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Buying an Airplane


KLRDMD

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Much has been said about buying and selling airplanes on this forum of late. Since I have just a bit more experience in this area than some, here's my take.

Disclaimer: We're talking typical Cessna, Beech, Cirrus, Piper, Mooney, etc. Something exotic, rare or experimental is different.

Most of the time you should be able to locate an airplane that meets your needs and have negotiated to buy it within 45 days. You may not have taken possession yet, but the basics have been agreed to. If it has been 90 days and you haven't found an airplane, more than likely the problem is the buyer, not the market. This is typically either a buyer that isn't really serious or a buyer that has unrealistic expectations.

Most of the time you should have come to an agreement to sell an airplane within 45 days. If it has been 90 days, more than likely the problem is the seller, not the market. Almost always this is an unrealistic asking price. After 90 days it is time to change your listing from OBO (or best offer) to FIRM and drop the price $1,000 per week until it sells. That might take a week and it might take six months or more. But when the price is right, a buyer will appear.

The above is assuming a serious buyer and serious seller. I'm afraid that's not always the case :rolleyes:

For my current airplane, I made contact August 21, had a signed purchase agreement on August 26 and took possession on September 3.

For my airplane before my current one I made initial contact on March 28, came to an agreement to buy on April 11 and took possession on April 30.

It doesn't take two freakin' years to buy an airplane !!!

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Agreed. While I've only been involved in two purchases and one sale, this was my experience as well.  

I first did all the research and personal prep I could do without contacting any sellers. This includes determining my mission, the market, and the funds. Then with cash in my pocket and a realistic understanding of the market and my mission, I went shopping. It took three weeks to find and buy the first one. A month to sell it, and two weeks to find and buy the second one.

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Just now, gsxrpilot said:

Agreed. While I've only been involved in two purchases and one sale, this was my experience as well.  

I first did all the research and personal prep I could do without contacting any sellers. This includes determining my mission, the market, and the funds. Then with cash in my pocket and a realistic understanding of the market and my mission, I went shopping. It took three weeks to find and buy the first one. A month to sell it, and two weeks to find and buy the second one.

Exactly !

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I think plane owners and plane buyers typically have very different views and then you throw in plane sellers. I think saying someone should buy a plane in no more than 45 days is a very bad way to look at it. Have we not all heard many stories when the first annual comes around they are wishing they had waited on another plane? And there are stories that say spending the most money on a model doesn't keep you out of trouble either. I have spent a lot of time and money over the last 2.5 years searching for a 201. I have my set mission and that might mean the pool I have to look at is smaller but that doesn't mean there are not good planes and only bad planes in it. I'm far from looking for a unicorn. I have been looking for a seller that is looking for the same outcome as I am. I don't need a 10 and not scared of a project. But when a seller doesn't know what they have or just all around trying to screw the buyer I personally have no use for those people.

And thanks to AAA I feel I've found someone wanting the same outcome as I want. I put a deposit down on a plane today and have a prebuy with Dugosh I am sure it's been well worth the wait.



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I probably took 6+ months to find mine, but I was trying to stay in the Southeast.  I simply felt better laying eyes on the plane I wanted to buy.  That probably falls into "problem with the buyer" category.  Anyway, the ink on the ad for the plane I bought was still drying when I called.  He told me that several others had called afterwards but the seller gave me first right of refusal.  Gave him a down payment, he flew it down a few days later (I didn't have a complex endorsement) for my mechanic to inspect it, and the deal was done with 10 days start to finish.

BTW, that was for a C model listed at $62k back in 2010.  Unless it's something rare or exotic, I also believe that airplanes sell when they are priced properly.  Of course, unrealistic expectation on both ends and poorly maintained aircraft throw a lot of flies into the ointment.

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My first Mooney which was my first plane took me about 5 months after I settled on a Mooney but a lot was buyer uncertainty because I had never owned a plane before I physically looked at 2 airplanes.  MY second one in about 2 months I had my plane. Second plane and I had already done 2 owner assisted annuals the first one was pretty extensive so I knew what I was looking for and what to expect.   I went and looked at 3 different planes.

