Consider that you have the opportunity to buy either of two
aircraft you have been dreaming about owning. They are identical
in every respect except that one had a hard landing that resulted in
damage to one of its landing gear. The damage was repaired and
except for the paper documentation, there is no evidence that the event
even occurred. Both aircraft are identical in terms of flight
worthiness. But, would you be willing to pay the same amount for
either aircraft? Unlikely!
Most price guides simply deduct a fixed
percentage from the total aircraft value. As is this
example, most damage events only affect one or two items, e.g. landing
gear, wing, propeller, windshield, etc. and most components that account
for an aircraft's value are unaffected by the damage. If you
deduct 10% or 20% of the aircraft's value due to the past damage event,
your are deducting that percentage from potentially high value item like
the avionics, and engines that were unaffected and may even be new
since the event. Does this make sense? Of
course not. But still the two aircraft will clearly not command
the same amount at resale! It's not that the two aircraft differ
in terms of flight worthiness, but the market will not treat them as
equivalent due to the stigma associated with the prior damage!
The marketplace decrease in value depends on the type of aircraft,
the extent of the damage, and the method of repair. There are
other factors as well. The market is less accepting of damage
history on certain classes of aircraft. For example, the stigma of
damage is far greater to a corporate jet than it is to a
single-engine piston aircraft. The NAAA analyzes the current market for
each particular type of aircraft when calculating value reduction for
the type of damage incurred. The values of unrelated components
are not affected. This approach is based on the NAAA's experience
in tracking the aircraft market since 1980 and from performing literally
tens of thousands of Certified Aircraft Appraisals during this period.
This difference between the NAAA and the other methodologies can
translate into a BIG difference in the real value of your aircraft. Only
NAAA appraisers have access to the computer software and data bases to
properly account for the impact of historical damage.
Ask your appraiser what method he
uses to calculate damage history. If it is not the system
described above, walk away!
