'Annual in lieu of Pre-Buy' - ?

[jaylw314]

1 hour ago, gsxrpilot said:

Rule 1 - evaluating the seller is as important as evaluating the airplane. 

Write a contract to buy that clearly spells out the expectations following the pre-buy. 

Ensure that the shop understands the difference between a pre-buy and an inspection.

Worst case scenario for the buyer is the loss of the deposit. Worst case scenario for the seller is the buyer disappears and skips out on the shop bill, in which case it's paid out of the seller's deposit.

The two MSC's I did pre-buy inspections with simply had a flat pre-buy fee which was due once they gave me the report.  While not written in the contract, I had the expectation they would come after me as the buyer for the invoice.  They had my information after all, since I had to make the arrangements. 

I think it is completely reasonable and expected that the pre-buy should be paid for completely by the buyer--that way, the buyer owns the information in the report, not the seller.  It's cleaner that way, and it means there's no ambiguity about making the sale conditional on the results of that inspection.  The buyer simply gets information he needs to determine if he wants to proceed, and information to renegotiate the sale price.

[gsxrpilot]

20 minutes ago, jaylw314 said:

The two MSC's I did pre-buy inspections with simply had a flat pre-buy fee which was due once they gave me the report.  While not written in the contract, I had the expectation they would come after me as the buyer for the invoice.  They had my information after all, since I had to make the arrangements. 

I think it is completely reasonable and expected that the pre-buy should be paid for completely by the buyer--that way, the buyer owns the information in the report, not the seller.  It's cleaner that way, and it means there's no ambiguity about making the sale conditional on the results of that inspection.  The buyer simply gets information he needs to determine if he wants to proceed, and information to renegotiate the sale price.

I agree. As a buyer, I WANT to pay for the pre-buy. I want the shop working in MY best interest. 

As a seller I want to make sure that it's a reputable Mooney shop. And I want to make sure the shop knows this is no "Inspection" and therefore no question about any findings grounding the plane. 

All costs for the pre-buy, including costs to move the plane to/from the shop, will be on the buyer. 

[RobertGary1]

1 hour ago, gsxrpilot said:

An MSC did that? I don't think it's the fault of the electric screw driver. 

Worse. I've had issues at various msc as well. 

1) no cotter pin on main gear (nut for isn't torqued so cotter pin is all that keeps it all together)

2) aileron bell crank replaced, no nut put on center shaft. Just waiting for a bump to lose aileron control

3) rag left in engine. 

4) let battery drain and then jump started my 12v plane with a 24v battery 

Various other things the decades have allowed me to forget 

today I don't allow anyone to open my Mooney without my supervision. When I go to sell thats going to make things tough. 

-Robert

[gsxrpilot]

8 minutes ago, RobertGary1 said:

Worse. I've had issues at various msc as well. 

1) no cotter pin on main gear (nut for isn't torqued so cotter pin is all that keeps it all together)

2) aileron bell crank replaced, no nut put on center shaft. Just waiting for a bump to lose aileron control

3) rag left in engine. 

4) let battery drain and then jump started my 12v plane with a 24v battery 

Various other things the decades have allowed me to forget 

today I don't allow anyone to open my Mooney without my supervision. When I go to sell thats going to make things tough. 

That's really unfortunate. I'd certainly file this as more evidence that a reputable shop is important.

And I'll agree it will make selling more difficult. I wouldn't consider your Mooney with that limitation.

[HRM]

I fail to see what is so complicated about this. The pre-buy is not an annual and an annual is not a pre-buy.

The Annual is to determine continued airworthiness after a period of time, it also includes PM activities (oil, filters, etc.).

The pre-buy is to alert the potential buyer of deficiencies that may be costly to fix later and that would have entered in to price negotiations.

Since the annual and pre-buy (thorough ones) require some disassembly of the aircraft, it makes sense to combine them. Of course, a dilemma arises when the AC is being sold with a 'fresh annual' because the buyer does not have the chance to economize on the pre-buy.

A solution is to know the shop who did the annual. How reputable are they, what does their history look like. AD tracking, up to date logs, W&B's performed as required, etc., etc., etc.

Frankly, I think if you fully trust the shop that did the annuals over a period of years with excellent (not just good) record keeping, you can bypass a lot of the pre-buy checks and just concentrate on the major gotchas.

