Any gotchas to look out for in brokerage agreements?

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russe

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russe
I'm thinking of selling my 1979 Peterson Cessna 182 using a broker.

Anything to look out for in brokerage agreements? One thing I've noticed is that there is a potentially overly broad indemnity clause in the contract.

I love the plane, but my primary mission is 700nm and I'd like a bit more speed, and now that I have 350 hours I think I can handle something that requires somewhat more from the pilot than the 182.
 
Try creating a posting here with the details and photos... you might find a buyer and not need the broker.
 
- Length of the term
- Outline of services included in the fee (how much advertising on pay-for sites, you don't want to get billed extra for things like controller ads)
 
AggieMike88 said:
Try creating a posting here with the details and photos... you might find a buyer and not need the broker.
Click to expand...

Is there a separate part of the site for that? Anyway, a few details:

Low total time, around 2000 hours. 930 hours on the IO470. I've put 300 hours on it over the last three years and have taken good care of it. Prop resealed, new alternator, new vacuum pump, new control rods and cables, all corrosion areas cleaned up, new tires, etc. etc..

Panel is old, but everything works well, including the Cessna 300 autopilot with STEC vnav module. KLN94 gps, kx155 radios, DME, ADF, PSeng 1000 audio panel, stormscope. Original paint and interior in good shape. Rosen visors. Wet wing 88 gal usable. Hard to overload.

Russ
 
Unless you live thousands of miles away, you'd be better off selling it yourself, unless you can handle a $5k hit, between his commission and the haggle

I've always been about to beat brokers up much more on price than a private party, I also hit broker far lower on my initial offer compared to a private party, add to that I want to know about the last owner and aircraft specific questions the broker can't answer anyway.
 
russe said:
Is there a separate part of the site for that?
Click to expand...

Yup.... Classifieds section.....

Once you have a few more on your post count, you can include images and hyperlinks.
 
russe said:
Is there a separate part of the site for that? Anyway, a few details:

Low total time, around 2000 hours. 930 hours on the IO470. I've put 300 hours on it over the last three years and have taken good care of it. Prop resealed, new alternator, new vacuum pump, new control rods and cables, all corrosion areas cleaned up, new tires, etc. etc..

Panel is old, but everything works well, including the Cessna 300 autopilot with STEC vnav module. KLN94 gps, kx155 radios, DME, ADF, PSeng 1000 audio panel, stormscope. Original paint and interior in good shape. Rosen visors. Wet wing 88 gal usable. Hard to overload.

Russ
Click to expand...

Price?
 
russe said:
I'll send you a private message
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You're going to generate more interest in the airplane if you publicly advertise the price. "Hiding the ball" on pricing will turn a lot of people off almost immediately.
 
Place an add on barnstormers,can't go wrong for the money.be aware you will get a bunch of brokers trying to take your money. Post a few pictures and your price,I also post respond via e mail to limit the calls from brokers.
 
Exclusive listing. If you list it with a broker and sell it yourself during the listing, you have to pay his fee regardless. Most brokers won't take an open listing but that's all I would sign.

Claw back after expiration. Some contracts require that you not sell the plane XXX days after expiration of the listing. This is to discourage people from selling to an interested person right after the listing is expired to save the commission. Don't do it.

Storage fees. This one can be a killer. Some brokers don't give a **** if they ever sell a plane. They generate fees by selling you a storage fee at their location. It's usually about double the cost of most other parking places. If you pay him storage fee, make sure it's at the going rate for the location.

Ask about planes sold in the last 90 days. Being Sept, they should have a pretty good list of sales. Ask to contact a previous client.
 
russe said:
Anything to look out for in brokerage agreements?
Click to expand...

Some brokers have their own web sites, in addition to the paid services where they list the planes. This allows posting logbooks. If you scan your logbooks and the broker hosts them for buyers to look at, it greatly improves the buyer experience, and that helps you.

Here's an example from a broker (I am not recommending her, just indicating an example of a web page that's useful for buyers):
http://inventory.steelaviation.com/detail-new.cfm?aircraft=680
The ads on the paid sites can link to that page, so that buyers can find the logs etc.

If I were selling through a broker, I would insist on that.
 
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docmirror said:
Exclusive listing. If you list it with a broker and sell it yourself during the listing, you have to pay his fee regardless. Most brokers won't take an open listing but that's all I would sign.

Claw back after expiration. Some contracts require that you not sell the plane XXX days after expiration of the listing. This is to discourage people from selling to an interested person right after the listing is expired to save the commission. Don't do it.

