How to price for a runout engine?

simtech

simtech

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Simtech
I found a Bo locally that has nice paint, good interior, and fair ifr avionics. The guy will not take less than 45k at all. The engine is 1000smoh and barely flies an hour a year for the past 5 years or longer. It is a 1500 hr engine. So it got me thinking if I could price it lower and and get a new engine.

On this forum I see people say price it as a run out engine. How do you do that? I mean you can't deduct the cost of a new engine from the asking price cause people would have to give the plane away. So as the title says how do you price a plane for a run out engine?
 
If the seller won't take less than 45k what difference does it make...the price is 45k. Either you pay or you walk. On the other hand if he's asking 45k you just tell him that because it's sat basically unused for so long you believe it's going to need an overhaul, and your offer of "x" say 35k represents that further depreciation. Either he accepts, counters, or walks away.
 
Not so much worried about this plane but rather future planes. Most planes that are for sale have sat a long time or are right at overhaul time. So the question is actually just a general one and I just back filled with what happened.
 
I wouldn't be scared of an engine that didn't fly much, but I would figure the cost of an overhaul installed and ASSUME that is what you'd have in the plane 30 days after you bought it. How does the deal look now? You are looking at $25K+ to install a reman engine, depending on which engine it has in it. Would you pay $70K for the airplane IF it had a fresh engine??:dunno:
With used airplanes you are taking a chance on the engine regardless of when it was overhauled, it may last 1500 more hours or 15. ;)
One issue with a lot of airplanes that are for sale, is people wait until they are sure they aren't going to fly any more before the list them for sale. Then it sometimes takes a year or more to decide the sell it for what it's worth, so they have sat for 2-3 years without much use. :mad2:
 
look for ads of planes similar to this one with engines hours at TBO or go on line to one of the estimators and just put in the engine hours at 1500 and you will get a price based on a run out engine.

SMOH Engine avg 750 hours. Effect on valuation= $20.00/hour for every hour plus/minus 750. In your case subtract $15k from the average price.
 
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Another way to look at it is it's a Bo with possibly 500 or more hours in it for $45K, which doesn't sound too bad.
 
I would steer far clear of any airplane that was not used much in the past several years. I would rather buy one that flies regular and is at TBO than one that is 500 hours away and not flown regular. Nothing mechanical likes to sit!

As for price, I generally look at what people are asking for similar airplanes with low time engines and deduct the predicted overhaul cost from that and go from there. If there is still time left on the engine, divide the overhaul cost by the tbo time and figure out how much money is left in that engine.
 
I have a friend with a very well maintained tri-pacer. The engine is a few hundred hours over TBO. A new engine is 18-20K. You can buy a midlife tri-pacer for 22-25K so what is his plane really worth? 5K maybe. Crazy things these planes.
 
If a midlife tri-pacer of similar equipment and quality is going for 22-25k then I would pay no more than 16-19k. That's assuming it has an 0-320 that could be overhauled for about 12k.
 
gov98 said:
If the seller won't take less than 45k what difference does it make...the price is 45k. Either you pay or you walk. On the other hand if he's asking 45k you just tell him that because it's sat basically unused for so long you believe it's going to need an overhaul, and your offer of "x" say 35k represents that further depreciation. Either he accepts, counters, or walks away.
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The flaw in your thinking is that the $45k already takes into consideration that it is not a new engine. So you wouldn't deduct the cost of a new engine from the asking price. Instead consider what the plane would cost if it already had a new engine? For example, if it had a new engine, they might be asking $70k (just an example). Subtract the cost of a new engine from that number.
 
simtech said:
I found a Bo locally that has nice paint, good interior, and fair ifr avionics. The guy will not take less than 45k at all. The engine is 1000smoh and barely flies an hour a year for the past 5 years or longer. It is a 1500 hr engine. So it got me thinking if I could price it lower and and get a new engine.

On this forum I see people say price it as a run out engine. How do you do that? I mean you can't deduct the cost of a new engine from the asking price cause people would have to give the plane away. So as the title says how do you price a plane for a run out engine?
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It sounds like he already has it priced as correct for a run out engine. Comp it in the market. The engine value is around $27,000.
 
What year Bo? Lotta different engines used over the years.
 
I swear its like people here have never bought anything before, wish I knew you guys when I was selling cars back in college.

If he's asking 45, price the market and offer him less then the market and go from there, If he's asking 45 off the cuff in would hit him at 35 and see his reaction.

I've never paid asking price, just the principle of the matter.
 