I'm now looking for a fun plane with a partner so I'm in no rush.  So that matches what the OP stated at least form the buyers perspective.  I've not technically sold an airplane yet unfortunately my first Mooney was totaled by hurricane flooding and the insurance company.

 

 

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My buying and selling experience was pretty simple I went looking at my first a C150 it looked good and got a test flight and everything seemed fine selling price was reasonable so I purchased it and it turned out to be a fine aircraft. When I was ready to sell after getting my Mooney it took a while but a nice young man that was an AP looked over the books we flew and agreed on a price (a little less than) I would have liked and the deal was done.  Purchase of my Mooney was not much different I went to inspect got a test flight we agreed on a price and I flew my CFI down to fly it home.  The lack of a pre buy inspection proved costly on the Mooney but things have worked out and we are very happy with our plane.  There are some tails of folks that have run into major problems even after all manor of pre buys were done. Some times you just have to dive in the pool and then get used to the water.  In many cases these old airplanes are a risk no matter how much you try to Learn of their condition before purchasing 

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31 minutes ago, bonal said:

In many cases these old airplanes are a risk no matter how much you try to Learn of their condition before purchasing 

In all cases airplane buying has risks. You mitigate what you reasonably can and take your chances. Buyers that take two years to buy an airplane (and still haven't bought one) may be trying to mitigate all risk. Ain't gonna happen.

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Another opinion: Over the years years I have owned a Cessna 120, a Cessna 150, two Cessna 172s, a Piper Archer, a Piper Dakota, a factory new DOVA LSA, and three Mooneys (201, 231, 261). None were trouble free. I expect less than perfection at purchase, and considerable maintenance costs during the term of ownership. Even the factory new DOVA (beautifully built in the Czech Republic to the design of a masterful aerodynamicist) was not perfect, and I spent a great deal of money bringing it up to my standards - esthetics and safety.

I decided that for my last aircraft (realistically based on my age) I wanted a solid 201 airframe, a decent autopilot, speed brakes, some speed mods, and a low to mid-time engine, and that I would have the interior rebuilt to my specifications, new paint in the exact scheme I wanted, and a brand new (literally) panel built exactly the way I want. The aircraft of choice would have to be flown to LASAR for a truly thorough pre-purchase inspection, and if I decided to purchase that airplane, LASAR was to deal with all squawks, and add the sone of the mods I wanted.

Now to find the airplane- I read many adds in MAPA, Trade a Plane, Controller, and a few local magazines to see the state of the market for the size of availability, and asking price. I made a few phone calls, but then decided to hire an aviation broker to act in my behalf. I knew the gentleman as he handled the sale of my DOVA, and I found him knowledgeable and competent. Within a relatively short period of time he combed the dealer network, as well as his dealer friends across the country, and the usual advertisements in the sources above. In two weeks we had discussed and reviewed the merits and deficiencies in over a dozen aircraft, and settled on one that met my requirements, and then some. This 201 also had a LoPresti Cowl, a PowerFlow exhaust system, a Hartzel Top Prop. The logs showed a wheels up (the CFI owner "forgot" to lower the gear), a few years prior, but LASAR was involved in the repair. Up to that point I had a range of acceptable pricing depending on equipment and condition. The asked for price was a bit above this range, but i was willing to risk the cost of a LASAR pre-purchase to ascertain if this was the airplane for me. The LASAR pre-buy inspection produced 17 pages of discrepancies! None were fatal - most deferred maintenance. I was ready to have the aircraft flown back to the owner, when my broker representative said he would try to negotiate the price to the point that everything LASAR found could be done through the reduction in sales price. Since this was almost 30% of the asking price, I didn't think it could be accomplished, but my broker convinced the owner to sell the airplane to me at that price. The airplane stayed at LASAR for about four months, and the airframe was virtually rebuilt to new. In the meantime my broker cleared the title (there was a problem) and handled all the paper work. I could not have done it without him. I am not a great negotiator, and even after decades of ownership, I am not skilled in the title clearing process, nor did I have access to his dealer network. Bottom line: hiring an aviation broker worked well for me. His fee was well earned, and I had an excellent airframe to become the core of my aircraft plans.