Storage fees. This one can be a killer. Some brokers don't give a **** if they ever sell a plane. They generate fees by selling you a storage fee at their location. It's usually about double the cost of most other parking places. If you pay him storage fee, make sure it's at the going rate for the location.

Ask about planes sold in the last 90 days. Being Sept, they should have a pretty good list of sales. Ask to contact a previous client.
Click to expand...

Exclusive listings and claw backs are definitely things to be careful about.

I am 100% against exclusive listings. If I can sell it myself through my own contacts and efforts even while listed with a broker, I feel like I would not owe the broker a dime.

I do look at Claw backs a little differently though if the broker made the eventual buyer aware of the plane through his advertising and other efforts and even introduced the buyer to me through these efforts. Just because the sale was not completely consummated during the listing term does not mean the broker is not due at least some commission if not the whole amount.
 
I'm still saving up for my first airplane purchase, so there's not much I can add other than this:

Talk to a lawyer before signing any important contract. A good attorney will be able to help you avoid some of those "gotchas" and understand the agreement better.
 
The only way I'll list a plane is with an exclusive contract. No way is a Broker that invests his/her time and money in putting your plane on their website, paying for advertising(even with my volume discount's I still pay about $300 per listing per month), dealing with potential Buyers, showing your plane, handling negotiations and legal paper work on any offers, and converting all your logs and 150-200 pictures to PDF, no way will most reputable Brokers do anything but an exclusive contract. In whatever business your in would you do all of that work knowing you may not get paid anything?
A Broker will also guide the Seller on what a realistic market value is for their plane, some planes are higher demand and sell quicker than others, but without realistic pricing the phone won't ring.
Not everyone needs a Broker to sell their plane, but most Brokers will market it in front of a larger audience and get it sold quicker than a private sale, saving the Seller money on insurance, hanger fees, loan payments, maint., etc.
 
Agreed. I'll give you one buyers point of view. I just bought last October and there were enough for sale that I didn't bother calling the ones that said "call for price." The old adage "If you have to ask, you can't afford it comes to mind.". I may be off base but I felt if they didn't want to put the price out there it was going to be too high relatively. Again, just one buyer's point of view. YMMV. Sorry I can't add any value on the brokerage front as I am still on my first.
bradg33 said:
You're going to generate more interest in the airplane if you publicly advertise the price. "Hiding the ball" on pricing will turn a lot of people off almost immediately.
Click to expand...
 
If the broker was the first point of contact for the eventual buyer, the broker deserves his fee, whether the deal closes during the term of the agreement or immediately after.

As for selling via 'your own contacts': IF you had those great contacts, why did you have to hire a a broker in the first place ?
 
Thanks for the thoughts, Mark. I don't have a problem with the exclusive listing part. What is a customary time amount for the extension period? Some brokers want to get paid their commission if the plane sells for six months after the brokerage agreement ends. This seems like a long time to me, and I am wondering if this amount of time is to be expected.
 
What do you think is a normal claw back period? Thanks for the tips...
 
You realize you're asking a broker for advice -- about brokering, right? :idea:
 
If there is some gotcha, its probably about insurance. Also, can he authorize repairs? Test fly it? Demo it to a prospective buyer. If so how often? What if he starts flying it for himself? What if he crashes it or it breaks down at an away airport? Who is going to pay for the pre flight if it doesnt pass?
 
Russe,
The extension period in my contract is non existent, if I haven't sold it in the 180 days I have it as a listing, the Seller can sell it on day 181 without penalty from me. If I knew that a buyer held out on a side deal with the Seller to wait until my contract ended to avoid a sales commission, I wouldn't like it, but it is such a rare occurrence that I wouldn't lose sleep over it.
If a client is signing a listing with me and lets me know they have been advertising it for the last several months, and may have an interested buyer that hasn't made up their mind yet, I give them 30 days to close the deal on their own, without any commission to me. After that, all potential buyers need to be referred to me.
Coloradobluesky makes several valid points. For the very reasons he mentioned, I will not demo or taxi any listing myself, and I'll only allow an engine start with prior approval from the Seller. Also, the Seller is informed every time I show their plane.
When it comes time to do a demo flight, I hire a properly insured flight instructor, or have the Seller do the demo flight. Just a note, I allow prebuys and demo flights only after we have a purchase agreement hammered out and signed by both parties.
Hope this helps you out.
Mark
 
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