Bluebook, VREF and Mooney Values

[jgarrison]

Mooney Friends....

There is a wall of text below, so if you want to skip the reading and get the TLDR - scroll to the bottom.

I am liable to open a can of worms with this post. But I have sat on my hands for way too long on this. In the end, I am going to ask for some advice.

Some of you longer term Mooney owners know that for about 10 years or so, I wrote a column in MAPA monthly that addressed the values of Mooneys. I took over the article after acquiring my company from Ken Shoup. Ken wrote the same article for the 8 or so years preceding my ownership. So for about 18 years, there was some value advice that was available to buyers and sellers that either Ken or I wrote. I stopped writing the column not so much because I didn't want to write it, but it was generally a task that took a fair amount of time to compile and edit and frankly, I had too many things on my plate with not only this business but another one that I owned. Over time, I slowly put the task aside and would get to an article when I felt I had put it off long enough.  Eventually I quit writing it altogether.

Those that have read my writing know that I am a critic of the value guides: Aircraft BlueBook and VREF. For years, my contention has been that it is tail wagging the dog - that the guides publish values for planes/equipment and the market and finance companies then use these values to put prices on planes. However, where they get these values is anyone's guess. They will tell you that they get the values from the market, via research by their staff and through dealer contributions. So in their words, they are just reporting recent history. I have spoken with a few dealers in the past who have told me they have submitted data on sales, but the fact is that 95%+ (and it may be closer to 100%) of sales go unreported. And even if they do get reported, the intricacies of the valuation of how they arrived at the selling price cannot be accurately transmitted to BB or VREF. You can point your finger at me for not reporting, but the fact is, there is too much that goes into value and sales price of any given plane that is not easily reported to the guides whereby they can turn the data into meaningful real world use. There are literally thousands of Make/Model/Year combinations across general aviation that are covered by the guides and then there are millions of combinations of Airframe Time / Engine Time / Cosmetics / Installed Equipment additions and subtractions that affect value. In the 'good old days', the homogeneity of the market was such that it was pretty easy to figure out value. You had just a few things to consider like does the plane have a second Nav/Com (which believe it or not is still one of the value additions for the early Mooney models in BB - how many pre-201's DON'T have a second radio now?). So how do the guides come up with their values? Again, they will tell you it is based on recent sales. I will tell you something different. There is no way (no ACTUAL WAY) that they are reporting real sales. And in fact they are just putting numbers on pages in a way that makes sense. Some numbers are based on a linear fashion (a 1966 model is worth more than a 1965 model, right?). Some are for additions and subtractions to value that often make no current (meaning 2018) sense (DME's and Radar Altimeters are still getting value on the M20J line). The result is that sometimes the bottom line appraisal is in the favor of a buyer (guide value comes in under true market value - so he has ammunition to press for a price reduction), sometimes in favor of the seller (hey the book supports the price - you just gotta get up to my price) but almost universally, it is is not a reflection of actual market. Sometimes, it is even the lender is the one who gets taken to the bank (VREF gives $26,000+ for an M20C/E/F if it has a Lopresti Cowling on it - think the lender might overvalue his collateral in that case?). The guides are just flat wrong on a lot of things. Not only within a Make/Model, but across Makes/Models (some things don't add the same value to a 172 that they do to an Ovation). There are flaws throughout the books.

The most frustrating thing for me and to a certain extent to my potential customers is that there are times when a lender will under-appraise an aircraft and as a result the plane cannot be sold due to a requirement of the buyer to up his down payment to cover the difference. This has happened two times to me in the last week. And I have finally had to say something about it. Some may say 'Well, Jimmy... You must have your price too high on the plane - so don't complain'. My answer - 'If I have over priced it, then buyers would not call. Why would someone call on a plane that is overpriced? I have overpriced planes in the past and I know what it is like for the phone to not ring. The internet is full of planes and buyers can compare planes, so if I was not within reason of the market, they would simply go to the next plane and contact that seller. But if I am getting multiple calls or emails on a plane every week, then I am quite sure I am not overpriced.'  That is the case with the two planes I am referencing that we couldn't get financed. On one, I argued value in a heated exchange with the lender and he told me he could only go by the book. Since I did not have a BB or VREF appraisals in front of me, I went to my desk and actually performed both BB and VREF appraisals on the plane and then submitted them to the lender. One came out just under my price, one came our just over my price. He told me that he did not get the same bottom line. This was mostly due to the 'non-listed additions to value' and to a lesser extent his small value on a Garmin GNS-430W (he says that the GTN-650 is the new radio, so 430W doesn't have much value!!). The plane had tons of aftermarket upgrades that are not listed in the 'Additions' section of the guides, upgrades that are actual value/decision influencers for Mooney buyers. He would not listen. He valued the plane at 85% of reasonable marketable value. The sale dies because of a bogus collateral assessment where he decides he doesn't care what the market (and his client) wants and that all those expensive goodies on the plane don't really make a difference in value and 'oh by the way, a 430W, no one wants those any more'.

