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aircraft broker

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What do airplane buyer's look for?

Do you know what the #1 thing savvy buyers look for when they’re searching for a used airplane?

It’s not all the bells and whistles.  

It’s not over-hyped sales speak.  

It’s not even the lowest price.

It’s consistent and honest communications.  That’s right, they want straightforward answers and they want them quickly.  If the buyer senses that the seller -- whether a individual or a broker -- is glossing over important items, paints the rosiest picture possible, only provides positive information, shows the best pictures or those that have been photoshopped, or in an other way isn't forthright, they will move on...quickly.

Consistency in communications is paramount and that consistency is usually not developed after just one or two aircraft sales, but after dozens, or hundreds.  It takes time and effort.

I can't even begin to think how many buyers have told me stories of planes they went to go see only to find them to be horribly misrepresented.  The owner either didn't disclose pertinent information or glossed over it hoping the buyer wouldn't notice.  Unfortunately, I've heard those same stories about other brokers in the busines.  That’s why so many aircraft owners hire WildBlue to help them sell their airplanes.  We go the extra mile to develop reliable listing information, place ads, answer phones, and interact on social media…so you don’t have to.  We talk with buyers over and over again…sometimes year after year…and give them the time they want…so you don’t have to.  We help them figure out which type of airplane is the best fit for them…so you don’t have to.  And we qualify them, lead them through the negotiation process, prepare paperwork, help them with pre-purchase inspections, and make sure all of the I’s are dotted and the T’s are crossed…just so you don’t have to.  

So, whether you hire a broker to help you with the sale (and we do hope you'll hire WildBlue) or if you choose to do it yourself, know that consistent, reliable, and honest communication is what buyers expect.  Without that foundation you can rest assured they will look elsewhere.
 

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2017 End of Year Market Commentary

Autumn is traditionally the best time to sell an airplane.  Buyer's are looking to make year-end decisions, often for tax reasons, and 2017 has has been no exception.  In many ways, Q4 2017 has surpassed previous years by a wide margin.  Is it because of an overall strong economy, the prospect of lower taxes, pilot medical reform, the need to upgrade capital equipment, rising aircraft prices, or all of the above?  The bigger question is whether or not this momentum will continue in to 2018?

So, what types of airplanes are driving this activity?  This commentary will reference the piston and single-engine turbo prop markets only.  Buyers want consistency, pedigree, and recency. 

They want consistent and frequent operation.  Airplanes that have sat for extended periods, even if low time, are not attractive.  A misconception among sellers is that buyers want low time engines but that's only half of the story.  What they really want are engines that have been frequently used.  A low time engine with minimal use over an extended period is considered a gamble by most buyers.

They want pedigree, meaning thorough, capable, and first-rate maintenance.  They want more than minimal maintenance.  If you're one of those owners who brag about your $1,000 annual then you're going to be in for a surprise when buyers don't appreciate your frugality.

And, buyers want recency.  In other words, they want an updated panel (it doesn't have to be state-of-the-art though), they want a 30 year old airplane to have an upgraded interior, and they want to feel like they're buying a plane that doesn't look like it's a blast from the past.

Consistency.  Pedigree.  Recency.  How does your plane measure up?

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Why hire an aircraft broker?

There’s always debate on this subject, especially on the various owners forums.  Some people say absolutely yes, some say absolutely no, and the rest are somewhere in between.  Even though aircraft brokerage is my business I’m not one of those who will tell you that is the right decision for everyone.  And -- just to get the white elephant out of the room -- yes, there are a few dirtbags in this business.  There are also a lot of very fine, hard working people who want to do the right thing and who pour their souls into helping their clients.  

Buying and selling seems to trigger a lot of emotions.  Throw an airplane into the mix and sometimes those emotions run high.  A lot of brokers are unfairly blamed for things over which they had absolutely no control or knowledge.  This is akin to the real estate agent who gets blamed for the broken water heater after the sale.  How were they supposed to know  Point being -- in today’s bombshell throwing social media world -- you can find less than favorable comments on just about anyone.  If you can’t, they probably haven’t been in the business long.  Dig deeper to find out how a prospective broker handles situations, take the time to actually speak with those who have worked with them, and think critically.  

But back to the question of whether or not a broker is right for you and/or your airplane. Let’s take a look at the 6 most important considerations.  The assumption here is that the broker has a long-standing reputation for great customer service and is not in the business to quickly flip an airplane.

  1. Time.  Even the easiest planes can take a lot of time to sell.  Make sure you have the time.  Figure 40+ hours to stage the plane, take good pictures and video, copy the records, develop the marketing materials, post the ads, call known prospects, answer calls, prepare offers and contracts, renegotiate after an inspection, coordinate delivery, etc.  Here’s a recent example: Within a period of 8 days I took over 30 calls and emails on a Beech A36.  Many of those callers were asking the same questions over and over again.  I don’t mind, it’s my business.  But even at just 15 minutes per call I spent over 7 1/2 hours of my time -- and that doesn’t include the other work I did on that plane.  If your time is valuable or in short supply then maybe you should consider hiring a broker.

