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'Annual in lieu of Pre-Buy' - ?


Firebird2xc

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as a seller , and I sell numerous planes , the buyer can choose a shop , and pay my expense to get it there , my expenses while I wait for the inspection , and my expenses home ,   I never have , and never will pay any expenses on a sale other than 1/2 of the escrow ,  and the shop must be within a 2 hour flight ....  -400- miles or less......  I think a lot of you guys live in fantasy land....

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2 minutes ago, Alan Fox said:

as a seller , and I sell numerous planes , the buyer can choose a shop , and pay my expense to get it there , my expenses while I wait for the inspection , and my expenses home ,   I never have , and never will pay any expenses on a sale other than 1/2 of the escrow ,  and the shop must be within a 2 hour flight ....  -400- miles or less......  I think a lot of you guys live in fantasy land....

Agree 100%.

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13 minutes ago, Alan Fox said:

as a seller , and I sell numerous planes , the buyer can choose a shop , and pay my expense to get it there , my expenses while I wait for the inspection , and my expenses home ,   I never have , and never will pay any expenses on a sale other than 1/2 of the escrow ,  and the shop must be within a 2 hour flight ....  -400- miles or less......  I think a lot of you guys live in fantasy land....

Of course, that's fair. And I'm in 100% agreement. What's not fair is the owner not allowing the buyer to choose a shop or get the plane to a shop. In this case, the requested MSC is only 40 nm away. An owner that won't allow that, doesn't want to sell, or is intentionally trying to hide something.

When I bought my 1964 Mooney, I knew I was buying an old plane and it would have issues. But as a buyer, I'd like to KNOW the issues I'm buying. If you want a perfect plane, Mooney International will take your order today. But I'm still entitled to be in informed buyer to a reasonable extent.

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1 minute ago, gsxrpilot said:

Of course, that's fair. And I'm in 100% agreement. What's not fair is the owner not allowing the buyer to choose a shop or get the plane to a shop. In this case, the requested MSC is only 40 nm away. An owner that won't allow that, doesn't want to sell, or is intentionally trying to hide something.

When I bought my 1964 Mooney, I knew I was buying an old plane and it would have issues. But as a buyer, I'd like to KNOW the issues I'm buying. If you want a perfect plane, Mooney International will take your order today. But I'm still entitled to be in informed buyer to a reasonable extent.

I would say no unless there was a deal in place , and 5000 in escrow, and expenses prepaid......a buyer must have some skin in the game , before the plane moves.....

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1 minute ago, Alan Fox said:

I would say no unless there was a deal in place , and 5000 in escrow, and expenses prepaid......a buyer must have some skin in the game , before the plane moves.....

Yep, complete agreement.  The price should be agreed on, $5K or 10% in escrow, contract signed and expenses paid. That eliminates the tire kickers and those who don't actually have the funds to buy or own a plane.

I've personally never used escrow. I'd just hand you the $5K as it would be in my pocket when I was there to see the plane and make an offer. I've always thought I wouldn't buy a plane from anyone I trusted so little that I'd want to use escrow for my deposit. 

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Hey all- read all the replies and appreciate the input.  I just wanted somebody else to troubleshoot my thinking before I called a play.  I think the buyer knows something they're not saying- or maybe they're upside down on the plane and are desperate to move it.  The guy I talked to on the phone today said that his son or brother or somebody flips airplanes- RED FLAG.  I just wanted to make sure I wasn't being oversensitive before I walked.  The airplane looks beautiful, and has a whole stack of the very newest Garmin radios and gizmos.  Like new paint, new glass, etc.  Low time engine.

Last year I went to look at an airplane and wound up looking at an old Lance for a size comparison.  It looked beautiful, and boasted things like new hoses and scat tubing, etc, in the engine bay.  Salesman Jedi mind-tricks don't work on me- I smell that B.S. a mile away.  "My wife loves this airplane," he said.  "The kids will miss it, but I'm willing to part with it," etc, etc.   So I Googled the N-number...  Funny story- in an unrelated conversation at an airport hundreds of miles away, I had talked to an FBO rep about renting hangar space.  We talked about what was prohibited, HAZMAT storage, etc- and how a year ago they'd had a monster fire in a hangar because of isopropyl alcohol or something... 
Guess which airplane was in the hangar right next door to the hangar fire...?   That shiny newly-painted Lance I was sitting in.  IMAGINE THAT...

