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The Aero Experience is a celebration of Midwest aviation and aerospace achievement. We invite you to join us as we explore the treasures of Midwest aviation through first-hand experiences. Our contributors take turns flying lead, and we are always looking for new destinations. Check in with The Aero Experience frequently to see where we will land today, and then go out and have your own aero experiences!

Blue skies,

Carmelo Turdo, Mark Nankivil and Fred Harl - The Aero Experience Team

Wednesday, September 25, 2019

Sponsor Announcement: JetValues Jeremy Joins The Aero Experience Team!

The Aero Experience welcomes JetValues-Jeremy as our newest sponsor! We are proud to present this informative and entertaining guest post about the world of aircraft appraisals from Jeremy R.C. Cox.

By Jeremy R.C. Cox
Please allow me to introduce myself to you: I’m Jeremy R.C. Cox (yes, I do have two middle names as I’m originally from the UK where they are weird like that!). I grew up on a pig, poultry, and dairy farm in England, learned to fly at age 9 and moved to the USA in 1991.  I have bought and sold hundreds of aircraft consisting of 67 different makes-and-models of jets along with turbo-props and 1 helicopter. I have been around aircraft for 45 years, and I am known in the aircraft industry as "JetValues Jeremy."

I am a Senior Certified Aircraft Appraiser. This takes 10-plus years of experience, and a minimum of 2 years of training to become certified. I have been appraising aircraft for more than 20 years. 

My maintenance experience is very broad, from light aircraft through Lockheed, Boeing, and Airbus Large Cabin Aircraft. I hold valid A&P Mechanic Ratings with Inspection Authorization. I also hold my FCC License with Radar Endorsement. 

I have 1,200+ hours on a Commercial/Multi/Instrument ticket (no medical). I have flown the Cessna Conquest and the Citation 650. I have done two North Atlantic Deliveries in light aircraft, and I have air-towed targets for Flight Refueling Aviation contracted to the British and Italian Navies.

I am an Aircraft Appraiser.

In 2014 I obtained my first certification as an aircraft appraiser and from that point on I realized that I had discovered my true calling in life; actually, more of a passion, really. This discovery is what precipitated my decision to retire from aircraft sales and be a full-time aircraft appraiser.

So why are appraisals needed? There are a multitude of reasons, which include, but are definitely not limited to: 
  • Establishing Fair Market Value for an asking/selling price, bank financing, IRS tax donation or insurance premium reference;     
  • Establishing Diminution (loss in value) due to a damage event; 
  • Establishing a Lease Rate; 
  • Investor Satisfaction in a publicly traded company; 
  • Ongoing Asset Tracking.
The challenge of developing a credible opinion of value for a subject aircraft is exciting to me – more so if the subject aircraft is not covered by any of the price guides. Appraising "off-book" aircraft is where the "wheels truly hit the runway" for me.

It is pretty easy for anyone to subscribe and use a price guide to ascertain a rough number of aircraft value, but the value returned by the use of a price guide is only as good as the knowledge and skill of the user. I believe that three types of values can be obtained from a price guide, as follows:
  • A basic, current unadjusted guide number that gives the user a general sense of where a specific "year of manufacture," make and model of aircraft falls within the used marketplace. This basic number is not viable for obtaining a loan on the subject aircraft, nor for making it possible to confidently set an asking price if your motivation is to sell the aircraft.
  • A moderate expectation of value, where the subject aircraft is adjusted from the published parameters quoted by the price guide, such as when Airframe Total-Time, Time-Since Overhaul and rudimentary Equipment Options are considered and adjusted. Again, this value is of limited use even though it is honed down with a small degree of accuracy.
  • A usable value that could satisfy bank compliance and even get the owner into a reasonably targeted area for attracting serious buyers. This value is only possible through skilled use of the price guide, where every adjustment is considered and used, including custom inputs made by the user. This value is not available to a user who does not have considerable knowledge of the make and model of aircraft that they are valuing.
The two biggest downfalls with the dedicated use of price guides as your only sources of value estimation are: 

1. The numbers quoted are predominantly derived from aircraft brokers and dealers who always have an agenda with the numbers that they release to the public (some do come from the price guides that offer an appraisal service in addition to the sale of their guides); 

2. If you want to get a value for an aircraft that is NOT covered by the guide, then except for attempting to cross-compare between the published aircraft and your subject aircraft, you are pretty-much S.O.L.

