is probably not the best match for a Gulfstream valuation. Knowing the ins-and-outs of the different organizations empowers you to make well-informed, smart decisions. With money and assets on the line, mistakes can be catastrophic.
We believe the ASA holds the highest standards for their credentialed appraisers. Not only is it the oldest of the appraisal organizations, it also is the only multidisciplinary one; ensuring that appraisers of all fields are interconnected and have a pulse on not only their industry, but the economy and appraisal environment as a whole. The rigorous education, testing, credentialing and continued education requirements are recognized as the gold standard, worldwide. Flight Level is proud to have two aircraft appraisers accredited by the ASA.
Corey DeWitt, AM
Top 4 things to know before getting your aircraft appraised
Lenders, insurers, asset managers and owners rely on aircraft appraisers each day, but there are a lot of misconceptions regarding the ins-and-outs of both the appraisal process and what it means to be an “appraiser”. This new Flight Level blog series, “Appraisal 101” will highlight some things we wish all our clients knew and give some insider scoop on what to watch out for when you hire your next appraiser.
Shedding light on aircraft appraisers
Appraiser credentials are, by far, the most common source of confusion in our industry. Here are the facts you need to know before approaching an “expert” for an appraisal:
1. There are ZERO consumer protections.
Most consumers are familiar with the appraisers from real property transactions, where there are a slew of regulatory consumer protections in place. Outside of real property appraisers, anyone can call themselves an appraiser of something - aircraft, art, surfboards, anything. This creates an environment for confusion, because it forces the end-user of appraisal services to determine the underlying credibility of the appraiser. Fortunately, there are organizations (which I will describe later) that accredit appraisers to perform aircraft appraisals. If you are not using an accredited appraiser you are at high risk of receiving a unreliable report.
2. Dealmakers May Not Be Impartial
Any number of aircraft dealers/brokers will provide you with a written appraisal. These parties are not inherently impartial since they are vying to be a member of the transaction and are concerned with either selling you on a number than makes you happy, or one that gets you to engage them as a broker. Accredited appraisers are held to ethical standards and must disclose any previous, current or prospective interest in the property. Maintaining impartiality is one of the key ethical requirements of an appraiser and an added layer of security with your valuation.
3. Someone Must Enforce Ethics & Best Practices
Appraisers who are accredited by a professional organization must uphold the standards of that organization or they will lose their credential. This is important. Non-accredited “appraisers” are not required to conform with any regulations or practices, nor is there a channel to report and remove unethical appraisers. Flight Level’s appraisers are both accredited with the ASA which strictly enforces compliance with the USPAP development/reporting guidelines, society ethics/practices and requires a minimum of 24 hours of continuing education in the appraiser’s field each year.
4. There are three organizations that accredit appraisers
While there are other organizations that claim to offer credentials the 3 that are professionally recognized are the: American Society of Appraisers (ASA), International Society of Transport Aircraft Trading (ISTAT), and the newly formed (2018) Professional Aircraft Appraisal Organization (PAAO). There are not any other organizations in the United States that provide education, testing, and credentials to aircraft appraisers. We will be comparing these organizations further in our next article.
Next time you or your lender are in need of an appraisal, seek out an appraiser who is impartial, conforms to a standard for ethical conduct and is accredited by an appraisal organization. Of course, if you have further questions or concerns about appraisals, Flight Level’s team of ASA accredited appraisers is here to help.
