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Buyers Guide If you have never bought an aircraft before it can be a little hard to do without someone to advise you. And even if you are an experienced buyer this guide will tell you how our owners will be expecting you to handle the sale. We have given our owners a similar guide to follow and you will find that most will do so. Although it is just a suggested method so ultimately both you and the owner will decide how the sale will proceed. Ok, lets get to it. Target Acquisition When a client contracts with us to find an aircraft the first question we ask is "What is your budget?" Many think this is some sort of salesman thing. It's not. It's a reality check. Knowing your budget will quickly tell us want types of aircraft are going to be available to you. If you want to spend no more than $40k it's not going to make much sense to go out and look at a 421C. The next question is "What type of flight experience do you have?" Again, a student in a 421C is not going to go over well with your insurance agent! So try to answer those two questions first. Also keep the operational costs in mind. It's possible to find an older more complex aircraft that's in your purchase budget but is too expensive for you to operate. Now is also a good time to put in a call to an insurance agent. You need to find out about how much it will cost for the type and price of aircraft you are considering. This information may cause you to change to another type aircraft if the cost is to high. For more info on this subject go to our insurance section. Once you have a budget and type of aircraft in mind you need to decide exactly what model aircraft to pursue. The budget will tell you what years to look for. Be sure to take into account what type of avionics, paint, interior and engine time you will want. It can drastically change the year and model you choose. The point here is be realistic about the money and try to narrow your search to the model and year. Talk to owners. Try to get a demo. Go to the owners association sites and read up on the type. Get this decision out of the way before you start wasting time and money flying all over the country looking at aircraft. Focus focus focus! Money Money Money If I had a dollar for every buyer I've seen miss that perfect aircraft because they did not make prior arrangements for the money I would eat lobster every night! One of the reasons we offer financing is to get our clients approved and ready to pounce when we find the aircraft. All lenders will give you a pre-approval that's good for many months. This gives you the ability to move fast and lets you know for sure what kind of lending limit you will have. Most lenders will want to see good credit, a couple years in your chosen profession and no more than 40% debt to income ratios. Get pre-approved. If you are going to use another source of money like stocks or a money market account find out in advance how long it will take to liquidate the account. Now you're ready to search! The Search Is On The fact that you are reading this means you have already found the best place to find your aircraft! One of hardest things about looking for an aircraft is getting a lot of good, accurate info and photos. We find it very difficult to get enough info to make a decision about a particular aircraft. What you need from the owner is the type of info we offer here. The price, lots of high quality photos, an accurate and complete spec sheet and the logs. I can tell you nobody else will supply you with all the logs like we do so don't expect it. Try to make sure you are dealing with the owner or his exclusive representative. Some aircraft will be advertised by more than one dealer. If you cant get comfortable with who's really in charge move on. It's not worth it. You are dealing with a great deal of money here. Don't take any chances. We have seen some very smart people loose large deposits and waste money on prebuys. So you found it. Now what? Deposit Or Not At this point we need to stop and talk about deposits. We don't like to give or even get deposits. I don't like putting my money at risk just to look at someone's aircraft. When I'm buying all I want is a gentlemen's agreement that if I do a prebuy and decide to come get the aircraft that they will hold it for a reasonable number of days for me to get there and pay them. The risk is they might sell the aircraft out from under me after I have spent money on the prebuy. If they sell the aircraft before I can start the prebuy that's fine and I'll just go find another aircraft. So if they tell you they will hold it after the prebuy but don't, and sell it, then they would have done the same thing if you had sent them a deposit. The benefit, holding the aircraft, is small compared to the risk, loosing a large deposit. So I don't like to do it. But, some owners will insist on you putting up a deposit before they will even let you do a prebuy because they may have been burned in the past by a buyer that held them up for a long time without really being ready and able to complete the sale. When that happens if you still want to pursue the aircraft make sure you put the deposit in an escrow account at a well known aircraft title company with an agreement that allows you to recover your money any time you want. The owner will be happy knowing you are serious and you will not have to worry about getting your deposit back. If the owner insists on you sending it directly to them, run! All right. Lets get a prebuy. Prebuy Time Well congratulations! You found an aircraft! You're halfway