^^^^^^EVERYTHING is negotiable. The worst he can say is no, or counter if he has some flexibility. Develop a strike price, and go from there. Walk if you can't get to that price.
 
LDJones said:
Another way to look at it is it's a Bo with possibly 500 or more hours in it for $45K, which doesn't sound too bad.
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I think that's awfully optimistic for an engine that has sat with fluids in it.
 
James331 said:
I swear its like people here have never bought anything before, wish I knew you guys when I was selling cars back in college.

If he's asking 45, price the market and offer him less then the market and go from there, If he's asking 45 off the cuff in would hit him at 35 and see his reaction.

I've never paid asking price, just the principle of the matter.
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hey dont worry...the asking price was not 45k it was over 50k when I first talked with him. Geez..... I negotiate everything and I aint afraid to walk trust me!
 
docmirror said:
What year Bo? Lotta different engines used over the years.
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1960 M35.

I'll be honest I'm not digging this plane. I talked with the guy a few months ago and went and saw the plane. We talked price and I talked with the mechanic. I decided right there I didn't want it. So today I was looking through some notes and saw where I talked with this guy and thought...hmm...maybe...Nah...Which prompted the runout value question. The guy still has it too..
 
simtech said:
I found a Bo locally that has nice paint, good interior, and fair ifr avionics. The guy will not take less than 45k at all. The engine is 1000smoh and barely flies an hour a year for the past 5 years or longer. It is a 1500 hr engine. So it got me thinking if I could price it lower and and get a new engine.

On this forum I see people say price it as a run out engine. How do you do that? I mean you can't deduct the cost of a new engine from the asking price cause people would have to give the plane away. So as the title says how do you price a plane for a run out engine?
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Has it sat out? Who annualed it? What exact engine ? How much total time on engine? What's it look like? Interior? AF total time? Prop history. ? Instruments? If you get the engine removed, overhauled correctly , reinstalled for 27 grand you'd be very fortunate. Be sure and have someone independent, who knows the type airplane, go over it carefully before you whip wallet out.
 
OK. IO-470-C. A pretty common engine, used in other planes. Although the TBO is 1500, the bottom end on that engine will go way past that. You'll be buying a jug or two in the next few years, but most of these cases make TBO easy, and beyond in many cases.

As for the run-out value, I would say $4-6k, but - that engine is not run out.

As for the price for the plane, if the paint and int are good, and the engine is at 1000 hours, I don't see a problem with that price. Lotta plane for the money.
 
A lot depends on who flew it and how they flew it. 1000 hours could be fine or it could be near the end. No one knows that......so far.
 
On my notes I see where I wrote 1000 hours in 20 years. The mechanic said the last few annuals the plane had like 1 or 2 hours on it between annual. Its nice looking for sure but yeah that sitting engine is what I dont like. So I know its been 20 years since last overhaul.
 
You still have a good chunk of pre TBO time on that engine, and for pt91 you dont need to abide by TBO.

Have a good pre buy done after settling on a good baseline price.

Good compression test and an a oil analysis would be a smart start, might have a few seals that need to be replaced.

If she was kept in a hangar and the pre buy goes well, and ofcourse the price is right, why not?

The sitting airplane thing is not as bad as some folks would like you to think.

My plane has just hung out in the hangar for decent chunks of time while I was busy flying for work. In my experence my annuals are always fine, compression tests always 77 and over. Of course my plane is awsome ;) YMMV.
 
docmirror said:
As for the price for the plane, if the paint and int are good, and the engine is at 1000 hours, I don't see a problem with that price. Lotta plane for the money.
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How do paint and interior make a plane airworthy? I've sent a few of those back to the seller. Old whore in a new dress is something I wouldn't advise my customer to buy.
 
Cpt_Kirk said:
I think that's awfully optimistic for an engine that has sat with fluids in it.
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Agreed...especially in Mississippi! Just a tad humid down there. And those fluids may well be remnants of Katrina. :rofl:

I don't understand the nonchalant attitude towards an engine that's only flown 5 hours in 5 years in the humid SE.

I would price it as run out. You might get lucky but I wouldn't bet on it.
 
Price of zero time engine - cost of overhaul = value of runout engine.
 
Norman said:
How do paint and interior make a plane airworthy? I've sent a few of those back to the seller. Old whore in a new dress is something I wouldn't advise my customer to buy.
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Fine with me - don't.
 
A runout engine is worth its core value. Not much, considering you also have to R&R.


Plus, while you're in there, all sorts of other components will need replacement.
 
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