There are three accepted approaches to value as defined by the American Society of Appraisers (ASA) in the Third Edition of Valuing Machinery and Equipment: The Fundamentals of Appraising Machinery and Technical Assets, which are:

1. COST APPROACH: The appraiser starts with the current replacement cost new (or in some circumstances the reproduction cost new) of the property being appraised and then deducts for the loss in value caused by physical deterioration, functional obsolescence, and economic obsolescence. The logic behind the cost approach is the principle of substitution: a prudent buyer will not pay more for a property than the cost of acquiring a substitute property of equivalent utility.

2. INCOME APPROACH: The appraiser determines the present value of the future economic benefits of owning the property.

3. SALES COMPARISON APPROACH: The appraiser adjusts the prices that have been paid for assets comparable to the asset being appraised, equating the comparable asset to the subject. 

It is required by Standard 8: Personal Property Appraisal, Reporting, Standards Rule 8-2 (b) (viii) of USPAP, that all appraisers consider all three approaches. The Uniform Standards of Professional Appraisal Practice (USPAP) is the generally recognized ethical and performance standard for the appraisal profession in the United States. USPAP was adopted by Congress in 1989, and contains standards for all types of appraisal services, including real estate, personal property, business and mass appraisal. Aircraft are categorized under "Personal Property."

Approximately 90% of all appraisals that I perform involve only the Sales Comparison Approach. The remaining 10% breakdown into approximately 8% as Cost Approach appraisals and 2% as Income Approach appraisals.

Even if the subject aircraft that I am appraising is covered by one or more price guides, I do not use them to obtain my opinion of value. I will quote both their base numbers and their range of variance in my appraisal report. Instead I will look at the recently sold marketplace for aircraft that have sold within the past six months and select eight comparative aircraft to adjust against the subject aircraft.

If there are not eight aircraft that sold within six months from the effective date of my appraisal, I will extend my candidate search farther back in history and then adjust the older selling prices for any CPI increases. If I still can’t come-up with eight comparative sales, then I will add "currently for sale" aircraft to my evaluation – initially adjusted to the expected selling price.

If the subject aircraft is unique and there are few if any comparative sales from which to select, I start the process of sampling and cross-comparison between like-kind aircraft. For some Warbirds and Vintage aircraft that I appraise, my sales comparison evaluation ends up being a mixology of sales comparison and cross-comparison. Most importantly, I have developed a "provenance rating system" that is proprietary to JVJ LLC.

Provenance is the "history of ownership of a valued object" as defined by the Merriam-Webster Dictionary online. Think of Sotheby’s and Christie's and iconic automobiles owned by movie stars. This extends into the aviation world with a Learjet owned by Frank Sinatra, a Jetstar owned by Elvis Presley, a North American P-51D Mustang aircraft that shot down a German ME-262 jet fighter in World War II, etc.

When you need to know the "certified" value of an aircraft, please call or email me. You will not be disappointed with the comprehensive report I will produce for you. Timing? A certified desktop appraisal usually takes two-to-three days to complete. A full on-site certified appraisal with aircraft and records review usually takes five to six days to complete once I return from the location of the aircraft and its records. On-site appraisals have taken me all over the world, so unless the location is in a war-zone, I will pretty much go anywhere on your behalf (I have both a US and British passport). I am also recognized in my profession as an expert witness specific to aircraft values in all manner of legal disputes.

Please contact me: 
Jeremy R.C. Cox
JetValues-Jeremy LLC
Aviation Assets Appraisals, Asset Management & Aviation Consulting Services

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