home. Right? Wrong! Now the real work starts. So you have found this aircraft and it's many miles away. How do you handle that? Well you can get on a plane and go look or you can have a prebuy done first. This is a personal decision. But what we do here is talk to the owners mechanic about the aircraft first. I have found most are very honest about the mechanical condition of the aircraft. As far as the cosmetics they are not as good with this info. But you have 75 high quality photos right? Well you do if it's one of our aircraft! After talking to the mechanic and reviewing all the info I make a decision to start the prebuy. Normally you will not use the owners mechanic. So you will need to get the names of some shops in the area that are qualified on the type. Or you may want to send your own mechanic to the do the prebuy. I can tell you most guys will not want to do that. They are usually too busy to leave their shop for a few days just to do a prebuy. And it's not really necessary because you should be able to find a qualified shop to do it for you. Once you pick a mechanic you will need to agree on what they are going to do. If you have a local mechanic you may get them to call the shop to discuss how the prebuy will be done. If not you can get a recommended prebuy guide from the appropriate aircraft owners association. Most shops will know what to do anyway and wont really need a form but you need to know exactly what they are going to do and how much the inspection will cost you. If you cant find a prebuy guide to follow you will need to make sure the shop at least checks the following items. Have them verify that all the logs are there, that the times match the spec sheet and any damage history entries. Check for all the required docs like the airworthiness certificate, current weight and balance, 337 forms and all the manuals. Check for AD compliance. You can try to check service bulletins but most owners don't do them and most shops can't check them because they don't keep a current list. So if you have a specific bulletin you want to check you better get it for them. Do a compression check with the proper size gauge for the cylinders. There are now two different size compression gauges for this task. One for cylinders under a 5 inch bore and one for the cylinders with more than a 5 inch bore. It makes a difference so try to make sure you know which gauge they use. This is a fairly new change and many shops are still not aware of it. So don't be surprised if they look at you funny when you ask the question. If it's a retract, swing the gear. Look for corrosion. Most aircraft will have a little so don't freak out if they find some but more than a little can be a problem. Look for hail or evidence of filled hail dings. If the fuel tanks are not full you can't be sure they don't leak so fill them up. Check the airframe for evidence of damage repairs. Some are very noticeable but some are impossible to spot so the inspection is no guaranty it has never been damaged. About all you can do is check the logs, 337 forms, NTSB/FAA sites and look at the airframe for damage history. If you can't find anything it probably has not been damaged but keep in mind it's still a possibility that it happened in the past and the current owner really didn't know about it. It happens, but remember, it's a used aircraft, so no guaranties. The rest of the inspection should be a good general search for squawks. The radios and autopilot are usually not checked by the shop so you can check them during the demo flight. Again this list is no replacement for a type specific list from a reliable source but it should work in a pinch. Some owners will offer to do a fresh annual for you to serve as a prebuy. Don't do it! You need a prebuy. Not an annual. They are different inspections. You can have lost logs, bad cosmetics, wrong times, damage history and squawks after a fresh annual. None of those things are mandatory to complete an annual. Some dishonest owners may try to slip one by you with this annual offer. Pass on that offer and do your own prebuy. A properly done prebuy will catch all those things. Plus it's cheaper to do the prebuy. The annual involves many items that are just not due at this point. Like packing wheel bearings, oil changes, etc.. Plus you are paying for this inspection so if after doing most of the annual they find a deal killer item you are going to be responsible for payment to finish the inspection on an aircraft that you aren't going to buy for an annual it didn't need!. The aircraft will be held hostage by the shop till it receives payment too. Not good. Stick with the prebuy. Now after that long explanation you're asking yourself "Why don't I just ask the owner to fly the aircraft to me?" We don't fly aircraft to show and we don't ask people to fly them to us either. I don't believe it's a good idea. It will cost you much more to get it flown in than doing the inspection there. If the aircraft is misrepresented the owner won't care and will still insist on keeping your deposit for the trip expenses. He lied but he has your money. He who has the money has the power! Right? So you are out a bunch of money and mad too! And most owners would require a substantial deposit to bring an aircraft to you. Remember above when I said be careful? Plus many owners have been burned by buyers that haven't got their act together like you do and have wasted time flying around the country for nothing. So they probably wont bring it to you anyway. I have found that if a seller is very willing to bring the aircraft to you it may be an act of desperation