Online Evaluation Services - Information You Need To Know
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ONLINE EVALUATION SERVICES
INFORMATION YOU NEED TO KNOW
Are you confused sometimes by the numbers offered by the online services? You should be because in most cases they are not correct, especially if the person using the service inputs wrong information.
There are several things that make the results you get erroneous. Damage history is one. I often get emails or online questions such as, "how much do I deduct for an airplane that has had a gear up landing?" The answer to that question is, "I donít know."
I cannot answer that question without seeing and evaluating the airplane itself to determine how well the repair work was done. Also, I need to review the logbooks and other paperwork to study how much damage was done to the airplane, then make a judgment based on how the whole thing was written up in the logbooks. For those who think there is a standard deduction for a gear up landing, there isnít. In other words, only a professional aircraft appraiser can make a reasonable judgment regarding repaired damage to an airplane. The general feeling that damage history tends to be disregarded as time passes is not necessarily true. That depends on the make and model of the airplane more than anything else.
Avionics is another factor that makes many evaluations high. If the evaluation system uses new avionics values the result is automatically erroneous. The error could be as much as 50 percent or more on the value of the avionics.
Be very careful when you accept an appraisal from a dealer who is selling his own aircraft, or one he is brokering. Very often they will write an evaluation using new values for avionics that have been installed in the aircraft for many years. One such evaluation that I was given by a client showed that a seven year old KR-87 was worth $2,000, which at the time was the new selling price. The errors in the avionics values contributed to a $15,000 over- valuation of the aircraft. Many of these so-called appraisals come from online services.
Another area that you must be cautious of is paint and interior. Itís not often that a fresh paint job and new interior will bring more than 50% of their cost in added value to a light single or light twin. Yet, some evaluations give 100 percent of those costs. Someone who has painted an airplane or refurbished the interior to make the sale will attempt to add the entire cost to the value of the airplane. It does not work that way.
There is a difference in value of a field overhauled engine versus a factory remanufactured engine or factory overhauled engine. There is no question that a potential buyer will look favorably upon the factory overhauled or remanufactured engine and less so on the field overhaul by a mechanic who is not known. This must be taken into consideration in any evaluation that is made as well.
The truth is that there are a great many factors that go into evaluating any airplane, and the best person to do that evaluation is a professional appraiser. The online services will give you an idea of how much an airplane might be worth, but only if it is done correctly by whomever is using those services, whether it is someone who is scanning ads for airplanes, or a dealer who is looking to justify an asking price. Only a professional appraiser can put a correct value on any airplane.
One online service continuously runs high on most aircraft and equipment. It is AOPAís Vref. When I ask people who are selling airplanes why they are priced as high as they are, the answer usually is that they got the information from using AOPAís service. When I explain that Vref generally runs high on most light aircraft, especially those with recent paint and interior, or upgraded avionics, they say that AOPA would never intentionally put out false information, so they are going with it. Iíll let you judge that for yourself. Below is the text of a letter I wrote to Phil Boyer, the president of AOPA, and the response I received.
March 26, 2002
Mr. Phil Boyer, President
421 Aviation Way
Frederick, MD 21701
Dear Mr. Boyer,
I am writing regarding the article that appeared in the April 2002 issue of the AOPA Pilot. The article is entitled ĎBy The Numbersí and deals with AOPAís online use of Vref. I wonder, Mr. Boyer, if you know that you are doing your members, and my fellow members, a great disservice by promoting this service.
I have been a professional, full-time aircraft appraiser for many years, and I am the author of the book, Purchasing & Evaluating Airplanes. Since Vref came on the scene the market has been muddled and very difficult to deal with, because the values promoted by that service are very high. There are few exceptions. Please see the comparisons I have run using Vref, the Bluebook, and the NAAA E-Valu-Ator that is maintained on Trade-A-Planeís site. The difference between them is too large to be called a difference in systems.
As a retail buyerís agent (I do not sell airplanes, I only buy airplanes under contract) I constantly run across airplanes for sale that are significantly overpriced, and when I ask the sellers how they arrived at their asking price they say they used Vref on your site. When I attempt to explain to a seller that my client would be very interested in their airplane if it were price more realistically the usual reply is something like AOPA would not provide a service that was not representative of the market. Yet, that is exactly what AOPA is doing.
There are several potential problems for the members who use Vref. For example, you have disclaimers that tell users that the service cannot be construed as an appraisal, but many users, especially those who have never owned airplanes before, donít believe that, whether they are using AOPAís service or another. If you have two AOPA members, one a seller and one a buyer, who use the service the buyer is going to overpay for the airplane if he does not have it professionally appraised. Your mention of the value difference between a professional appraisal and the Vref value doesnít mean anything to the average shopper. Many of those people think they are dealing with the same numbers and conditions that an appraiser uses, and that is not so.
Some of the values that are used in the Vref system are too high. For example, a fresh paint job and interior will not generate an increase of $12,000 in most light single engine airplanes. The increase will be closer to $7,500 to $8,000. That value depends on the quality of the paint job, the types of materials, and the quality of workmanship put into the interior.
The system is too complicated for most people to get right. For example, in the evaluation I did it says that the ADF is already considered in the base value. However, the airplane I used, which came from an ad in Trade-A-Plane, had a King KR-86 installed in it. The KR-86 is a much better and more expensive ADF than the Narco ADF 31 that was the typical ADF used in the early Arrows. The KR-86 should be worth more money than the original base ADF, yet it appears that by adding the KR-86 to the evaluation the base ADF is still included. Most people using the system will not understand that. Most of the evaluations people have sent me to justify their asking prices include the value of the base nav/coms plus the full used value of the upgraded nav/coms that have been installed. That only makes the evaluation that much higher than it should be.
A member who uses this service to price an aircraft for sale will lose a considerable amount of money, because it will take a significant amount of time until he or she realizes that the airplane is overpriced and does something about it. During that time the costs of storage, insurance, maintenance, etc. continue. In my experience, an airplane that is properly priced will sell within 90 days, while it can take as long as six months or more to sell an airplane that has been overpriced.
I deal with sellers constantly and see many good aircraft that would sell quickly if they were priced right. In fact, my clients would buy those airplanes if they were priced right. It has gotten so bad that when someone tells me they used AOPAís Vref to price their airplane I thank them politely and hang up. If I try to explain the system to them they think that because I am a buyer I am simply trying to get them to sell me their airplane too cheaply, so I donít bother any more.
I can understand that you would like to have a service like this for the membership, but a service that is a hindrance to those who use it is not very helpful. In my opinion Vref is attempting to set values instead of report them. That is great for selling books to dealers, but it is not what any appraisal or pricing service should be about. I strongly urge you to look into this matter as soon as possible and to take action to make the service beneficial to the membership or, if that is not possible, to get rid of it altogether.
Brian M. Jacobson
ANSWER FROM AOPA
Address: PO Box 785, Union Lake, MI 48387 Phone: (248) 363-3807 FAX: (248) 769-6084
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