So here I sit trying to decide if there is anything I can do about it. I have influenced both BB and VREF in the past. They added a lot of items to the pre-201 section based on my explanation of value items to them ('201 Windsheild - what's that?'). But I am not planning on going to the publications and doing their work for them. What I am debating though is trying to figure out if there is a way to have a real reporting of the market and trying to decide whether that that work and 1) will it be used appropriately by buyers / sellers / lenders, 2) Is this something that a dealer/broker should actually be involving himself in and can it properly be done without bias and 3) if it is something I want to tackle. We should finish up this year with about 50 Mooney sales. I have plenty to keep me busy. And even with the inaccuracies of the value guides, we still manage to sell a lot of planes at true market values (yes, I do watch the Mooney market closely and know where my planes fit in). But my 20 years of frustration with the 'experts' has boiled over.

So here are my questions to you to anyone that wants to comment: 

1) Is producing a value guide specifically Mooney related something that would be used by the market, including lenders?

2) Is such a guide something that I specifically should involve myself in, given that I am very active in the Mooney resale market?

3) If 1 and 2 above are a yes, then should this be something that I can monetize... i.e. should I expect to be paid for the work I do and if not, what are my incentives to take on an ongoing task such as this?

4) If all of the above are yes, then what next? How do I get from concept to product?

I see the posts here all the time referencing my name and suggesting someone call me for advice, normally on values. I appreciate those recommendations. I know that I have my detractors out there, so I am not going to promote myself as 'the guy' on values or in any other fashion as the only Mooney resource. But I think I have some value to add to the subject of Mooney values. All American passed 1000 Mooney sales a few years ago. I have been involved in something like 750 since I started. I have no problem talking to people and giving general advice. Most of the advice I give can be done using the internet, keeping a record of aircraft that go on the market and keeping up with asking prices and equipment. That does work to a certain extent and is the process I use sometime when shopping for planes. On some of the more popular models, it is sometimes hard to get all of the data as they are often on the market and gone so quickly that you miss them. And some planes never hit the market. I have sold eight aircraft this year without advertising them. So all of the data may not be available to everyone. However, there are some basics that can be factored into a price that the guide have no clue about . A good example is that a 1982 M20J or M20K has a higher delta in price versus a 1981 model than does the 1981 vs. 1980 models. Why? Removable/Split/Reclining back seats. That's a reality and one that the guides couldn't tell you about if their lives depended on it. The back seats are a huge difference for a lot of buyers. What does BlueBook say about the M20J in these year models? 1980 - $71,000 base price. 1981 - $75,000 base price. 1982 - $77,000 base price. $4,000 between the 80 and 81. $2,000 between the 81 and 82. I won't comment on the base prices (other than they are low). But I will comment on the differences.... WRONG... COMPLETELY WRONG.

I don't want to go out and promote myself with a 'Guide to Buying a Mooney'. That's been done. I'm sure some of you still have your copy. And I am not trying to start a new business and get rich (hey, this is aviation after all). But what I do want to consider is coming up with something that reflects value for Mooney buyers, sellers and lenders that is real and reflects actual real life data. A dynamic resource that reflects changing technology - which both books are sorely deficient at. And one that can be taken seriously, even to the extent that lenders will have it at their disposal.  

So that's it. I am sure that we can have some quality discourse here. If you prefer, you can email me at jimmy@allamericanaircraft.com and I will be happy to talk with you privately there.

As for the owners / mods here, apologies in advance for violating the advertising ban (although I am not selling anything yet). 

Thanks for your time.  JG

TLDR (Too Long Didn't Read) - Bluebook and VREF are very poor resources for actually determining true market value for most aircraft makes/models. I am trying to determine if there is an actual need for a value assessment guide that is Mooney specific and if so, I am looking for some recommendations on how to accomplish the production of such a guide.

[MIm20c]

I agree with everything you said.  I find vref completely useless especially when looking at avionics. 

Unfortunately the normal SOP is to study the market for ~ six months, calculate ones budget, and search hard for the right plane to show up. 

To be honest the largest variance that is hard to quantify is maintenance history and condition of the plane. I’m looking at plane after plane show up for sale with 30 hrs in the past decade and minimal upkeep. Lots of threads on this site bragging about years of $500 annuals.  Sometimes it feels like over half of the Mooney engine overhauls are prop strike related. 

My suggestion:

avionics values - set on current used values (ebay) 

overhaul value - years and shop reputation should hold more value

airframe value - condition and quality IA maintenance/inspections hold a high importance

[DonMuncy]

Jimmy,  think you are wrong on one point. I, and a bunch of other people, consider you 'the guy' on values of Mooneys. (with apologies to David) 

I believe you are completely accurate on your assessment. I believe your expertise definitely has a value to the Mooney community, and especially to those needing to value their planes for a potential sale, and those in the market for a Mooney. Unfortunately, I do not have a good idea of how to monetize your efforts. If I were in the buying or selling mode, I would expect to pay to get your expertise on the market as it related to my interest. But as a matter of general interest, I would be hesitant to spend money for it. Back when you were writing your column in the MAPA log, I would periodically check my plane against your evaluation just to keep up with what it was worth. Yes, I admit I am a CB, and liked it fine, when I could tap your knowledge for free. Maybe I rationalized it by thinking it was a benefit of belonging to MAPA. (Good for MAPA; not necessarily so good for you.) 