because he has not been able to sell the aircraft for some reason. This is not always true as one dealer in particular offers to fly their aircraft to anyone anywhere and they have very nice aircraft. But that's not the norm. Just do the prebuy there. Tell the shop to stop if they find any deal killers. That will save you some money and you wont waste your time traveling either. On to the inspection. Prebuy Rules Of Engagement Ok, you have decided how and where to get the prebuy done. Now you need to know the rules and why you are doing the inspection in the first place. "Why I'm doing the inspection?" I know. "What do you mean, Why?". Well you know you are checking the condition of the aircraft. True. But what you really need to know is how much is it going to cost to fix any squawks. A list of squawks without accurate repair estimates is useless! Most mechanics are real good at writing up squawks but real bad at estimating the cost to fix them. When you order the prebuy you need to make it clear to the mechanic that you want them to list the squawks by two types. First list FYI items that don't need any attention like "The brakes are 25% worn." Then list the items that do need attention like "The brakes are worn out and need replacing". The second list then needs to be broken out into parts and labor as accurately as possible so you can go back to the owner with a firm amount to bust off the price. Make sure the amount is accurate because you will be paying for the repair after you purchase the aircraft. Of course you could try to get the owner to fix all the items before you close but we find it's easier and faster to just bust the price and get the aircraft home to do the repairs. Plus the owner will require a large deposit before he will fix anything and if for some reason the deal falls though, once again you will probably not get your money back. Again don't put your money at risk. Just keep the deal clean and bust the price. You are going to want to close this deal "As Is" without any contingencies. And try to keep in mind that this is a used aircraft and not perfect. The aircraft is priced used, not new. You know the saying "If you want a new one call the factory". So now you know the condition of the aircraft and how much it's going to cost to get it air-worthy. Lets go fly! Demo Time Lets backup for a moment. Normally we do the demo flight before the prebuy. But if the aircraft is not local you will do the demo flight after the prebuy is done. The demo is the second half of the prebuy. Normally the owner will fly the aircraft and demonstrate all the systems to you. Don't worry about flying the demo yourself. Let the owner do it. You watch the systems work and make sure you keep a list of squawks. Take the controls and check the rigging. Don't worry about trying to learn how to fly the aircraft at this time. Concentrate on your squawk list. You will have plenty of time to fly later. Use your prebuy guide to know what to check. And if you are not familiar with the systems you might want to get the mechanic to go with you. And make sure at least one of you is watching for traffic! It's easy to find both of you with your heads down looking at something so be careful. Most demos can be done in about 45 minutes and I recommend DAY/VFR demos only. You don't really know the pilot or aircraft so don't take any chances. So lets go buy this thing! What To Pay Just about everyday someone calls wanting to know what some aircraft they are looking at is worth. Well we don't offer appraisals so what I tell the caller is do what we do and go look at the market to get an idea of the value. If you spend some time on this you will get a pretty good idea what the aircraft is worth. After you have done this it's time to decide how you are going to proceed. Lets assume the owner is asking the correct price for the aircraft. Well you can go two directions here. You can go ahead and pay the sellers price less squawks or make a lower offer. Most buyers will take a shot with an offer and that's normal. You want to be sure you're at the sellers bottom dollar. It's how you make the offer that can cause a problem. I can tell you that after over 26 in this business nothing ticks me off more than the way some folks try to get you to bust. What gets me going is the guy that calls and says "Your price is way too high! I will give no more than X for your aircraft". Now keep in mind I have 26 years experience appraising and selling aircraft. I do it for a living. I know I'm not too high. And this guy hasn't asked me one question about the aircraft. After a few more questions from me I realize he doesn't even know anything about the aircraft other than a few basic facts! But he knows it's way too high. Give me a break! Or he knows the aircraft very well because we have been talking about it for quite some time but decides he wants to try and buy it for less so he makes me an offer that is ridiculously low and tells me that's all it's worth. Both of these offers are an insult to my aircraft and my intelligence! Usually the offer is below what I would give for the aircraft as a dealer! On the other hand I have total respect for a guy that calls and says "I really like your aircraft and I know you said the price is correct and firm and I agree with that but I just don't have a high enough budget to pay your price would you take X?" I will bend over backwards to do anything I can for a straight shooter like this. My favorite call is when the low baller calls back after telling me I'm way too high and I get to tell him I sold the aircraft for the listed price right