Suspicion comes into play where the seller is evasive about due diligence, the annuals were done by multiple shops or non-mooney A&Ps, etc. Red flags to my mind.

Frankly, if the bird starts smartly, flies and lands like a Mooney (should) and all the avionics work, it really just needs the gotcha checks (pucks, corrosion, tanks, logs).

[RobertGary1]

59 minutes ago, gsxrpilot said:

That's really unfortunate. I'd certainly file this as more evidence that a reputable shop is important.

But these are the top MSC shops. To me it shows that as an owner we are ultimately responsible for the airworthiness of the aircraft. To me supervising critical work is a necessary part of that.

-Robert

[gsxrpilot]

32 minutes ago, RobertGary1 said:

But these are the top MSC shops. To me it shows that as an owner we are ultimately responsible for the airworthiness of the aircraft. To me supervising critical work is a necessary part of that.

I have a hard time believing these are "top MSC shops."  

I'd say that most of us are not able to supervise maintenance done on our planes. Most of us work full time at other jobs. Someday when I retire, I'll be able to participate in the maintenance of my plane. But certainly not now.

I have no problem dropping my plane off for service at Maxwell's, SWTA, or Dugosh. Certainly mistakes can be made, but if I can't trust a shop to work on my plane, I couldn't own a plane.

So yes, I think you're being a bit precious and you'll find that that will factor into any attempt to sell.

[RobertGary1]

11 minutes ago, gsxrpilot said:

I have a hard time believing these are "top MSC shops."  

These are shops that are mentioned here often and are honestly good shops. 

I recall one time pointing out a mistake to the A&P at one of the MSC's (forget which mistake this was) that I fly my kids out over the Sea of Cortez and over the central valley in the dark in my plane. He got a look on his face I won't forget. I don't think they're thinking that when working.

For the most part I think owners are happier with their heads in the sand. I work a full time job like everyone else but if I didn't have time to personally check over work on my plane I'd consider it too unsafe to fly and would certainly sell. This is after some decades of Mooney ownership and spending top dollar at nearly every one of the top MSC's mentioned here. I'm not saying they are not great shops, just saying that they are human and make mistakes.I certainly make mistakes at work too.

-Robert

Edited August 16, 2017 by RobertGary1

[jaylw314]

2 hours ago, RobertGary1 said:

Worse. I've had issues at various msc as well. 

1) no cotter pin on main gear (nut for isn't torqued so cotter pin is all that keeps it all together)

2) aileron bell crank replaced, no nut put on center shaft. Just waiting for a bump to lose aileron control

3) rag left in engine. 

4) let battery drain and then jump started my 12v plane with a 24v battery 

Various other things the decades have allowed me to forget 

today I don't allow anyone to open my Mooney without my supervision. When I go to sell thats going to make things tough. 

-Robert

For a pre-buy, it should be made clear the ONLY things to be disassembled are inspection panels, cowling, belly panel(s), interior panels, and things that could be disassembled by an owner (spark plugs).  Flight controls, structural elements, or things that require certification, e.g. pitot/static, should NOT be disassembled, since reassembly requires them to be done in what the A&P thinks is an "airworthy" fashion, and this opens the plane up to the possibility of being grounded.  Reassembly would also require a log entry, which should NOT be allowed as part of the pre-buy.  The former are all elements the owner could put back himself if an A&P refused to reassemble the plane for whatever reason.

Edited August 16, 2017 by jaylw314

[RobertGary1]

2 minutes ago, jaylw314 said:

For a pre-buy, it should be made clear the ONLY things to be disassembled are inspection panels, cowling, belly panel(s), interior panels, and things that could be disassembled by an owner (spark plugs).  Flight controls, structural elements, or things that require certification, e.g. pitot/static, should NOT be disassembled, since reassembly requires them to be done in what the A&P thinks is an "airworthy" fashion, and this opens the plane up to the possibility of being grounded.  Reassembly would also require a log entry, which should NOT be allowed as part of the pre-buy.  The former are all elements the owner could put back himself if an A&P refused to reassemble the plane for whatever reason.

Another interesting point is what is considered required to be done to close the deal. Will the A&P, buyer and owner agree. For instance...