For my purposes, it is almost a moot point, as, if I get in the buy/sell mode, I will come to you first. 

[carqwik]

Whether the guidebooks are right or wrong, it's what the bankers need to "justify" a loan  amount (everything else being within underwriting criteria) so the auditors don't freak out.  Even with a great appraisal, if it's out of whack from the guidebooks, the lender is stuck at the lesser value. 

The problem with the a/c guidebooks is that there's no wholesale auction market like in the car business.  That's about as real time to pricing data as one can get...the big auto auction houses have that data online (for certain people - not the public so don't ask).  Of course, there's some "art" involved too as to the actual value on any one specific vehicle - but there's enough data so that the values are pretty close to reality.  This isn't the case in a thinly-traded airplane market so there is much more "art" than anything else to determine values.  Having said that, as a broker specializing in Mooney's, you're probably the best authority as to real values.  But you're not the lender.

 

[jgarrison]

20 minutes ago, MIm20c said:

To be honest the largest variance that is hard to quantify is maintenance history and condition of the plane. I’m looking at plane after plane show up for sale with 30 hrs in the past decade and minimal upkeep. Lots of threads on this site bragging about years of $500 annuals.  Sometimes it feels like over half of the Mooney engine overhauls are prop strike related. 

My suggestion:

avionics values - set on current used values (ebay) 

overhaul value - years and shop reputation should hold more value

airframe value - condition and quality IA maintenance/inspections hold a high importance

Good point on the low flight hours. I have been preaching that to sellers for a while. I never quantified it when doing the MAPA bit. I will need to remember that if this gets any traction. Thanks... 

 

[jgarrison]

15 minutes ago, DonMuncy said:

Jimmy,  think you are wrong on one point.

Thanks Don....

[Marauder]

