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!
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