 

A&P - You should change the donuts, they're 10 years old

Owner - Those donuts measure fine, are within spec, and no cracking, degrading. No reason to change them

Buyer - A&P says they need to be changed so I want it done.

 

 

A&P - Fuel staining. Tanks need to be patched or resealed

Owner - The Mooney manual is clear that a small seep isn't an airworthy item (and actually how they came from the factory in most cases)

Buyer - A&P says its leaking fuel, that is scary that 100% should be fixed.

 

etc.

-Robert

[jaylw314]

38 minutes ago, RobertGary1 said:

Another interesting point is what is considered required to be done to close the deal. Will the A&P, buyer and owner agree. For instance...

Mike Busch suggested in one of his webinars that the primary goal of the pre-buy should be to identify major issues or deal-breakers, and he suggested minor squawks should not be the focus.  As a seller, I would not feel compelled to fix anything I did not want to since I did not pay for the pre-buy (and because I'm the owner), which is the way I think it should be.  As a buyer, I might use minor squawks as ammunition to try to negotiate a lower sale price, which would also be an appropriate strategy.  But as a buyer, walking out on a deal because of unfixed minor squawks would be cutting off my nose to spite my face.

[RobertGary1]

15 minutes ago, jaylw314 said:

Mike Busch suggested in one of his webinars that the primary goal of the pre-buy should be to identify major issues or deal-breakers, and he suggested minor squawks should not be the focus.  As a seller, I would not feel compelled to fix anything I did not want to since I did not pay for the pre-buy (and because I'm the owner), which is the way I think it should be.  As a buyer, I might use minor squawks as ammunition to try to negotiate a lower sale price, which would also be an appropriate strategy.  But as a buyer, walking out on a deal because of unfixed minor squawks would be cutting off my nose to spite my face.

That seems reasonable. The pre-buy may also be where the buyer comes to the shocking realization that a 40 year old airplane is not in the same condition as the brand new car he could buy for the same money.

 

-Robert

[Jerry 5TJ]

Theory aside, I'm headed for an actual pre-buy next week on a plane I'm buying.  

I'm paying for the inspection.  It's a fixed flat rate, two days, including a report including retail estimate to fix items found. 

My purchase agreement says I present the list of "airworthy & significant" items to seller.  He pays or he flies his plane home. 

Will I include everything found?  Certainly not. Will I include SBs that I and manufacturer deem important even if not "airworthy" per some?  Probably.  

Seller pays to get the plane to inspection--about 5 flight hours in this case.   I pay for inspection.  We each have $ invested in making this transaction successful.   

 

 

 

[gitmo234]

My pre-buy was basically broken down into major airworthiness items, with an option to turn into a full annual (which I took). Went like this:

Buyer pays for pre-buy. 

Small (<$500) non-airworthiness items that could be quickly fixed or replaced during pre-buy would be paid for by the buyer, provided they didnt accumulate to a huge amount and the aircraft was otherwise airworthy (no gigantic items to fix)

Larger items >$1000 to fix allowed the option to negotiate payment, such as shared cost, or the option to walk and have deposit returned

Airworthiness, service bulletin and other serious items would be paid by the seller and/or I could walk

Annual was a month or two from expiration. If at the end of the inspection it was a solid buy, I could elect an annual for which the seller would pay all routine costs (annual fee, oil, filters, small routine maintenance items, etc). Any larger costs discovered in the annual, then it opened up negotiation or walking away again.

But then again... my wife writes contracts for a living so.....

Edited August 16, 2017 by gitmo234

[gsxrpilot]

19 minutes ago, RobertGary1 said:

That seems reasonable. The pre-buy may also be where the buyer comes to the shocking realization that a 40 year old airplane is not in the same condition as the brand new car he could buy for the same money.

 

-Robert

Then he's not a buyer.

[gitmo234]

Just now, gsxrpilot said:

Then he's not a buyer.

Agree with this. I've found buying is a hybrid between buying a car and a house. If you ever think your home inspection isnt coming with 4 pages of squawks, you're misguided. Realistic expectations on the part of the buyer is sometime a magical thing

[RobertGary1]

One local broker here says he calls the shop first and tells them that the shop is not authorized to touch the plane until the buyer has paid the pre-purchase inspection fee in full. He's seen cases where the buyer had disappeared and the shop comes after the owner for the fee to release the plane.