Mooney Friends....
There is a wall of text below, so if you want to skip the reading and get the TLDR - scroll to the bottom.
I am liable to open a can of worms with this post. But I have sat on my hands for way too long on this. In the end, I am going to ask for some advice.
Some of you longer term Mooney owners know that for about 10 years or so, I wrote a column in MAPA monthly that addressed the values of Mooneys. I took over the article after acquiring my company from Ken Shoup. Ken wrote the same article for the 8 or so years preceding my ownership. So for about 18 years, there was some value advice that was available to buyers and sellers that either Ken or I wrote. I stopped writing the column not so much because I didn't want to write it, but it was generally a task that took a fair amount of time to compile and edit and frankly, I had too many things on my plate with not only this business but another one that I owned. Over time, I slowly put the task aside and would get to an article when I felt I had put it off long enough.  Eventually I quit writing it altogether.
Those that have read my writing know that I am a critic of the value guides: Aircraft BlueBook and VREF. For years, my contention has been that it is tail wagging the dog - that the guides publish values for planes/equipment and the market and finance companies then use these values to put prices on planes. However, where they get these values is anyone's guess. They will tell you that they get the values from the market, via research by their staff and through dealer contributions. So in their words, they are just reporting recent history. I have spoken with a few dealers in the past who have told me they have submitted data on sales, but the fact is that 95%+ (and it may be closer to 100%) of sales go unreported. And even if they do get reported, the intricacies of the valuation of how they arrived at the selling price cannot be accurately transmitted to BB or VREF. You can point your finger at me for not reporting, but the fact is, there is too much that goes into value and sales price of any given plane that is not easily reported to the guides whereby they can turn the data into meaningful real world use. There are literally thousands of Make/Model/Year combinations across general aviation that are covered by the guides and then there are millions of combinations of Airframe Time / Engine Time / Cosmetics / Installed Equipment additions and subtractions that affect value. In the 'good old days', the homogeneity of the market was such that it was pretty easy to figure out value. You had just a few things to consider like does the plane have a second Nav/Com (which believe it or not is still one of the value additions for the early Mooney models in BB - how many pre-201's DON'T have a second radio now?). So how do the guides come up with their values? Again, they will tell you it is based on recent sales. I will tell you something different. There is no way (no ACTUAL WAY) that they are reporting real sales. And in fact they are just putting numbers on pages in a way that makes sense. Some numbers are based on a linear fashion (a 1966 model is worth more than a 1965 model, right?). Some are for additions and subtractions to value that often make no current (meaning 2018) sense (DME's and Radar Altimeters are still getting value on the M20J line). The result is that sometimes the bottom line appraisal is in the favor of a buyer (guide value comes in under true market value - so he has ammunition to press for a price reduction), sometimes in favor of the seller (hey the book supports the price - you just gotta get up to my price) but almost universally, it is is not a reflection of actual market. Sometimes, it is even the lender is the one who gets taken to the bank (VREF gives $26,000+ for an M20C/E/F if it has a Lopresti Cowling on it - think the lender might overvalue his collateral in that case?). The guides are just flat wrong on a lot of things. Not only within a Make/Model, but across Makes/Models (some things don't add the same value to a 172 that they do to an Ovation). There are flaws throughout the books.
The most frustrating thing for me and to a certain extent to my potential customers is that there are times when a lender will under-appraise an aircraft and as a result the plane cannot be sold due to a requirement of the buyer to up his down payment to cover the difference. This has happened two times to me in the last week. And I have finally had to say something about it. Some may say 'Well, Jimmy... You must have your price too high on the plane - so don't complain'. My answer - 'If I have over priced it, then buyers would not call. Why would someone call on a plane that is overpriced? I have overpriced planes in the past and I know what it is like for the phone to not ring. The internet is full of planes and buyers can compare planes, so if I was not within reason of the market, they would simply go to the next plane and contact that seller. But if I am getting multiple calls or emails on a plane every week, then I am quite sure I am not overpriced.'  That is the case with the two planes I am referencing that we couldn't get financed. On one, I argued value in a heated exchange with the lender and he told me he could only go by the book. Since I did not have a BB or VREF appraisals in front of me, I went to my desk and actually performed both BB and VREF appraisals on the plane and then submitted them to the lender. One came out just under my price, one came our just over my price. He told me that he did not get the same bottom line. This was mostly due to the 'non-listed additions to value' and to a lesser extent his small value on a Garmin GNS-430W (he says that the GTN-650 is the new radio, so 430W doesn't have much value!!). The plane had tons of aftermarket upgrades that are not listed in the 'Additions' section of the guides, upgrades that are actual value/decision influencers for Mooney buyers. He would not listen. He valued the plane at 85% of reasonable marketable value. The sale dies because of a bogus collateral assessment where he decides he doesn't care what the market (and his client) wants and that all those expensive goodies on the plane don't really make a difference in value and 'oh by the way, a 430W, no one wants those any more'.
So here I sit trying to decide if there is anything I can do about it. I have influenced both BB and VREF in the past. They added a lot of items to the pre-201 section based on my explanation of value items to them ('201 Windsheild - what's that?'). But I am not planning on going to the publications and doing their work for them. What I am debating though is trying to figure out if there is a way to have a real reporting of the market and trying to decide whether that that work and 1) will it be used appropriately by buyers / sellers / lenders, 2) Is this something that a dealer/broker should actually be involving himself in and can it properly be done without bias and 3) if it is something I want to tackle. We should finish up this year with about 50 Mooney sales. I have plenty to keep me busy. And even with the inaccuracies of the value guides, we still manage to sell a lot of planes at true market values (yes, I do watch the Mooney market closely and know where my planes fit in). But my 20 years of frustration with the 'experts' has boiled over.
So here are my questions to you to anyone that wants to comment: 
1) Is producing a value guide specifically Mooney related something that would be used by the market, including lenders?
2) Is such a guide something that I specifically should involve myself in, given that I am very active in the Mooney resale market?
3) If 1 and 2 above are a yes, then should this be something that I can monetize... i.e. should I expect to be paid for the work I do and if not, what are my incentives to take on an ongoing task such as this?
4) If all of the above are yes, then what next? How do I get from concept to product?
I see the posts here all the time referencing my name and suggesting someone call me for advice, normally on values. I appreciate those recommendations. I know that I have my detractors out there, so I am not going to promote myself as 'the guy' on values or in any other fashion as the only Mooney resource. But I think I have some value to add to the subject of Mooney values. All American passed 1000 Mooney sales a few years ago. I have been involved in something like 750 since I started. I have no problem talking to people and giving general advice. Most of the advice I give can be done using the internet, keeping a record of aircraft that go on the market and keeping up with asking prices and equipment. That does work to a certain extent and is the process I use sometime when shopping for planes. On some of the more popular models, it is sometimes hard to get all of the data as they are often on the market and gone so quickly that you miss them. And some planes never hit the market. I have sold eight aircraft this year without advertising them. So all of the data may not be available to everyone. However, there are some basics that can be factored into a price that the guide have no clue about . A good example is that a 1982 M20J or M20K has a higher delta in price versus a 1981 model than does the 1981 vs. 1980 models. Why? Removable/Split/Reclining back seats. That's a reality and one that the guides couldn't tell you about if their lives depended on it. The back seats are a huge difference for a lot of buyers. What does BlueBook say about the M20J in these year models? 1980 - $71,000 base price. 1981 - $75,000 base price. 1982 - $77,000 base price. $4,000 between the 80 and 81. $2,000 between the 81 and 82. I won't comment on the base prices (other than they are low). But I will comment on the differences.... WRONG... COMPLETELY WRONG.
I don't want to go out and promote myself with a 'Guide to Buying a Mooney'. That's been done. I'm sure some of you still have your copy. And I am not trying to start a new business and get rich (hey, this is aviation after all). But what I do want to consider is coming up with something that reflects value for Mooney buyers, sellers and lenders that is real and reflects actual real life data. A dynamic resource that reflects changing technology - which both books are sorely deficient at. And one that can be taken seriously, even to the extent that lenders will have it at their disposal.  
So that's it. I am sure that we can have some quality discourse here. If you prefer, you can email me at jimmy@allamericanaircraft.com and I will be happy to talk with you privately there.
As for the owners / mods here, apologies in advance for violating the advertising ban (although I am not selling anything yet). 
Thanks for your time.  JG
TLDR (Too Long Didn't Read) - Bluebook and VREF are very poor resources for actually determining true market value for most aircraft makes/models. I am trying to determine if there is an actual need for a value assessment guide that is Mooney specific and if so, I am looking for some recommendations on how to accomplish the production of such a guide.