What I learned from this dealer was that he could get cheap work and dealer cost parts done because he was a dealer and dealt in volume, so he pocketed the savings and then charged buyers full price for the installed gear, etc.  

As nice as this airplane looks, this deal smells.  Even money says an annual done by his guy means he hands him the logbooks with a few Benjamins stuffed in the middle... 

I'm gonna ask him if he'll let the local MSC do a proper PPI on it.  If he balks, I'm out.  If not, then we can get serious.

Thanks again, all.

 

Edited by Firebird2xc
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A hand written purchasing agreement goes a long way...

Cover all the details of who is paying for what... what the timeline you're going to follow is...

What happens when the PPI fails for the different possibilities...

If you don't use the PA, you at least wrote down all the details you want to remember later on...

Stay focussed on the objective...

You want the sale to go through...

If the seller is looking for a free annual at the buyers expense... this can't be a benefit for anyone...

If you're not sure you want to buy it, it is too soon for you.  Putting an offer on a plane the first time is really a challenge...

Having a plane get away from you is a great wake up call.  On the next one, you know exactly what you are looking for. How much you are willing to pay. And you are ready jump all over it.

Your questions on MS will be way more focussed.

Get focussed!  :)

The guy wants to sell the plane doesn't he?

Selling machinery isn't that imaginative.  Ask what the parties want, be honest, it will all work out...

Ok... I used to buy and sell machinery for a living.  Buying is more enjoyable, but selling can be really rewarding...

One of the best tools to have when buying a plane... a mechanic that knows what you are buying...  If the plane I was buying was anywhere near Clarence, I know exactly where the PPI was going to get done.

My luck isn't that good.  If it lives near Clarence, it's log book probably has his signature all up and through it.  :)

 

Rule #2...  the PPI is best to be independent of the previous owner and the previous mechanic and shop...

 

PP thoughts only.  Retired, not selling anything.... :)

Go make it happen,

-a-

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28 minutes ago, carusoam said:

A hand written purchasing agreement goes a long way...

Cover all the details of who is paying for what... what the timeline you're going to follow is...

What happens when the PPI fails for the different possibilities...

If you don't use the PA, you at least wrote down all the details you want to remember later on...

Stay focussed on the objective...

You want the sale to go through...

If the seller is looking for a free annual at the buyers expense... this can't be a benefit for anyone...

If you're not sure you want to buy it, it is too soon for you.  Putting an offer on a plane the first time is really a challenge...

Having a plane get away from you is a great wake up call.  On the next one, you know exactly what you are looking for. How much you are willing to pay. And you are ready jump all over it.

Your questions on MS will be way more focussed.

Get focussed!  :)

The guy wants to sell the plane doesn't he?

Selling machinery isn't that imaginative.  Ask what the parties want, be honest, it will all work out...

Ok... I used to buy and sell machinery for a living.  Buying is more enjoyable, but selling can be really rewarding...

One of the best tools to have when buying a plane... a mechanic that knows what you are buying...  If the plane I was buying was anywhere near Clarence, I know exactly where the PPI was going to get done.

My luck isn't that good.  If it lives near Clarence, it's log book probably has his signature all up and through it.  :)

 

Rule #2...  the PPI is best to be independent of the previous owner and the previous mechanic and shop...

 

PP thoughts only.  Retired, not selling anything.... :)

Go make it happen,

-a-

All solid advice.  A PPI is a must for me.  I'm told buying a plane is more like buying a house than a car, and I believe it.  I have an aviation maintenance background, so I know how it goes.  You take one thing apart to do a check and find three problems.  That said, I'm not doing a blind annual signed off by the seller's guy.  I'm not as dumb as I look. ;)

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Guest paulie

I don't care if the annual was done yesterday, I would still do s pre buy inspection. There are annuals and there are annuals. I've seen them signed off as a drive by.

