What's with brokers?

[druidjaidan]

Trying to buy an M20F.  One comes on the market through a broker.  I talk to him and we go back and forth a bit.  He refuses to make scans of the entire logbooks because "I sold 10 planes last month if I scanned all the logs that's all I would ever do".  Ok...frustrating, but I get him to scan the most important pieces and figure we'll sort it out during inspection.  He ends up sending me fairly adequate details.  Last three annuals, the engine overhaul, and a lot of other useful items as well as answers all of my detailed questions.

Ok so we make an offer.  I specify LASAR for the inspection.  He tells me a story about LASAR ruining a sale for him because they came up with 13k in squawks and suggests TopGun instead.  At this point I'm ok with either since they are both very reputable, but think it's strange he would try to tell a buyer to not user LASAR because they are too thorough...I understand him trying to dissuade me, but that isn't exactly a convincing argument.

Ok so we negotiate the price a little and settle on something ok for both of us.  I send him my purchase agreement (basically the AOPA example one).  He comes back oh no, we have to use my contract I've been using for 20 years.  Oh and you can save the escrow fees because I'll do it with my trust account.  He sends me the contract this morning (actually he messed up and sent it to my wife and my partner and not me, but w/e).  Before I even see the contract my wife replies "We will not be signing this contract, and I suggest we walk away now if this is how he does business".

Turns out the contract (to paraphase) basically says that the seller has the right to bend me over, come over and sleep with my wife, and then keep my deposit.  Not cool.

Here's some tidbits:

- "Purchaser agrees that a pre-purchase inspection is to inform Purchaser as to the condition and airworthiness of such aircraft. Purchaser agrees problems of mechanical, or cosmetic, can not be used to renegotiate purchase price of such aircraft. In addition, it is agreed that Seller may retain all deposits paid in connection with the purchase price and any trade-in aircraft as liquidated damages by reason of Purchaser's failure to pay for a pre-purchase inspection up to the cost of the pre-purchase inspection and/or any additional costs associated with nonpayment of pre-purchase inspection."

- "Seller shall not be liable to Purchaser in any way for failure or delay in making delivery on delivery date."

Combined with a section that basically says if I can't close within 10 days then I surrender my deposit.

 

And my favorite:

- "Seller reserves the right to terminate this Sales Contract at any time."

So, the seller refuses to negotiate when the inspection comes back that he's not properly maintained the plane in years, he can drag his feet as much as he likes, but if I don't close as soon as he says then he takes the deposit and walks away, oh and if he gets a higher offer while I'm doing the PPI he can cancel the contract.  Oh and the broker "guarantees" clear title so therefore we don't need a warranty of clear title from the seller.  Never mind what that guarantee is...

Edited October 12, 2015 by druidjaidan

[gsengle]

Run away

Your only strength in any negotiation is your willingness to walk... demonstrate that willingness.

Sent from my iPhone using Tapatalk

[PTK]

The more you deal with these types the more you validate them. 

You are holding the money so you set rules they dance to. Not the other way around.

You don't need them to buy an airplane. They need you to sell one.

Some get away with this bs because they portray themselves as "experts." They're no more expert than used car salesmen who need to make a sale.

Send me a PM if you want and I'll share with you my experience with a plane broker down south many regard as the "expert!"

Edited October 12, 2015 by PTK

[KSMooniac]

Run away.  It might even be worth the effort if you really like the plane to send an old-fashioned letter to the owner and let him know what kind of service he has purchased with that broker.

[Bravoman]

Basically the essentials are that the buyer has the right to have a PPI anywhere the buyer chooses, at buyers expense. I have always done an annual level inspection because in my book an aircraft purchase is as big and important as buying a house. Next the buyer has the right to walk if the buyer sees anything he doesn't like. Finally use a professional escrow and title service to make sure all of that is done right and you are getting free, clear and marketable title to the aircraft. And never allow escrow funds to be held by the seller or his broker. That is the recipe I have always followed and it's never gotten me in trouble.

[manoflamancha]

Most brokers I've dealt with are sleaze balls best to buy private party. Look up the aircraft owner and contact directly. 

[druidjaidan]

Most brokers I've dealt with are sleaze balls best to buy private party. Look up the aircraft owner and contact directly. 

I've already started trying to track down the seller to contact directly.  Unfortunately he moved recently I think so I'm not so sure I'll be able to.

[KSMooniac]

Just send a letter to the registered address for the N-number and it should get there.

[RobertGary1]

At one point I was considering selling my F and spoke with a broker so I may have some perspective of the other side. One concern with sellers is that buyers will not negotiate in good faith and will agree to a fair price knowing they will use the pre-buy to negotiate it down. The brokers I spoke with were set up to dissuade this. You're buying a 30 year old plane so its not going to be squawk free. So you don't want to waste time with buyers who are either trying to play the pre-buy or are first time buyers and have unrealistic expectations. Another problem is buyers walking away from a sale after the pre-buy leaving the seller on the hook for the shop. Legally the owner can be liable for the work. So most brokers will only work with shops that will agree to collect their fee up front. 