Jimmy - I was a regional sales manager for years. There is absolutely a need for a pricing guide that takes into account the true value of a vintage Mooney based on all the factors associated with the plane. The challenge is keeping it current since we are seeing a lot of upgrade options.


Sent from my iPad using Tapatalk Pro

[jgarrison]

4 minutes ago, carqwik said:

but there's enough data so that the values are pretty close to reality.  This isn't the case in a thinly-traded airplane market so there is much more "art" than anything else to determine values.  Having said that, as a broker specializing in Mooney's, you're probably the best authority as to real values.  But you're not the lender.

 

I certainly appreciate your words. I have briefly been in the used auto business, very briefly. While I won't dispute anything you wrote, there are a few differences to point out. You brought up the biggest. Depth of market. Nothing compares to a data set in the thousands, where in the M20F line, you have have 20-30 sales in a year. There is also, to a certain extent, a homogeneity of market in the car biz. Without major changes in a model, there are subtle differences between two different 2009 Tahoes or a 2012 and 2009 Tahoe. And going along with that, the vast majority of the wholesale auction market is made up of cars that were produced in the last 15 years, where there is a fairly linear progression from new to 'off the lot' depreciation to year model depreciation going backward. Whether KBB sets the value or the dealers set the value, there is some required devaluation between buying new and buying used, and with the depth of the market, it is pretty easy for both the dealer and I as an individual to determine what value there is in relation to new. That's why it is easier to appraise Acclaims than it is to appraise Executives. It is easy to compare the Acclaim market from year to year. Variances are pretty much defined by year model, times, TKS, WAAS and which autopilot. And then, the market only exists of 10-20 sellers and fewer than that on the buy side. That is not the case with anything older than about 20 years. Variances between planes are vast and the market is larger and the variance in history is dramatic.

One thing I won't dispute is that I am not the lender, so yes, my opinions may be moot. I think ultimately, my goal in taking on a task like this is that I would eventually influence the guides to get their crap together and in turn the lenders, so they would understand the value. If there is not a box to put a check mark in, most lenders don't have a clue. As I said originally, the Pre-201 appraisal points in both books were influence by me back in the early '00's. I explained to them that they were missing some extremely valid appraisal points like the 201 windsheild and 201 instrument panel upgrade. I'm not going to send them my large list of appraisal points this time. But hopefully the guides and lenders someday come to an understanding of actual market.

Thank you for the input. Very well stated.

[jgarrison]

32 minutes ago, Marauder said:

 

Jimmy - I was a regional sales manager for years. There is absolutely a need for a pricing guide that takes into account the true value of a vintage Mooney based on all the factors associated with the plane. The challenge is keeping it current since we are seeing a lot of upgrade options.


Sent from my iPad using Tapatalk Pro

 

That's where the idea comes in that I may want to figure out how to monetize the guide. Coy did it with his buyer's guide. I tend to be a more 'behind the scenes' kind of personality, if you know what I mean. I have no problem doing the work, but if I am going to work to keep up with market and options, I either need to know that I will get some immediate return (that's money) or in future return (perhaps that is an increase in the number of planes sold - although I'm getting old and slowing down - not sure I want THAT much extra work). Not greedy. Just want to assess the investment/return.

 

[Marauder]

1 minute ago, jgarrison said:

That's where the idea comes in that I may want to figure out how to monetize the guide. Coy did it with his buyer's guide. I tend to be a more 'behind the scenes' kind of personality, if you know what I mean. I have no problem doing the work, but if I am going to work to keep up with market and options, I either need to know that I will get some immediate return (that's money) or in future return (perhaps that is an increase in the number of planes sold - although I'm getting old and slowing down - not sure I want THAT much extra work). Not greedy. Just want to assess the investment/return.

 

I think you can attempt to monetize it but isn't the end state to make sure you are selling these Mooneys for a fair market value based on the enhancements made to them? That would be a better approach to enlighten potential buyers to the true cost of an upgraded plane and value sell that. Anyone can sell on a discounted price. What has hurt the used Mooney market is the concern over supportability (not real) and the disconnect with the current Mooney platforms. If I were selling used Mooneys, I would be marketing the historical link to the fastest production plane available.

I am still perplexed why Mooneys tend to be underpriced relative to other makes and models. When I see a Cessna 150 going for $25k and a nicely equipped C being difficult to sell at $35k, it has me scratching my balding head why that dynamic exists.

As for "Coy", if you are referring to Coy Jacobs, I wouldn't use his example as a role model for this. Too many of us are still tending to scars dealing with him. 

[Yetti]

What I have never understood is a 75 F and a 78 J.   Generally the F would be 60K and the J would be 110K .    Value wise a F is just a few knots slower but it is half the price.  Most everything else is the same except the speed mods on the J.  3 years in car values would not account for the extra dollars.