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2 hours ago, Alan Fox said:

as a seller , and I sell numerous planes , the buyer can choose a shop , and pay my expense to get it there , my expenses while I wait for the inspection , and my expenses home ,   I never have , and never will pay any expenses on a sale other than 1/2 of the escrow ,  and the shop must be within a 2 hour flight ....  -400- miles or less......  I think a lot of you guys live in fantasy land....

How would you handle it if something was found on pre-buy related to airworthiness or even just defective, so not as advertised? Would you not pay to fix it? Would you take less for the plane given the new information the buyer now has?

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Stuff to discuss with the seller before going too far in...

some buyers and sellers may not agree to the potential solution.

for example, you find some corrosion in a wing spar...  the owner is surprised as you are.  The cost can be quite large to fix.

As a buyer, you want to fly.  Not fix somebody else's problem...  chances are, you are exiting the PPI successfully... unfortunately without a plane. Fortunately without an expensive problem...

This is not how most sales go.  But the possibility is real.  Or PPIs wouldn't be needed or wanted... they are not a real negotiating tool for bringing the price down.  They are an exit strategy for when the plane isn't what you were expecting.

The upside for the owner is, he has information he can act on... He is stuck with the onus wether he knew about it before or after the fact, he knows it now...

The complexity of this situation is why you want to draft a purchase agreement to outline how you would want to handle this type of situation.

at one level, you write your thoughts on a piece of paper... for a really expensive plane you have your lawyer write his thoughts on an office memo.  I wrote mine in an email that I sent to the broker...

Best regards,

-a-

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1 hour ago, Cooperd0g said:

How would you handle it if something was found on pre-buy related to airworthiness or even just defective, so not as advertised? Would you not pay to fix it? Would you take less for the plane given the new information the buyer now has?

Depends how the agreement is written. I would never enter into any agreement where the seller refuses to transport the airplane a reasonable distance with reasonable fuel compensation to mechanic of my choosing. Any other expenses seller incurs in moving the airplane such as his time or if he hires a pilot etc. are seller's responsibility and the cost of doing business. All he gets is fuel expense. Seller allow's my mechanic to fix issues he recommends. Or I as buyer and at my discretion have the option to walk away and keep deposit minus fuel expenses. The seller has the burden to know what he is selling and not waste the buyer's time. The buyer's responsibility is to be serious that he is buying the airplane if checks out as evidenced by deposit in escrow.

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I did some more digging on the plane's history.  Apparently it was owned by a flight school from 1999 to 2004/2005.  In the only accident discrepancy that came up on the search, an exhaust component "departed from the muffler" while the engine was being run up during rough running troubleshooting.  Said flight school was violated in 2011 for a maintenance violation.  It sounds like they have a mechanic or two who isn't really much for compliance.

Last year I got an hour demo in a Lance to see if I liked it when I was considering buying it...  To say it 'flew crooked' was an understatement.  The huge trim adjustments between cruise and approach made me think the whole airframe was torqued... 

I think this airplane has likely been annual-ed via the 'buddy system' for a while.  Like I said- I'll ask to send it to an MSC and see if the owner balks.  If they balk, I walk.

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Guest paulie

Flight school airplane where they fly it like they rented it and a fed violation for maintenance? Wow they must have really screwed up for the feds to notice. I would run away from this plane. The one I just bought was sold within a year by the po because the pre buy was done by a mechanic that was in cahoots with the dealer. If I wasn't my own mechanic I would find a A&P I really trusted and bring him along for the pre buy and if that didn't satisfy the seller it would be good bye.

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Just a quick sidebar I heard about from one of Mike BUschs's webinars--while PPI's are important, I think it is important to be explicit with both the seller and the mechanic that the PPI is NOT an "inspection."  I think sellers get scared off by PPI's, and to some degree rightly so, thinking that their plane can be grounded by an unscrupulous IA away from home who can hold them hostage for an airworthiness issue their own IA has signed off on.  To that extent, if I were a seller, I would certainly NOT agree to having an annual inspection done away from home, even if paid for by the buyer.  

An "inspection" allows an IA to determine airworthiness and ground the plane.  If it is agreed upon ahead of time with everyone that the PPI is NOT an inspection (call it an unofficial "exam") and ONLY allows the mechanic to give an opinion to the buyer, that might make the seller more willing to agree to the PPI. 