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15 hours ago, co2bruce said:

A seller must realize that his plane is worth what someone ELSE is willing to pay, not what he thinks they ought to pay....

I'm not convinced that oft-quoted jingo is completely applicable in tight, highly limited markets. 

It may be that for nearly unique items the value is what the seller will accept.  

For example, if I decide to offer my Ovation for $299K firm, a buyer can either pay that or do without.  There are no other examples like it advertised and only a handful in existence anywhere.

By contrast if a buyer wants a new Mazda 3, there are hundreds available on lots.  There are multiple buyers and sellers who "make a market" for that commodity.

 

 

 

 

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2 hours ago, Jerry 5TJ said:

I'm not convinced that oft-quoted jingo is completely applicable in tight, highly limited markets. 

It may be that for nearly unique items the value is what the seller will accept.  

For example, if I decide to offer my Ovation for $299K firm, a buyer can either pay that or do without.  There are no other examples like it advertised and only a handful in existence anywhere.

Your logic is sound except people who can afford and fly this type of aircraft will also be looking at cirrus etc.  I personally believe if you put that firm price on controller you could enjoy flying your plane for a lot longer while buyers look for an owner that needs to sell.  However, I hope the market comes back so I can sell my O in 10-15 years without much depreciation (not counti on it as I purchased it used 3 years old with a few hundred hrs). 

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Sure, you want a distressed owner (not distressed airplane). 

But that's not germane to the question of average market  -- a distressed seller of a near-perfect plane is a statistical outlier.  

Or maybe I'm arguing against myself here -- I was maintaining there exists no stable marketplace for near-unique items.

 

 

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This is all my opinion, but I'm going to give it to you anyway. ;)

 

There is a bell curve of 'deal quality' for every market.   Some planes are a good deal for the buyer (on the high end of the curve) and some are a good deal for the seller (on the low end of the curve).

At any point in time, the 'market' is the sum of all the planes for sale right then and the buyers that want to buy.  Every seller's ideal is to be on the bottom end of the curve and every buyer's ideal is to be at the top end of the curve.     The farther away from the top end of the curve you are willing to be when you buy, the faster you will be able to buy.   If you want something at the very top of the curve you might wait a long time. Years, even.   When you are selling if you price your plane so it's at the top of the curve, you'll sell fast.   If you price your plane so it's at the bottom of the curve, you might wait a long time.   There are planes still for sale on controller.com that were for sale when I bought my plane 2.5 years ago.

The same is true for everything else; houses, cars, shovels, etc. 

As a buyer you decide what you want, then look at the market for those products and those that are similar to what you want.   Then you try to negotiate for as good of a deal as you want to spend the time and effort getting.

As a seller, you look at the market for those products like yours and decide how good of a deal you want as a seller then price it appropriately.  Then you negotiate with buyers and accept when you are happy with the deal.  

 

Hardly anybody wants an exact specific plane or configuration.  Continuing Jerry 5TJ's example:  If I was in the market for a FIKI Ovation and you offered yours for $299k, I would be more likely to buy the 2006 Ovation G2 currently on controller for $275k.   It's got a G1000 instead of the G500/GTN750/650 but for most buyers that's close enough.  Your plane would probably sit on the market for quite a while.  It's a great plane (Much better than my dinky '64 M20E) with great equipment, but at that price I think it'd be a bad deal for a buyer.