[Lance Link]

No doubt a big part of the value of someone having you sell their plane, or sell one to them, is that you know how to price them.  Private sellers who don't want to pay a broker's fee have to figure that out on their own, without knowing how.  And buyers have to figure out how much to offer and pay without knowing values very well.  No amount of reading ads will give a person solid knowledge in those areas.  I think that because I tried it for a year.  If you sell your knowledge about value, no matter how you do it, I have to think it can only hurt your brokerage business, if only slightly.  You will be giving buyers and sellers the information they need to cut you out of the process.  So in my opinion you should probably sell your knowledge for a fairly high price.  Whether a guide is the right way to do that or not I don't know.  There are a lot of folks who advertise that they find planes for customers, and they charge thousands, but they don't necessarily know much about Mooneys.  Maybe you could go somewhere along those lines.  I did not buy my plane from you only because you did not have just what I was looking for.  But if you did have the right plane, I would have been comfortable knowing the pricing was probably in the ballpark.  I ended up buying from a private party.  Did I pay the right price?  Hell if I know.  But one thing is for sure, if I could have gotten you involved on something of a consulting basis, helping me deal with the sellers who won't pay a broker's fee, I would have done it in a heartbeat, and paid dearly for the service.  This approach might not ever be as lucrative as brokering, but it will pick up income that is not available by way of brokering, and might be easier and less hassle in many ways.  Just a thought.     

[Bravoman]

As mentioned, with planes there are so many variables that a standardized value guide is virtually impossible to devise and valuation is as much of an art as it is a science. It is just something you have to study for a while and if you do that you get a pretty good idea as to a make and model within some margin of error. I can see it being a real problem in some cases for lenders and those wanting to finance. I for one have never hesitated calling or making an offer to a seller( on any kind of item) who was objectively overpricing because you never know where they are in their mental processes or how much the market has beat sense into them before you got there. A lot of times it doesn’t work out but sometimes it does. But you never know unless you open the dialogue.

[Andy95W]

How about an annual guide that is very generic published in the MAPA Log (hopefully paid for by them to reimburse your time).  This way, an  owner can keep a general eye on his airplane's value for things like insurance value, etc.

Then, instead of giving free advice, offer your services for some reasonable amount to evaluate a specific airplane.  I don't know, maybe $20-50 or so?  The potential buyer would send you all of the specs you require and you would evaluate the airplane.  Or, for a seller, he could advertise his airplane (with your agreement) as "Aircraft value determined by Jimmy Garrison".

At least this way you're not providing a guide of every possible combination of models, times and equipment, but you could use your experience to focus in on one airplane at a time, just like you do with All American.  Might get some new customers for them this way, as well.

Good luck, we really do value what you do for our community.

[Bob_Belville]

Hum, this thread gets my attention. As the very old owner of a $150,000 '66E I think about the day that I'll be calling Jimmy to tell him it's time to sell. I've assumed the only task will be to find a buyer who appreciates the plane and is willing to buy at a price she and I agreed to.

Your frustration on a couple of lost sales makes me realize, duh, that some (most) buyer want to/need to finance their purchase and the lender has to be willing to accept the collateral.

A thought... I wonder if you have or can cultivate relationships with a aircraft lender or two who would give proper weight to your valuation criteria. Would having a good opportunity to get a crack at those 50 sales a year you're doing peak their interest? 

[smccray]

I agree with your assessment on the pricing tools.  The tail wagging the dog, or the dog wagging the tail, it's a problem and it certainly affects transaction prices.

I want to challenge you a bit Jimmy on the definition of the problem.  You're stating that the problem is that banks/buyers don't understand the values of various upgrades to certain aircraft.  You have two different groups there that you have to think about differently.

Buyers:  Pilots are cheap.  Mooney pilots are extra cheap.  I believe your current business is capturing your knowledge.

Banks: The solution already exists, but your definition of the problem isn't correct.  If your number is good, all it takes is ordering a full appraisal on the plane.  The bank just needs something to stick in a file that proves that the loan is secure.  The desktop appraisals tools are a way to avoid the cost of a full appraisal.  If the Bank is willing, all it takes is to have the Bank order an appraisal of the plane.  It doesn't make much sense on a low value loan, and that's the real rub.

I suspect Coy realized he had to educate the market on the value of his modifications in order to sell them.  You have the knowledge and expertise on values, but I suspect you're going to have a difficult time monetizing that value directly.

 

19 minutes ago, Bob_Belville said:

Hum, this thread gets my attention. As the very old owner of a $150,000 '66E I think about the day that I'll be calling Jimmy to tell him it's time to sell. I've assumed the only task will be to find a buyer who appreciates the plane and is willing to buy at a price she and I agreed to.

Your frustration on a couple of lost sales makes me realize, duh, that some (most) buyer want to/need to finance their purchase and the lender has to be willing to accept the collateral.

Bad news bears... so I'll take the down votes.  Anyone who is going to spend $150K on an E model is going to be a cash buyer, or a buyer that is financed on the strength of his/her balance sheet irrespective of the collateral.  There's nothing wrong with that, but it's the reality of underwriting a loan of the nicest examples of any plane.  