Top Gun and Lasar will give great inspections. But their quoted price to correct the issues will be much higher than your local A&P (like going to the BMV for a battery, they're a factory service center). You can absolutely expect to spend $10K on an "annual" from a factory service center, I did it numerous times before I learned to do my own work.

The part about keeping the deposit seems odd though, I'd push back on that.

-Robert

[druidjaidan]

At one point I was considering selling my F and spoke with a broker so I may have some perspective of the other side. One concern with sellers is that buyers will not negotiate in good faith and will agree to a fair price knowing they will use the pre-buy to negotiate it down. The brokers I spoke with were set up to dissuade this. You're buying a 30 year old plane so its not going to be squawk free. So you don't want to waste time with buyers who are either trying to play the pre-buy or are first time buyers and have unrealistic expectations. Another problem is buyers walking away from a sale after the pre-buy leaving the seller on the hook for the shop. Legally the owner can be liable for the work. So most brokers will only work with shops that will agree to collect their fee up front. 

Top Gun and Lasar will give great inspections. But their quoted price to correct the issues will be much higher than your local A&P (like going to the BMV for a battery, they're a factory service center). You can absolutely expect to spend $10K on an "annual" from a factory service center, I did it numerous times before I learned to do my own work.

The part about keeping the deposit seems odd though, I'd push back on that.

-Robert

I understand what the seller's concerns might be.  And I'm willing to work with them on language that ensures we both get what we want, but this thing was comically unbalanced.

As I said "Seller reserves the right to terminate this Sales Contract at any time." I mean really now.  With that term in place this contract is as good as toilet paper, and there is no reason for me to sign it at all since it provides me nothing.

[chrisk]

I think this is something you can work with.  

• Make your deposit the cost to get the plane to the inspection. 
• Make sure you can walk any time.
• Live on the dangerous side and don't worry about the seller backing out of the deal.   He wants to sell the plane.   If it is a big concern, have the broker change it to "if not closed within10 days after the inspection."  

If the inspection goes bad, You get to walk.  If your inspection finds things, you can walk if the seller doesn't fix them or discount the price to fix them.  And if the inspection finds minor things, you will have no incentive to walk.  

[DXB]

Contract as provided is absurd to sign, but it would surprise me if broker would not renegotiate the language on the prebuy not being a basis for renegotiating purchase price.  Some distinction between airworthiness items and minor non-disclosed items seems appropriate and standard.  I doubt he could sell many planes otherwise.  That and using escrow for deposit- just standard business practice.  If he is flexible on these two items, going ahead might be reasonable.

 

[ArtVandelay]

If I was the seller, I would not allow an inspection, I would allow an appraisal. Been told the word inspection gives the A&P power to ground the airplane (I think Busch mentions this). The idea is the buyers A&P uses this to extort repairs from the seller. Not sure how common this is, but when I bought my plane, they had restrictions on where I could take it.

I would listen to your wife, the purchase agreement is BS

[RobertGary1]

I understand what the seller's concerns might be.  And I'm willing to work with them on language that ensures we both get what we want, but this thing was comically unbalanced.

As I said "Seller reserves the right to terminate this Sales Contract at any time." I mean really now.  With that term in place this contract is as good as toilet paper, and there is no reason for me to sign it at all since it provides me nothing.

Its not unusual to allow the seller to change his mind. Although being able to keep the deposit doesn't seem appropriate. Maybe this guy just wrote a very generous contract that he's been using for decades and no one has challenged him on it. 

If you do end up negotiating directly with the seller you'll want to ensure he pays the brokerage fee since you first contacted the broker. Otherwise its a pretty good chance you'll end up in court (although the seller has the legal responsibility you may find yourself summoned as well). 

-Robert

[FlyDave]

When I was looking for a different plane I was dealing with a guy in Colorado that was selling a rocket. Throughout 3 requests to get electronic copies of the logs he absolutely refused to scan them. In the year 2015 I can't come up with a good reason for someone refusing to produce electronic copies of log books except that they are attempting to hide something. I walked away from that seller and the plane - not worth the frustration!

I didn't think brokers were a good option but I ended up dealing with Jimmy Garrison at All American - and I'm glad I did. You'll probably pay a little more but with Jimmy you're working with someone that has an excellent reputation (ask just about anyone on this board).  His 25-30 years experience goes into inspecting every plane he sells and he stands behind each sale. Oh, and he'll send you the log books on any plane he sells because that's one of the first things he gets when he sells an airplane.

If you're just looking to pay as little as possible then try brokers like the one you're dealing with. But the whole process is easier and more comfortable working with someone like Jimmy Garrison.

[DrBill]

when I bought my E in 2011  I reworded the brokers doc to suit me and I inserted a clause that the PPI would identify any air worthy items that would be negotiable.  Other items found in the PPI would not hold the sale.  I  had the ppi at my mechanic and all was well.. I'm still happy 4 years later.