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6 hours ago, Cooperd0g said:

How would you handle it if something was found on pre-buy related to airworthiness or even just defective, so not as advertised? Would you not pay to fix it? Would you take less for the plane given the new information the buyer now has?

All of my sales agreements are negotiated prior to inspections , Generally they go through , But , they are written as "buy , or no buy "  If the buyer decides not to buy , escrows are returned but expenses are not.... 

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10 hours ago, jaylw314 said:

Just a quick sidebar I heard about from one of Mike BUschs's webinars--while PPI's are important, I think it is important to be explicit with both the seller and the mechanic that the PPI is NOT an "inspection."  I think sellers get scared off by PPI's, and to some degree rightly so, thinking that their plane can be grounded by an unscrupulous IA away from home who can hold them hostage for an airworthiness issue their own IA has signed off on.  To that extent, if I were a seller, I would certainly NOT agree to having an annual inspection done away from home, even if paid for by the buyer.  

An "inspection" allows an IA to determine airworthiness and ground the plane.  If it is agreed upon ahead of time with everyone that the PPI is NOT an inspection (call it an unofficial "exam") and ONLY allows the mechanic to give an opinion to the buyer, that might make the seller more willing to agree to the PPI. 

Look. The seller knows the airplane he is selling. Or should know. And if he doesn't know he needs to find out before he decides to sell. He can't place restrictions on the buyer because he is unsure of what he is selling or is unwilling or lazy to find out. Or knows something and doesn't want buyer to find out! It's that simple. It's unreasonable to expect the buyer to be concerned if the airplane is going to be grounded or not as a result of an inspection or PPI! That's the seller's problem. If it gets grounded so be it. The seller should've known. It's comical when I hear people say things like "the buyer should have skin in the game!" What skin? The buyer is holding the money and has multiple airplanes to choose from. The seller has one airplane to sell. He needs to bend over backwards and convince the buyer why he should buy his airplane. Not put up drama and waste the buyer's time. The buyer does not know the airplane. He needs to find out in detail what he is considering buying. When the buyer is serious enough to place a deposit he is telling the seller that "...I will buy the airplane you are selling when certain conditions are met. When those conditions are not met I will not buy it." He shows interest and is willing to pay his mechanic to give him an objective opinion. He is also going above and beyond by paying the fuel expense for the buyer to bring it to seller's mechanic. That's plenty of skin and there's nothing more the buyer should do. It's also comical when I hear things like the buyer needs to pay seller's expenses above and beyond fuel. This type of seller is dreaming! If the seller is serious and ethical he would not have these unrealistic expectations. The problem arises when unscrupulous sellers try to pull a quick one over naive buyers. We have plenty of examples of that unfortunately.

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Demand the annual be done at a MSC! I did not do a pre buy just the annual, turned out great. I needed to put 5k in escrow, all refundable up to the start of the annual. After the annual was started all but 1k was refundable, that was my "skin in the game".

Plus the seller paid for everything including fixing anything found, this is all negotiable of course. Depends on how bad they want to sell.

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A few points I have taken from the above comments:

  1. There should be an agreement on what is being done, where, and what determines buy or no buy decision. Verbal or written may not matter, but it also may depending on the final decision.
  2. Potential buyer puts money into escrow, sellers pocket, or somewhere to provide proof of interest/ability to purchase.
  3. "Examination"/PPI take place and determines squawks/airworthiness items to be discussed between buyer and seller.
  4. Buyer determines from results of PPI/exam (and previously signed agreement) to proceed or stop process.
  5. If "stop" is the result, buyer is out cost of PPI and sellers expenses to move plane to and from PPI location. Funds over and above this amount are returned to buyer.
  6. If "proceed with purchase" is the outcome, there may be negotiations on squawks, airworthiness items, etc.

Many of the these items can be modified depending on the risk the buyer is willing to undertake or the familiarity or reputation of the seller.

Buyers and sellers who do these transactions regularly likely have documents outlining how they want the sale to go.

So to answer the OP's original request, here are some guidelines to follow or not. You probably already gleaned all of this from reading everything the same as I have.