-Robert

[gsxrpilot]

1 hour ago, RobertGary1 said:

Another interesting point is what is considered required to be done to close the deal. Will the A&P, buyer and owner agree. For instance...

A&P - You should change the donuts, they're 10 years old

Owner - Those donuts measure fine, are within spec, and no cracking, degrading. No reason to change them

Buyer - A&P says they need to be changed so I want it done.

A&P - Fuel staining. Tanks need to be patched or resealed

Owner - The Mooney manual is clear that a small seep isn't an airworthy item (and actually how they came from the factory in most cases)

Buyer - A&P says its leaking fuel, that is scary that 100% should be fixed.

This scenario is very similar to what happened for the first Mooney I purchased. I was very new to the whole thing and was leaning heavily on Don Maxwell who did the pre-buy for me. The information (it wasn't tanks or donuts) was used by me to negotiate on price. The seller was certainly willing to walk away and sell to someone else. But as the plane had been for sale for some time, and I was offering cash reasonably close to his asking price, he took my offer and I owned the plane.

It was/is good information for a new buyer to have, regardless as to how it should be interpreted.

[Jerry 5TJ]

22 minutes ago, gitmo234 said:

Agree with this. I've found buying is a hybrid between buying a car and a house. If you ever think your home inspection isnt coming with 4 pages of squawks, you're misguided. Realistic expectations on the part of the buyer is sometime a magical thing

Your house is more expensive than your aircraft?!?!?  Misguided priorities IMO.  

 

[HRM]

2 hours ago, jaylw314 said:

But as a buyer, walking out on a deal because of unfixed minor squawks would be cutting off my nose to spite my face.

I would suggest that there are some ethical issues at play as well.

So it needs 0.5 AMU in minor items, drop the offer price by that amount and move on. The aviation gods will punish bad karma.

[EricJ]

My long purchasing saga is still in progress, and I've only just today gotten the results of the PPI, which also came with a copy of the invoice to the current owner from the same shop for a bunch of work that was just done.   We'll see where it goes from here.  It's been good to learn from the various experiences of people here.

[jaylw314]

2 hours ago, EricJ said:

My long purchasing saga is still in progress, and I've only just today gotten the results of the PPI, which also came with a copy of the invoice to the current owner from the same shop for a bunch of work that was just done.   We'll see where it goes from here.  It's been good to learn from the various experiences of people here.

Eww, not to second guess, but it's somewhat risky having a shop that's done recent work on the plane do a PPI--they may not be motivated to uncover squawks, especially related to any recent work done.  Not that it is automatically bad--I had Dugosh do my PPI and they found no engine squawks, and I only realized later they had done the installation of the remanufactured engine 4 years before.  Luckily it turned out ok

[smccray]

13 hours ago, N9201A said:

Don't let buyer run process unless you've got adequate security or just like painful, completely avoidable problems

Really? Seller gets a reasonable deposit and the buyer gets to inspect the plane.  Buyers shouldn't expect to take an airplane apart without a deposit and sellers shouldn't expect to control the inspection.

A seller that expects to control the potential buyer's inspection isn't reasonable. I wouldn't allow a seller to control my pre-buy, and I wouldn't expect to control a buyer's pre-buy. Trust- but verify. The seller may be a smooth talking liar- verify. Seller may not be aware of a real issue with the plane- verify.  Any buyer should expect to buy a plane as is, where is, no warrantee even for airworthiness of the plane. You pay your money and you take your chances. Every one of these planes can experience a $25k+ uninsured loss without warning. If you want a warranty buy a new plane. 

It's not a comforting feeling, and owners are unlikely to see a major loss, but it's the reality of owning an airplane.  That said- come on it- the water is fine. I love owning a plane and I consider it a privilege to take care of my bird. Whenever I turn over the keys it won't be the happiest day of my plane ownership experience.

[N9201A]

Really? Seller gets a reasonable deposit and the buyer gets to inspect the plane.  

Uh, that would be the "adequate security" referenced in my sentence you quoted.

Others have mentioned requiring the Buyer to prepay a set inspection fee. That's wise too.

Or don't, I don't really care. But now that you've read this thread, don't expect any sympathy as a seller when a flighty buyer sticks you with the prebuy tab.

[N9201A]

Of course, as I also wrote, there are those who seem to like completely avoidable, self-created problems....