Buy a Plane, need some advice

Discussion in 'Flight Following' started by Utah-Jay, Jul 29, 2020.

  1. Utah-Jay

    Utah-Jay Pre-takeoff checklist

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    I am in need of some advice as we are going to put an offer on a plane and it is our first time.

    Cars, no problem

    Houses, no problem

    A plane is a different deal, so looking for a baseline on how to start a negotiation for a plane.

    Asking is just over $300K, it is the perfect plane for us. It is only 2 1/2 years old with 400 hours. It has all the bells and whistles we would look for if ordering a new plane.

    So the major question is, what is the norm in aircraft sales for purchase price relative to asking price? Is there a general percentage? We know the seller is willing to deal a bit as he has mentioned it twice.

    Would an offer of $275K be out of line?

    Thanks in advance for your help
     
  2. Bell206

    Bell206 En-Route

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    FWIW: to answer this post and your prebuy post, while everyone has their own route to buying an aircraft, I always recommend to first decide who will be maintaining that aircraft for you. Then if at all possible see if they can perform the prebuy for you. If not at least keep your APIA involved in the process as when it comes time for your first annual inspection it's your mechanic that will give the bill to fix all the items your prebuy mechanic missed. As to what is a fair price to offer, whatever the market will support or you're willing to pay. There are a number of threads on PoA that offer some prime advice on this topic. Good luck.
     
  3. MooneyDriver78

    MooneyDriver78 En-Route

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    I don’t think it’s an insult. What I did was give reasons for lower price (any defects you found during test flight, disagree with condition of paint or interior), I found if you give a reason they are much more likely to accept your offer, as oppose to just trying to lowball them.
     
  4. Utah-Jay

    Utah-Jay Pre-takeoff checklist

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    That makes 100% sense, but prior to a pre-buy inspection this plane is pristine. I just don’t know if plane sellers build in a negotiation hedge in the asking price the way most home sellers tend to do
     
  5. NordicDave

    NordicDave Pattern Altitude PoA Supporter

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    Get a type expert for a pre-buy inspection. It's reasonable to make an offer and final determination depends on what the pre-buy reports. Meaning it's OK, and not considered poor form, to reopen negotiations following the pre-buy inspection. Buying a plane is more akin to buying a house than a car or anything else. Buying a plane does or should include a sales agreement with the completion of the process occurring in a escrow account. The sales agreement can have opt-out terms like suitable financing or condition. Similar to a home.

    We tend to negotiate a home's value based on seller representation and our knowledge of market, but inspection outcomes may drive a redress.
     
    Last edited: Jul 29, 2020
  6. cgrab

    cgrab Pattern Altitude

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    I'm selling my plane, I went through a thorough Vref assessment and did the add and subtract where there was no Vref like a new Icom radio. I want to sell it so I advertised a few $k less than the Vref came up with. If someone wants to offer me less, I will show them my calculations. I expect to get what I ask. You may want to ask them how they came up with the asking price.
     
  7. ktup-flyer

    ktup-flyer En-Route

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    Usually, yes. We don't know what you're buying... $300k could be a fair price, and $275k could be a low ball. Run a Vref on it and compare with similar aircraft on the market.
     
  8. mondtster

    mondtster En-Route

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    Some do, some don't. My advice to people applies to anything you want to buy (not just airplanes); determine what the item is worth to you and offer that. The seller will say no, counter or accept.

    I'd make your offer assuming that the airplane is as advertised. If it is not, the prebuy inspection should uncover the items that are not as advertised and negotiations can then be opened to determine how to address those problems.
     
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  9. Utah-Jay

    Utah-Jay Pre-takeoff checklist

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  10. Adam Weiss

    Adam Weiss Pre-takeoff checklist

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    ^This.
    How do you buy a house or used car?
    Look at comps.
    That's the single best thing to give you an idea of where the market is for that specific model today.
    Then you do the +/- for equipment, condition, etc.

    If the market is around $275K for this plane, then offering $275K is just fine (and probably a bit high if you expect to negotiate to $275K).
     
  11. MooneyDriver78

    MooneyDriver78 En-Route

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    If you wait a few months, then the price they might accept should get lower. But I see a lot of nice planes get snatched up before this happens. Like others have said, what’s it worth to you.
     
  12. Utah-Jay

    Utah-Jay Pre-takeoff checklist

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    We don’t know that selling prices, the only prices we can find are the asking prices prior to purchase, the asking price on this plane is certainly in line with other asking prices
     
  13. mondtster

    mondtster En-Route

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    Unless the airplane is worth significantly more than what the asking price is, I'd say you have time to determine the actual value of a $300k airplane. Even in this market the number of people that are able to simply write a check for that kind of money and are also shopping for a similar airplane are going to be few and far between. If all the comparable airplanes are at comparable prices, and they're periodically selling, it is probably worth close to the asking price.
     
  14. Utah-Jay

    Utah-Jay Pre-takeoff checklist

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    Vref said $282K at “retail”
     
  15. Ed Haywood

    Ed Haywood Pre-takeoff checklist

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    Most experienced sellers add a little extra to their bottom line price, unless they are anxious to sell quickly. That goes for houses, cars, boats, planes, etc. I like to offer 10% below, and expect to get countered at 5%, which I usually accept. In your case that would be an offer of $270K and a counter of $285K, right at VREF.

    One personal story: when I was a young guy I wanted to buy an Aeronca Champ. I was in the Army and didn't have squat for money, but I found a really nice one being sold by a retired airline pilot. This thing was immaculate, a collector's item in factory original paint scheme. He was asking $20K. I offered 16 and he countered with 18. Neither of use would budge, and he sold to someone else a few days later. To this day I shake my head at how stupid I was to let that beautiful plane slip through my fingers over $2,000.

    Lesson of the story: don't let the process distract you from the goal.

    43548.JPG
     
    Last edited: Jul 29, 2020
  16. GRG55

    GRG55 Final Approach

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    This plane isn't old enough to have had many modifications (if any) since it was built. And seems from this comment above there are other airplanes of similar vintage and equipment for sale for comparison.
    Vref is a good indicator. You might also start with the original price new and factor in depreciation for hours and condition as a comparison.

    At the end of the day the only price that matters is what a willing buyer and willing seller agree on.
     
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  17. Tom-D

    Tom-D Taxi to Parking

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    Not really, any aircraft is only worth what you are willing to pay for it.
     
  18. schmookeeg

    schmookeeg Administrator Management Council Member PoA Supporter

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    1. The purchase price is such a small part of your overall plane ownership expenses, yet it seems to draw 80% of the hand-wringing. I'm the same way. It's not rational.

    2. You asked for a generalization about ask vs. sale price. In my experience, taken as a whole, actual sale prices seem to discount list somewhere around 10-15%. I don't think your offer was out of line at all.
     
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