  2. A second opinion.  Most reputable brokers keep meticulous records on previous sales and market history.  They use this data along with current trends and forecasts to give you a very clear idea of a likely sales price and time-on-the-market.  You can use them as a sounding board and they can help you see things objectively.  They can also advise you about upgrades you’ve been considering.  I’ll get calls from customers who want to spend money on an upgrade they think will help them sell their plane.  More often than not I encourage them to save their money since their return on investment is almost always well below 100%.

  3. Notes & Databases.  Reputable brokers keep copious notes and databases.  We know who’s in the market, which buyer’s are always looking for that “smokin’ deal”, what the scam-artist tactics are, which maintenance shops are good (and which ones to stay away from).  When you sell a lot of airplanes you collect a lot insider market knowledge that can be very valuable.

  4. Returned communications.  I’ll bet I get a comment a week from someone who told me they couldn’t get so-and-so to return their call.  Sometimes they’re referring to brokers (which is inexcusable) but often it’s from individual owners.  If you’re busy, often out of cell coverage, work nights, or have other reasons why you can’t respond in a timely manner, then maybe you should considering having someone help you.  

  5. Objectivity.  I always cringe when someone tells me their plane is “the best one out there”, “a perfect 10”, or that there’s “absolutely nothing wrong with it.”  Hey, we’re all human and we sometimes miss things.  It’s rare that I don’t discover something about a plane that the owner didn’t know.  Buyer’s want to hear the truth and they are skeptical about so-called perfection.  A good broker will take the time to go see your airplane personally.  If you’re one of those people -- and this happens -- who want to hide or conceal something about your plane then a good broker is not for you.  They will find out and should disclose that info to prospective buyers.

  6. Experience.  An experienced broker will know how to handle contracts, extensions, revisions, foreign purchases and different countries bureaucratic requirements, ferrying, closing, inspections, etc., etc. and they will be able to advise you every step of the way.  We know where the potholes and roadblock lie and can often see them a long way off.

A good broker can be well-worth his/her money, sometimes multifold.  You absolutely must perform due diligence before committing to a brokerage agreement though.  If you’re the kind of person who handles your own investments, sells your own homes, and likes to do everything yourself while never taking counsel from anyone else then you’re not the kind of person who would be a good fit for a brokerage relationship.  A broker is there to help you expand your team, to give you some of your time back, and to broaden your perspective on things you may not have previously ever thought of.  And a good broker should always act in your best interests and be willing to tell you “no” when all you you really want to hear is “yes.”

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Cheap or Good?

Speaking only for myself – I can imagine that others may feel the same way – one of the most frustrating, and frankly counter-productive, first questions a buyer can ask is, “so, what’s the lowest you’ll take for that thing, anyway?”

Really??

I mean, you don’t know a thing about the airplane other than what you’ve seen on the ads.  More than likely, you haven’t taken the time to dig into the logs or speak with the mechanic to see what type of maintenance has been done on the plane.  You certainly haven’t seen it yet.    Have you even considered the possibility that a “cheap” airplane or “smoking deal” may cost you more in maintenance, upkeep and upgrade than you’ll ever save on the front end?

When a buyer asks me this question within our first few minutes of conversation I automatically lower my expectations of that prospect and begin to discount their legitimacy.  Experience has taught me over and over again that this question is often asked when little research has been done, when they suffer from price myopia, or when the buyer can’t think of anything else to say. I've also found this question to be reflective of their ability to financially qualify for the plane in the first place. 

Some say there are no dumb questions.  Honestly, I’m not so sure about that.  What I am sure about is that there are dumb times to ask certain questions.  Buying and selling is a lot like dating.  There are just certain questions you don’t ask until you get to know someone first.  Know what I mean?  Should you forget that basic principle, you’ll likely find that to be your last date…or worse.  Educate yourself first.  Try to get as much of the big picture as you can before jumping right to the bottom line.  You’ll undoubtedly find the other party more receptive and appreciative of the efforts they’ve made to maintain their airplane. 

So, if you call and ask me that question, don’t be surprised if my response is, “Do you want a cheap airplane, or do you want a good airplane?”  Because there’s a difference; a BIG difference.  Happy and successful aircraft ownership is based on understanding the costs involved, not just the price.

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How to Handle the Sale of an Elderly or Ailing Family Member's Airplane

It’s not easy to watch a family member age.  It can be particularly difficult if that person still retains assets that, at some point, must be liquidated; even more so if there is an emotional attachment to those assets.  The same issue applies to loved-ones who become unexpectedly sick or incapacitated.  Airplanes represent a particularly challenging set of choices that will have to be made.  This is not a situation I envy or look forward to dealing with myself, yet it is a fact-of-life for most of us…or at least it will be. 

