One of the pleasures of being a flight instructor, consultant and occasional contract pilot is that I get to spend a lot of time around pilots keen to buy a taildragger, turboprop and occasionally a jet. Even existing aircraft owners express a desire to upgrade, re-evaluate, or simply sell their existing aircraft for something else.
Yet, in the general aviation world, there’s a frequent recurrence of casualness around aircraft acquisition that can lead to wasted time, effort, and money etc. never mind the frayed emotions and harumphing. In the turbine world, it leads to lawsuits and varsity level harumphing.
Three questions to help think about avoiding such pain:
- How do I make an offer on an airplane that I can’t even see in person?
- What is a reasonable sequence of events from first contact to closing?
- How do I make an offer that is fair, but not insult the Seller if the asking price appears way over market?
Fortunately it is a Saturday morning and I went to bed early without any excesses last night. So… my answers to the above will not only be clearly thought out, but the memory banks of my 26+ years in this business should be fairly accessible.
Question #1: The “great deal” far away
This is actually the best way to think about buying an airplane. They are highly mobile and the market is bigger if you look farther afield. So long as you are looking farther away, why not consider great places… where it is dry and the atmosphere is gentle on airplanes. (Hint: Humid, heavy, salty air = bad. Utah = good.)
The “great deal” far away can first be approached via the internet and a phone call. Call the Seller, tell them how serious you are and earn their trust that you are genuinely interested in buying their aircraft. (This Seller may have had a few dealers / brokers making lowball offers, so you need to gain their trust that you are the real deal.) After establishing this trust, ask these questions:
- Are the logs complete. And could you scan and email the last few pages of the engine, prop (if applicable) and airframe logs?
- Is there any damage history? If so, you want to set expectations for the inspection. You also want to know that the repair was well documented. Why not toss that into the scanner as well?
- Can you email high res photos of the ugliest parts of the airplane (chips, damage, corrosion or anything that should be disclosed)? You know it is pretty, but why not see all of it up close and personal, before you begin the journey to it?
If the above goes well, you’ve got enough information to proceed with making a conditional offer and getting a contract signed. (Assuming the initial disclosures weren’t too freaky, outside your comfort zone, or require more research.)
Question #2: A reasonable sequence of events
Based on lots of good deals, that ended up leaving all parties happy, here is a straightforward, natural sequence of events. Quite frankly, I am astounded by how rarely they are followed in the “non-Pro” world of aircraft acquisition.
The sequence of events should go like this:
- First contact + disclosures: This is the trust building and courtship and disclosures via email / phone, maybe even the local shop that has been taking care of it. You provisionally line up an unrelated, unbiased shop that has not seen the airplane before or in a decade or so.
- Draw up a purchase agreement that spells out:
- What you are going to do, in what order. (Reposition, pre-buy, negotiate new stuff, close.)
- What the terms of the sale are in terms of price, inspections and escape clauses, and who is covering what part of the expenses of the sale process as part of this contract.
- Conduct a pre-purchase inspection, and let the Seller know you are starting the process of doing an annual inspection. (Might as well get this out of the way right?) If you are a first time aircraft owner, get used to inspections and staying ahead of problems.
- Itemize new, surprise or heretofore unknown stuff: Let the Seller know 1/3 into the “annual” (aka your pre-buy) what you’ve found and what adjustments, if any, need to be made. At this point I aim to be into the inspection for $250 to $750 for a piston single. (Here the Seller sees your commitment, but also knows that the plane will be put back together without the benefit of an annual if things go south. You are also showing how committed and serious you are to knowing *everything* about this machine that could hurt you if you don’t.
- Negotiate final price and close. Ideally you want to spend a few extra dollars here and close through an escrow and title company in Oklahoma City. (This not only keeps all the money stuff honest, but it also allows you to get a clean title on the aircraft “free and clear from any encumbrances or liens” as a lawyer would say.)
- Fly home happy.
Question #3: The offer
Pay for access to a tool like Aircraft Blue Book. (Vref is another good one.) While far from perfect, but these bank and finance driven databases give you common ground with the Seller. Look up the value of the candidate based on airframe and engine time. (If you are looking at turbine aircraft there are more variables to consider, but these are the two core ones.)
This is your baseline of rationality. Stick to it. Add or subtract from it based on stuff that actually enhances or detracts from the value of the aircraft. (Avionics? Yes. Major structural repair? No, etc.)
Focus on the wholesale column (the retail column is largely a fictitious concept to pros). You are doing a private sale, so use the wholesale number as the basis and not a fictitious retail sale on a 30 year old airplane that lives in a barn or T-hangar. Also there is likely no dealer to pay if you are making direct contact with the owner. So toss “retail” as a concept.
If you scroll to the bottom of this article, you’ll see a spreadsheet on how to value a Phenom 300 in the Ukraine for US buyer. The principles are the same as a Super Cub in Omaha. Be sure to note the downs for discounts #1 through #5.
And bam – you’re a Pro. Sound easy? It is. It just takes time and effort, but the above sequence is not overly complex. Just a good flow chart to build into your acquisition process.
Want to do more stuff like a Pro? Sign up here and I’ll send you updates and related content.