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I did the Alan method - put $ into escrow, reimbursed for reasonable expenses to get the plane to Top Gun, and had an annual with them. Anything discretionary it was agreed upon that I'd cover, anything airworthiness the seller would cover (it was due for an annual). 

Nonetheless I spent about 25% of the purchase price of a clean airframe bringing it up to my standards.  Let's say 3/4 of that 25% was for required (although not necessarily airworthiness items) and 1/4 of that was for upgrades. 

If the seller wants to put the plane back in annual outside of the sale - then consider a PPI at a reputable shop

. If you're serious but not sure if you want to commit to an annual- visit the plane.  Get permission from the seller to remove the cowling, empennage  access door, and under rear seat inspection panels.  Do a thorough logbook review.  Take a ton of pictures and scan the books.  Then put them up here and we can tell you at first pass whether this thing is worth pursuing or not.  

Option #3 - owner does annual where he wants.  You hire and fly Clarence or Dmax down with you to do an on site PPI and a test flight.  That should speak volumes. 

I would not try what KLRDMD does wth his Jedi master airplane buying.  Almost all of us aren't experienced enough.  

If you think you've found a "deal" or a good buy... you haven't.   There aren't barn finds.  Good planes are priced accordingly. Bad planes will be priced accordingly at the next annual. 

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13 minutes ago, bradp said:

If you think you've found a "deal" or a good buy... you haven't.   There aren't barn finds.  Good planes are priced accordingly. Bad planes will be priced accordingly at the next annual. 

Truth! I've got a list of those who thought otherwise... :(

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18 hours ago, M20Doc said:

Strange that none of the most highly renowned names in this thread ever post any advise to help anyone, let alone the cheer leaders.

Clarence

 

I've heard from two Mooney Service Centers on the east coast that it has to do with time online as well as liability if what they post is incorrect.

-Seth

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18 hours ago, M20Doc said:

Strange that none of the most highly renowned names in this thread ever post any advise to help anyone, let alone the cheer leaders.

Maxwell is very active on the MAPA email list. He prefers that format over the forum here at MooneySpace. But questions asked on the MAPA list are usually quickly responded to by Don.

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12 hours ago, PTK said:

Look. The seller knows the airplane he is selling. Or should know. And if he doesn't know he needs to find out before he decides to sell. He can't place restrictions on the buyer because he is unsure of what he is selling or is unwilling or lazy to find out. Or knows something and doesn't want buyer to find out! It's that simple. It's unreasonable to expect the buyer to be concerned if the airplane is going to be grounded or not as a result of an inspection or PPI! That's the seller's problem. If it gets grounded so be it. The seller should've known. It's comical when I hear people say things like "the buyer should have skin in the game!" What skin? The buyer is holding the money and has multiple airplanes to choose from. The seller has one airplane to sell. He needs to bend over backwards and convince the buyer why he should buy his airplane. Not put up drama and waste the buyer's time. The buyer does not know the airplane. He needs to find out in detail what he is considering buying. When the buyer is serious enough to place a deposit he is telling the seller that "...I will buy the airplane you are selling when certain conditions are met. When those conditions are not met I will not buy it." He shows interest and is willing to pay his mechanic to give him an objective opinion. He is also going above and beyond by paying the fuel expense for the buyer to bring it to seller's mechanic. That's plenty of skin and there's nothing more the buyer should do. It's also comical when I hear things like the buyer needs to pay seller's expenses above and beyond fuel. This type of seller is dreaming! If the seller is serious and ethical he would not have these unrealistic expectations. The problem arises when unscrupulous sellers try to pull a quick one over naive buyers. We have plenty of examples of that unfortunately.

I must be dreaming then Peter , I sold three planes in the last six weeks , One being the A-36 parked in the community hangar with yours , For 160K  ,  Guess you are an expert on how to sell a plane also....

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12 hours ago, bradp said:

If you think you've found a "deal" or a good buy... you haven't.   There aren't barn finds.  Good planes are priced accordingly. Bad planes will be priced accordingly at the next annual. 

One of the planes for sale I contacted just a week ago straight up said "this is a true barn find!" And I said, "I'm not interested in a plane that has been sitting for over five years with no flight time." 

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