Closing costs and agreement

J

Jason608

Pre-takeoff checklist
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Jason608
Hi
I'm very close to finalizing an airplane purchase, but could use some advice on the closing process.

1- Offer acceptance a downpayment
2- Pre buy inspection $1,000 - $1,500 (from quotes)
3- Escrow $1,500 (from contract)
4- Bank closing/funding $450 (from bank)
5- I also have the CFI and Savvy expenses estimated.

What does the seller vs the buyer pay? It looks like the buyer is responsible for everything but it my be customary for the seller to split the escrow costs? Is any of this correct?
 
I believe it's customary for escrow costs to be split, as both parties are gaining something from it.
 
Challenged said:
I believe it's customary for escrow costs to be split, as both parties are gaining something from it.
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It is customary but it should be agreed beforehand. I had a buyer decide unilaterally to use escrow so they got to pay the full cost.
 
The escrow fee is $1,500? Unless you're talking about a big money airplane, if I were a seller I'd decline to pay any part of that. If you want escrow as a buyer, it'd be at your full expense. As a seller, you hand me funds I hand you executed sale docs, no need for a middle man.
 
The automated escrow quote was $1,500. I called AOPAs escrow company and they were half.
 
My escrow was about $700 on a $122K plane. As a buyer I paid the full escrow cost.
 
Challenged said:
What's escrow typically, ~ 1% of purchase price?
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$300 to $1000 for GA airplane. Function of transaction price. Sub-$100k airplane should not be more than about $400 tops.
Common to split equally between buyer and seller, but lots of exceptions
 
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Eric Gleason said:
What is the buyer gaining from it?
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Do you know how it works?

The buyer does not release funds to seller until the documentation to transfer title is received and complete.
As a buyer that's worth a lot to me.
 
Jason608 said:
The automated escrow quote was $1,500. I called AOPAs escrow company and they were half.
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Call Momi Forsythe at AeroTitle in OKC. Unless you are buying a one-year old $800,000 Cirrus it won't come anywhere near $1500
 
GRG55 said:
Do you know how it works?

The buyer does not release funds to seller until the documentation to transfer title is received and complete.
As a buyer that's worth a lot to me.
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Yeah, I know how it works. How about “ I give you the keys and the title when you give me the cash?”

Escrow doesn’t benefit the seller. The only reason as a seller to enter escrow is to play by the buyer’s rules.
 
GRG55 said:
Do you know how it works?

The buyer does not release funds to seller until the documentation to transfer title is received and complete.
As a buyer that's worth a lot to me.
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Airplanes have a title?
 
Eric Gleason said:
Yeah, I know how it works. How about “ I give you the keys and the title when you give me the cash?”

Escrow doesn’t benefit the seller. The only reason as a seller to enter escrow is to play by the buyer’s rules.
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How about, "I give you the cash when you give me the keys and the paperwork?"

The seller wants to sell but doesn't want to transfer ownership until he receives the money. The buyer (or his lender) wants to buy but doesn't want to give up the money until he gets the bill of sale and clear title. Escrow avoids the "who goes first" discussion. Whether it benefits one more than the other is a tossup. My experience is it benefits both.
 
The benefit of escrow to the buyer is knowing it’s really time to dig up all the paperwork and take your stuff out of the plane, or anything else you need to do, like make sure all the coke is out of the secret baggage compartment.

You know you have a real buyer when the money is in escrow.
 
Salty said:
The benefit of escrow to the buyer is knowing it’s really time to dig up all the paperwork and take your stuff out of the plane, or anything else you need to do, like make sure all the coke is out of the secret baggage compartment.

You know you have a real buyer when the money is in escrow.
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Assuming the plane is not full of airworthiness issues during pre-buy inspection.
 
Escrow makes the most sense if one or both sides are financing. A buyer's bank will typically require it and if the seller has it financed, escrow is one of the few ways to make sure the lien gets released.
 
Both my plane purchases were handshake deals.

First plane - Confirmed clear of any liens. Upon passing the pre-buy (no airworthy items) we sat down to do the paperwork, I wired the $$$. Once the wire transfer was confirmed we shook hands again and parted ways.

Recent Purchase - Again, a handshake deal on the price, I participated in the annual of the plane that was being done in the shop I have used since 2005. Once my plane sold we met at the owners home airport to sign the papers and with a quick trip to the local bank wired the $$$. The previous owner let me use his hangar for a week while I arranged transition training at no cost. On the last day I was in his hangar he sold that too, new tenant moving in the first of the month.
 
I've only used escrow once (other than real estate). When I sold a website, we used escrow to hold the money until the buyer had access to the servers, databases, and had switched domain control to themselves, etc. This protected me as the seller because they couldn't get their money back once I gave them any of the credentials. It protected them as the buyer because they didn't have to release the money to me until they were satisfied they got what they paid for. Same follows for an airplane. The buyer did pay for it (not really, I'm sure they accounted for the cost when they made their offer, so technically we both paid for it)
 
steingar said:
Same here. I've never escrowed anything, never involved a lawyer, nothing.
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I use escrow routinely in my business dealings so I don't see it as any big deal during a transaction. It's just second nature to set things up that way.
 
GRG55 said:
I use escrow routinely in my business dealings so I don't see it as any big deal during a transaction. It's just second nature to set things up that way.
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It's what business people do.
 
So buying a plane "old school" will save on average of about $2,000.00?
 
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