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.