after we last talked! And if I can sell an aircraft for below true market value I guarantee I will love selling it to the straight shooter. He deserves it. So don't insult the owner. Be nice. If the seller is actually too high all you can do is politely tell him you have done your home work and can show him some examples of similar aircraft that prove out your position. Offer him as much of that value as you can afford and tell him you understand if he doesn't want to bust. If he doesn't bust thank him for his time and move on. If you're nice and make a fair offer he may call you back at a later date when he realizes he's too high. You need to understand any good dealer will give 80% of the true retail value of an aircraft for inventory. And just like houses most owners don't wholesale their aircraft. They don't have to. Any good aircraft will sell for retail in short order if priced right. I have always priced our aircraft at the price I expect it to sell for with no negotiating room and I normally get that price. So if it's priced right expect to pay that price. And if you do, consider yourself lucky because you have gotten what I describe as a good deal. A good aircraft at the right price. Anyone that thinks you can routinely buy good aircraft at below market prices is wrong. If you go around low balling everyone you will miss out on many great aircraft and probably never actually buy anything. Ok, you've come to an agreement on the price. Lets close. Funding The Funds We're getting close to closing! Your prebuy is done and paid for. You have agreed on a fair price less squawks. Now what? Pay and leave! Ok. Maybe there's a little more to it than that. You need a title search. If you are financing the aircraft the lender will do this for you. What it will show is the current owner of record and any liens. You can also request a 337 search to be done with the normal search. This will show all the 337 forms ever filed on the aircraft and my reveal a case of unknown damage. Don't be alarmed to hear that there is an old lien on the aircraft because it is very common. Most are not active and can easily be released. The lender may or may not do this for you. Most wont. So you may have to get the owner to do it. If you are not financing you will have to order the search yourself. Go to our vender list and contact our title company or pick another one yourself. Don't rely on the owners claim of no liens. Do the search. Many aircraft have liens the owners don't know about. The seller will have to fill out and sign the FAA bill of sale and send it along with the registration form signed by you to the lender or to you if you are a cash buyer. You then need to complete a sales contract. This contract should show the buyer and seller info, the aircraft info, price and any contingencies (which you should not have) and a statement that the sale is "AS IS" with no warranties of any kind. We need to stop at this point and drive the point home that you are buying a used aircraft that you have had ample opportunity to inspect and fly. If at this point you are not satisfied that it is everything you think it to be, don't buy it. You need to understand that no warranty means if it breaks in two on the way home you own both parts! You will have no recourse and that is the way these aircraft are sold. Calling the owner after the sale to tell him something broke will usually result in a response like "Sorry. It was working when it left and you had every opportunity to check it out. Sorry if you missed something but AS IS means AS IS. It's used. Not perfect. And has no warranty. It states that on the sales contract". When you sell the aircraft one day you will feel the same. So don't get bent out of shape over a fresh squawk. I tell my buyers "If you don't find something broke by the time you get home you're not paying attention. It's an airplane they break". Back to the funding. Once the docs are in order and the insurance binder is in the lenders hands you are ready to transfer funds. If you are financing the aircraft your lender will wire the payoff direct to the sellers lender and any extra to the sellers account. You will have a cashiers check for the down payment made out to the seller. If you are not financing you will need to wire the payoff to their lender and bring them a cashiers check for the balance. If they don't have a loan you will fund the total to them either with a cashiers check or wire to their account. You can also use an escrow agent from an aircraft title company to do the funds transfer. This is your expense but it may be worth it to you if you don't feel comfortable with the funds transfer process. Funding can be different on every deal so have the seller call us before you close to make sure everything is correct. Make sure you have all the logs, manuals and parts that go with the aircraft before you close. One last thing before were done. Taxes. Sales tax may be due depending on the state you are from. Every state is a little different so you need to contact your state tax office to find out what you will owe if anything. Most states will charge sales and property tax. Look into it. The last thing you want is a big bill after you just spent your last dime on this great aircraft! Mission Accomplished This info is our way of doing things and it works very well for us. Of course like I said in the beginning you and the owner will have to decide how to proceed. If you are buying one of the aircraft here at "Aircraft By Owner" the owner will be able to contact us for advice and help. We hope you can put this info to good use. Good luck! |