 

Edited October 30, 2018 by smccray

[smccray]

19 minutes ago, Bob_Belville said:

A thought... I wonder if you have or can cultivate relationships with a aircraft lender or two who would give proper weight to your valuation criteria. Would having a good opportunity to get a crack at those 50 sales a year you're doing peak their interest? 

It won't work.  The appraisal has to be independent, and a broker in the deal isn't an independent party.  The bank's assessment of the collateral is irrelevant- the bank regulators will be looking for an independent assessment of the value of the collateral.

[carusoam]

Hey Bob, Go Bosox!

I said the same thing, but it took me three times as long to write it...

 

Jimmy, see if any of this makes sense related to your questions...

 

While selling industrial machinery, I saw many of the same challenges...

1) Customers gravitate to the smartest suppliers... nuts and bolt knowledge, speeds and flying qualities, ownership methodologies... economies of scale and finance of machines...

2) Customers listen a long time to the guy who is explaining the differences between the various machines. How one will fit good today, and better over the years, because...

3) Presentations... PowerPoint... I had one presentation for each machine I sold.  Adjusted, for each type of customer I had.... PPT is a fancy way of delivering pictures and videos... in an easy to understand order...

4) some customers want to discuss  the finances, from costs to operate, to cost to keep and maintain...

5) some customers want to discuss T/O, climb, cruise speed and landing distances...

6) I followed a guy that was decades older than me... He didn’t know any of the technical details to answer the customer’s technical questions... He was good at customer relationships...

6.5) I think I may have learned the basis of customer relationships from David. Who filled me with Mooney knowledge... and sent me on my way.  Knowing I would be back when my stars were better aligned...

7) When you are the smartest guy in the room, selling machinery, delivering the details customers need to hear...

You make promises along the way, you follow through every time...

You have instilled confidence they are buying the right machine... you follow-up on every loose end...

8) Ethics is everything... UPOD.... under promise, over deliver...

9) I have seen a few books and guides get written... I wrote some guides myself... They are great for showing people that I know my stuff... it is a great way to share the knowledge...  for some reason, these technical or  ‘How To’ guides were called ‘White Papers’...

10) If anyone reads any of my guides, they can do my job as well as me, on the day I stopped writing it... the guides get old quickly... annual updates are required...

11) the way I made money was selling mechanical solutions to people’s production challenges... the sale made money. Not the presentations, nor the guides, nor the endless discussions, texts and emails... I used to write a lot...

12) Full service sales group... relationships are everything... Being unable to cover all the bases, you need a goto person or two for each of the things you can’t supply...

- You got sales covered...

- Maintenace shop...

- PPI services...

- Insurance...

- Transition Training...

- Finance...

Some customers have three machines already, they need none of this. Some are buying a machine the first time, they need all of this...

 

13) When buying my O... I went to my bank... they were excited to see me... first questions were how many seats and how many turbines? Minimum loans their aviation department handled was in the millions... Ended up going to AOPA for my one-off finance challenge... done by Bank of America... so many middlemen...

14) When it comes to selling machines, so Many things can get in the way... Finance is going to be one of those things... When you have a goto finance guy, it won’t be the first time... it will be your 751st time...

You will find a customer who has financial strength, but no money, so you set him up with your goto finance guy that arranges a lease that ends with a $1 buy-out at the end...

15) The machines I sold were premium quality... there are customers that are looking for that...

16) the non-premium machines were sold by somebody else... Too confusing to customers to sell both...

17) Stick to what you do best... Customers seem to appreciate that...

18) writing books and guides, because you want to... you might even get paid for doing it. If it turns out you get paid minimum wage... you did it because you loved it...

19) when you write it, i’ll Probably be at the front of the line to buy an E-copy...

20) I met David in the late 90s by phone while comparing Brand P, C, and M20Cs...

A decade later I stopped in looking at the M20R with matching, updated questions...

21) there is always going to be competition, and customers that are better for somebody else to have... they want your knowledge.  it won’t help them, even if you handed them your book.

22) What happened to Mooney Finace?

 

Selling a 30amu plane takes as much work as selling a 300 amu plane...

PP thoughts only, not a sales guy...

Best regards,

-a-

[KSMooniac]

Before I finished reading your original post, I was thinking you really need to develop a relationship with one or two bank/credit union/other lenders. Nowadays we don't need to go to our neighborhood bank for a loan, although many of us still might prefer the local relationship. However, when you're in the unique position of selling an asset that is not valued properly by an ignorant lender, I think it would be far easier and better over the long term to concentrate on working with a small selection of lenders that believe in your knowledge of the Mooney market. You made a strong case in your first post! If your buyer can't get his lender to agree, you could offer your partner lender(s) as a way to complete the sale.

Perhaps that would be a lender local to you that already know, or it could be one of the national options that can look at your history and volume of sales, and see a good way to expand their business. Especially since you generally aren't selling junk that a buyer might abandon.

I think going that route would be far less work than publishing a guide periodically. I miss the valuation articles, but for me that was just entertainment since I don't plan on selling...even 11+ years into ownership so far. They were helpful to let me know about added value, though, as I continue my upgrades. Like my removable rear seat retrofit coming up...