Bill

 

[N252WD]

+1 on Jimmy Garrison, I have already bought 2 planes from him.

[druidjaidan]

Its not unusual to allow the seller to change his mind. Although being able to keep the deposit doesn't seem appropriate. Maybe this guy just wrote a very generous contract that he's been using for decades and no one has challenged him on it. 

If you do end up negotiating directly with the seller you'll want to ensure he pays the brokerage fee since you first contacted the broker. Otherwise its a pretty good chance you'll end up in court (although the seller has the legal responsibility you may find yourself summoned as well). 

-Robert

Really?  Cancellations are normal?  I've done a lot of transactions for businesses, I've been present for negotiations, and I've bought a house.  Admittedly not an airplane, but all of those contracts shared a lot of similarities.  They all included a period of time where the seller was committed to the sale and the buyer could do their due diligence and none of them provided for a penalty free walk away for the seller (excluding some things like "the asset was destroyed or seized").  

I'm sure you're probably right.  He took some template 20 years ago, adapted it to be very generous and he's probably never done anything to overly sleazy with it and nobody seems to be able to read contracts and all of his business is in the under $150k range so even less people are paying attention.

[druidjaidan]

when I bought my E in 2011  I reworded the brokers doc to suit me and I inserted a clause that the PPI would identify any air worthy items that would be negotiable.  Other items found in the PPI would not hold the sale.  I  had the ppi at my mechanic and all was well.. I'm still happy 4 years later.

Bill

 

Yeah that's basically exactly what I've been trying to get in the language, that and removal of the seller's cancellation rights.  He's very much refused.

 

When I was looking for a different plane I was dealing with a guy in Colorado that was selling a rocket. Throughout 3 requests to get electronic copies of the logs he absolutely refused to scan them. In the year 2015 I can't come up with a good reason for someone refusing to produce electronic copies of log books except that they are attempting to hide something. I walked away from that seller and the plane - not worth the frustration!

I didn't think brokers were a good option but I ended up dealing with Jimmy Garrison at All American - and I'm glad I did. You'll probably pay a little more but with Jimmy you're working with someone that has an excellent reputation (ask just about anyone on this board).  His 25-30 years experience goes into inspecting every plane he sells and he stands behind each sale. Oh, and he'll send you the log books on any plane he sells because that's one of the first things he gets when he sells an airplane.

If you're just looking to pay as little as possible then try brokers like the one you're dealing with. But the whole process is easier and more comfortable working with someone like Jimmy Garrison.

Yeah I've actually been keeping a close eye on Jimmy's inventory.  He hasn't had an F up in a couple months now.  The market for good ones seems really limited, but we're patient if this doesn't pan out.

[chrisk]

Really?  Cancellations are normal?  I've done a lot of transactions for businesses, I've been present for negotiations, and I've bought a house.  Admittedly not an airplane, but all of those contracts shared a lot of similarities.  They all included a period of time where the seller was committed to the sale and the buyer could do their due diligence and none of them provided for a penalty free walk away for the seller (excluding some things like "the asset was destroyed or seized").  

I'm sure you're probably right.  He took some template 20 years ago, adapted it to be very generous and he's probably never done anything to overly sleazy with it and nobody seems to be able to read contracts and all of his business is in the under $150k range so even less people are paying attention.

I had two pre-purchase inspections that fell through before I bought my plane.  One 231 was one flying hour after annual (performed by the shop that was selling the plane).   The pre-purchase inspection found  the exhaust valves were leaking on two cylinders.   The same shop that did the annual and was selling the plane, said they would fix the cylinders.     I passed, as I didn't have the confidence the job would be done properly.

[manoflamancha]

Agree in buying from Jimmy Garrison he is one of the few reputable straight shooter brokers around on Mooneys. If I don't find one locally to buy in San Diego then I'd consider buying one from him. Plus it gives me excuse to visit Skyport Redbird and have real Texas BBQ brisket and get some actual IFR weather.

[Bennett]

I've had very good luck in buying aircraft where I have hired an aviation broker to represent me. Sure I have to pay him a fee, but in every case, he has rejected aircraft I didn't think we're so bad, found defective titles, and negotiated prices well below asking prices - prices I would have been embarrassed to have offered as a counter.

[nels]

Not sure how it works in other states but I think here in Ohio if you buy from the owner you pay no sales tax. If you buy from a dealer or broker you pay Ohio sals tax. That can add up to more than just chump change.

[N601RX]

Not sure how it works in other states but I think here in Ohio if you buy from the owner you pay no sales tax. If you buy from a dealer or broker you pay Ohio sals tax. That can add up to more than just chump change.

Same as here in Alambama.  A sell between 2 individuals is considered a casual sale and not taxed.

[druidjaidan]

Not sure how it works in other states but I think here in Ohio if you buy from the owner you pay no sales tax. If you buy from a dealer or broker you pay Ohio sals tax. That can add up to more than just chump change.

Not here unfortunately.  I'm going to get murdered by washington state use tax no matter what (10% and change)