I have never met an aircraft owner who did not perform substantial due diligence before finalizing a purchase.  We all want to know what we’re getting ourselves into and, ultimately, that we got a fair deal.  Many aircraft owners are very savvy business people, investors, and professionals.  We all like to think that we make good decisions and that our “investments” are wise ones.  Much of this is based on expectations and our own personal bias.  After all, a good investment for one person can be a sink hole for another.  Aircraft owners, especially those who bought their airplane before the turn of the century, were used to consistently appreciating aircraft values.  You could buy a plane and, except for unusual circumstances, sell it for at least as much as you paid for it.  But, the burst of the internet bubble coincided nearly exactly with a ramp up of manufacturer production (which provided new units to a stagnant inventory) and with the slow but steady loss of general aviation pilots.  According to Vref Value Reference, complex singles increased in value by 27% from 1994 to 2000.  From 2001 to 2009 they declined by nearly 35% in value.  Since that time the trend has been nearly flat with a 5% overall increase -- most of which was recorded before 2011.  The light twin index has been similar while the turboprop index has been more volatile.  Thus, many owners who either bought prior to the 2000 decline or those who spent the majority of their aircraft ownership career prior to 2000 may have unrealistic expectations about the value of their aircraft.  This, combined with the effects that aging has on our cognitive abilities and heirs who want to get as much as they can, often results in a situation where aircraft are retained for far too long amid declining values and aircraft carrying costs.

Let me share a recent example with you.  I have a client, we’ll call him Ted, who is looking for a 2000-era Piper Malibu Mirage.  He’s got about $500,000 to spend and, like all buyers, wants a fair deal.  We recently identified a possible candidate, went to do a quick visual inspection to see if the specs matched reality, and made an offer contingent on a full pre-purchase inspection.  The seller, who was represented by a very capable and reputable broker, was firm at $500,000.  Given the specs and recent market activity, this is a plane that should sell for $440,000 to $460,000.  He (the seller) had already turned down an offer of $485,000.  Our offer was at $459,000 and you can probably imagine how that was received.  The elderly seller, it was discovered, was in failing health and had a strong notion of what he thought the plane was worth.  Unfortunately, he was wrong.  Now, he’s in the hospital and his non-flying children are in charge of the sale.  They have now dropped the price (well below the first offer of $485,000) and are still sitting on the airplane.  I was told again that they are “firm” on this price and there is no room for negotiation, even though the plane is still over-priced.  We’re not looking for a steal, mind you, just a price that matches the market.  According to JetNet, insurance and depreciation alone for a Malibu Mirage exceeds $23,000 annually.  Every month they wait to sell is a hidden $1900 loss to their bottom line.  This doesn’t include the negative perception buyers have of airplanes that don’t fly regularly or the cost of recurring annual inspections.  Holding on to the plane another 6 months will probably cost them more than taking our $459,000 offer would have, and they would have freed up substantial emotional capital by getting the plane off their minds.

Here’s another example.  This one worked out better.  My client, Ben, was diagnosed with terminal cancer just prior to listing his A36 Bonanza.   He was fairly realistic about the value of the plane yet still held on to a pre-2000 aircraft value paradigm.  Unfortunately, Ben’s health took a turn for the worse and he was admitted into the hospital.  He recognized his diminishing capacity and turned the sale over to his son who was a non-pilot.  His son looked at the sale of the plane as a business transaction and tried, however difficult, to remove all emotion and sentiment from the plane.  As such, when a reasonable offer came in, Ben’s son was prepared to accept.  His wise decision probably saved Ben’s family a lengthy period of turmoil over the plane since shortly after the sale Ben passed away.  His family and his estate no longer had to worry about the disposition of that sizable asset.

So, whether you’re the aging owner of an airplane or have a family member who is, keep in mind these observations:

·        If you haven’t received an offer near the price you want in the first 4 months of the airplane being for sale, you probably never will. 

·        Planes need to be flown and ones that have been sitting for lengthy periods of time will scare away potential buyers.

·        There are carrying costs (insurance, hangar, operation, maintenance, and depreciation) to aircraft ownership.  These costs almost always exceed any hoped-for increase in aircraft value.

·        Don’t let the airplane go out of annual.  If you do, you might as well tell prospective buyers you can’t afford the airplane and are desperate.

·        Planes generally don’t increase in value by any meaningful amount.  Don’t take it personally or think you’ve somehow made a bad financial decision if your plane is not worth what it once was.

·        What you’ve spent on the airplane, how much you owe, the total cost of upgrades, or what you need for retirement have little-to-no bearing on what the airplane is worth.

·        Comments like “I’ll keep it before I give it away” or “I’ll make it a lawn ornament first” are emotional statements that will cost you time and money.  At some point, even for the most stubborn of us, reality kicks in and you will realize that continuing down that path will be far more expensive than you originally thought.

·        Waiting for “the market to go back up” is not a strategy either.  For every 10% market decline it takes 11.1% to regain.  History demonstrates many 10% losses but few 11% gains.

·        And, finally, just because your close relative thinks the plane is worth X doesn’t make it so.  Seek, and listen to, the advice of a professional who is in that market.  Get second and third opinions if you need to. 

Every situation is different.  What’s important to remember here – regardless of whether you’re the aircraft owner, an heir to the sale, or estate executor – is that those who handle the sale from a business perspective and try to remove all emotions are the ones who fare the best.

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