Even if you published Jimmy's Mooney Guide periodically, do you think a random bank would place more stock in that over VREF? I don't...hence my belief that you could cultivate a handful of lenders that have confidence in your knowledge of the market and it would be a win-win-win for all parties.

Sent from my LG-US996 using Tapatalk

[Skates97]

17 minutes ago, KSMooniac said:

Before I finished reading your original post, I was thinking you really need to develop a relationship with one or two bank/credit union/other lenders. Nowadays we don't need to go to our neighborhood bank for a loan, although many of us still might prefer the local relationship. However, when you're in the unique position of selling an asset that is not valued properly by an ignorant lender, I think it would be far easier and better over the long term to concentrate on working with a small selection of lenders that believe in your knowledge of the Mooney market. You made a strong case in your first post! If your buyer can't get his lender to agree, you could offer your partner lender(s) as a way to complete the sale.

Perhaps that would be a lender local to you that already know, or it could be one of the national options that can look at your history and volume of sales, and see a good way to expand their business. Especially since you generally aren't selling junk that a buyer might abandon.

I think going that route would be far less work than publishing a guide periodically. I miss the valuation articles, but for me that was just entertainment since I don't plan on selling...even 11+ years into ownership so far. They were helpful to let me know about added value, though, as I continue my upgrades. Like my removable rear seat retrofit coming up...

Even if you published Jimmy's Mooney Guide periodically, do you think a random bank would place more stock in that over VREF? I don't...hence my belief that you could cultivate a handful of lenders that have confidence in your knowledge of the market and it would be a win-win-win for all parties.

Sent from my LG-US996 using Tapatalk
 

My experience buying planes is just the only one I bought, which I had to put extra down on because the bank did not think it was worth what I and the seller thought it was worth. I do however have a fair amount of experience with financing of autos after 25 years in dealerships and I think @KSMooniac makes an excellent point. I have seen plenty of people get financing that didn't have the right credit, the amount financed was higher than what "should have been" financed, they received better rates than they technically should have qualified for, etc... In every case it was because the Sales Manager or Finance manager called in a favor with a bank or credit union branch president that they had developed a professional relationship with. In fact, the last car I purchased for my wife we sat in the Finance Managers office as he called up his contact at the credit union and said "Listen, this is our Controller and he's buying it for his wife, I need you to do better than that." When he hung up the phone we had a rate about as close to zero as you could get. 

I think with your track record/history you could have (or may already have) a couple of contacts that you could lean on a little to get some of those contracts bought. 

[Danb]

Richard and that’s a problem where a seller can alter or modify a potential deal by the appearance of not being independent. I also wonder if it’s bluster that the manager calls in a favor, I assume he is just getting the market rate by buffaloing the customer that he knows someone and therefore it alters the standard.

My airplane insurance guy told me he called the adjuster told him I was a proficient pilot therefore he attained a lower premium for me...really.

[smccray]

Van Bortel finances aircraft using an in house finance department. I don’t know how low they go in terms of loan size, but they may be a source for financing.  A non-bank lender is probably the best bet to get a deal done, and their rates (at least 2 years ago when I asked) were bank/like.  They were willing to finance a plane they didn’t sell, but I asked about a Meridian for a friend, not a Mooney.

[FloridaMan]

Let's not forget that airplane prices have been going up with the economy and basic med. I'm doing something that I never thought I'd do with the Rocket and it's that I'm financing it. The bank offered me 4.15% and a payment that's less than most car payments. While I'm not one of them, there are a lot of people who live paycheck to paycheck and they will spend what they can afford. When lending becomes more available, they will spend what their budget allows and the median of the bell curve moves WAY up in price. We're seeing it with the housing market again and a secondary market is the price of airplanes. 

I wasn't flying back then, but I heard that before the .com bubble burst in 2000 that there were absolutely zero M20J's available on the market at times. 

[Skates97]

2 hours ago, Danb said:

Richard and that’s a problem where a seller can alter or modify a potential deal by the appearance of not being independent. I also wonder if it’s bluster that the manager calls in a favor, I assume he is just getting the market rate by buffaloing the customer that he knows someone and therefore it alters the standard.

My airplane insurance guy told me he called the adjuster told him I was a proficient pilot therefore he attained a lower premium for me...really.

Is it sometimes just a case of "I have a special price for you, my friend?" Sure it is. There are times though that having a long-standing relationship with the lender allows a bit more leeway, speaking not from the standpoint of the consumer sitting in the chair but the guy in charge of all the financials for multiple dealerships. In my case I knew exactly what the market rate was for a candidate with my income, credit rating, etc... and the rate on my loan was substantially lower.

[rpcc]

Well - from a buyers point of view IMHO, I think a Mooney value guide is about as useful a concept as  a Future wife value guide.  These are not Hershee bars.  From what I've learned, these machines are each unique - from equipment, condition, operational history, and time to make whatever changes are needed - electronics upgrades, paint, tanks....  and to be quite honest how the machine works with the owners objectives and how attractive the complete package is to the buyer.   Agreed it does drive the financing market and in a sense help support the value.