The price range for an item is from what the top paying buyer is willing to pay to what the lowest-bid-accepting seller is willing to accept.  If you only offer below what the lowest seller is wiling to accept, you won't buy anything.  If you only offer above what the highest paying buyer is willing to pay, you won't sell anything.  The closer you get to those limits, the longer it will take to make a deal.

http://www.controller.com/listings/aircraft/for-sale/1457395/2006-mooney-m20r-ovation2-gx

http://strategicaircraft.com/2000-mooney-m20-r-ovation-2-n555tj/

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Thanks for the comparison, Wombat. 

Based on what you compare I'd say I under-priced my Ovation in my gedankenexperiment:   The 2006 Ovation looks great, but is not WAAS or ADS-B Out compliant while 5TJ is.  If you add enough $ to install both you're well over  the price I picked out of the air.    BTW: My Ovation has received a new engine since the ad you found. 

They are both nice birds, and to get either one will gobble up nearly a third of a million bucks.  

Sobering! 

 

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Jerry:  With that additional information (WAAS and ADS-B status, plus new engine) it sounds like your plane at $299k would be a good deal for the buyer, and would therefore sell quickly.   If you put yours on the market, the one from controller would be less good by comparison and would likely sit on the market longer.   There are not a lot of those planes for sale at any given time, so adding or removing a single one will alter the market, particularly if it is priced at either end of the spectrum.    I don't know enough to have confidence in my statements about your plane (or the one I found on controller) being good or bad deals, but I am confident that there is a market price for both of them, even though they are uncommon and unique items.   Pricing (or offering) on either end of the spectrum will make finding the right plane or finding a buyer take a long time or a short time.  

Even considering that, as a seller you can adjust the speed of the sale by pricing high or low compared to the current market.   As a buyer I can adjust the time to make a deal by changing my willingness to buy better or worse 'deal' planes.   That doesn't mean a better or worse plane, just a better or worse deal on the plane.

 

If eman1200 were willing to purchase a plane that is not at the far right side of that bell curve toward 'good deal to the buyer' , he would have found plenty of planes to buy in the last couple of years.   There is nothing wrong with what he is doing, it's just very likely to take a really long time to find that good of a deal.

Edited by wombat
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@wombat I like your analysis.  But I'd add another data point to the equation. As I know as well as anyone, there is always risks and unknowns in this game. And with large ticket/highly regulated items such as airplanes, the risks can get very large, very quickly.

I would submit that the further to the far right side of your curve, the higher the risk of unknown and expensive issues. Not that sellers are unscrupulous, but sellers will always highlight the good and minimize the bad. And the less enthusiasm a seller has for their product, the less they are likely to know about their product and the more likely they are to sell on the right side of the curve.  

There are several stories on this forum in just the last 12 months, of purchases that looked to be on the far right side of the curve, but upon post acquisition inspection, hidden costs quickly pushed the buyer to the center or even to the left side of the curve.

Of course, there are no absolutes, and my theory is certainly just another variable and not a constant. But it's painful to see, especially on the low end of the price spectrum, buyers become owners just to find that the "great deal" they thought they had, has come back to bite them in the ass. 

But... so long as you can avoid financial ruin, this certainly is a fun game to play.  More fun then Vegas and only slightly less risky.

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@gsxrpilot:  I agree with you.   I'm trying to close a deal on a C182 that seems like it's pretty far to the right (great deal for the buyer) but it could turn out to be a huge waste of money.   Fortunately the three of us that are buying this plane have decided to buy something that is well below what we could afford, so if we do get a lemon it's only an irritation and not a bank-account-breaking problem.

 

PS:  This is not replacing my M20E, it's in addition to the Mooney.

Edited by wombat
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@dlthig certainly makes a good observation here. My limited experience shows that the best way to ensure as much meat is left on the bone as possible is...

First, I should buy the plane I can afford, and not stretch myself into an airplane there is no way I could afford, except that it's priced way "under market". Someone once said that even if you could buy a Bravo for K money, starting on day two, you'll be supporting and maintaining a Bravo and not a K.

Second, I should hedge my bet by selecting the best maintained, currently flown, example... which will unlikely be selling at a huge discount.

Just my $0.02 as usual.

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