The salesman.

[John Baker]

Yesterday I got to thinking about just selling my plane to get out from under the expenses of owning one. I decided to call an aircraft broker to find out how much they charged for selling airplanes.

I got a nice friendly fellow on the phone, asked if they sold used aircraft and how much they charged to do it. He explained they charge eight per cent of the selling price, or a minimum of four thousand dollars. The seller has to also pay for any advertising or related costs as well.

He asked me what I had? I told him a very clean Warrior with slightly over 1500 hrs on the engine, and a little over 5,000 hrs on the airframe. He looks everything up and told me that the book says it's worth $27,000. tops. I told him I paid 47,000.00 for it and I fixed all the squawks it had. That it is clean and ready to fly.

He explained it was the market conditions, and by the time he took all his fees, I would get a little over $20,000.00 for it. Then he started briefing me how I must sell it today, or as quickly as possible, because the market will never come back and it will soon be worth nothing but scrap and what I could get for parts. I told him I own it free and clear and was under no pressure to get it sold. He said I better sell it now while I can still get such a good price for it.

I asked him if he had any warriors for sale now? He said no, but he had two very nice Cessna's. I said is that all, just two planes. He said he had some more, over priced pieces of junk, but that was it.

I asked him what he would charge to just broker the sale for me if I found my own buyer? He asked if I meant take care of the paper work. I said yes. He said that was no big deal, I could buy him dinner or just give him whatever I thought it was worth. He also told me how I can advertise it for free.

I thanked him for the information and hung up.

This fellow claimed to be a salesman, yet unless a plane in his inventory was priced low enough, he considered it an overpriced piece of junk.

I'm thinking what service does this fellow provide? He only wants give away prices for a easy sale. He advertises it for free, then will charge me for the advertising. He claims the paperwork is nothing

An old adage in sales is: "Any idiot can give it away."

Interesting business.

John

 

[alaskaflyer]

In the guy's defense, you will never get anything close to $47k for it.

That being said, while there are plenty of reasons why a buyer of real estate or expensive toys would want an agent, seldom are there good reasons for a seller to have one. IMO. YMMV.

 

[John Baker]

Years ago, I attempted to sell my sailboat, the one I had lived on for twelve years. I found that being emotionally involved and listening to potential buyers reasons for a lower price, was not a good idea. After kinda walking toward a fellow who had just badmouthed my boat, and him stepping backward enough to fall in the drink in December, I decided it was best to have a broker sell it.

I do not expect to get $47,000.00 or more for it, but I do expect to get more than twenty some odd thousand.

John

 

[jesse]

What is in the panel? Unless there is something amazing in the panel I'd be surprised to see you make it out of the 20s. Airplanes just aren't selling much and a Warrior with 1500 hours on the engine just isn't worth much.

 

[Trapper John]

The guy doesn't want to mess with it, unless he can get you to list it at a fire-sale price so he can bag his $4k commission fast.

As others have said, values are lower now, so you'll have to take quite a bit less than what you paid for it if you do sell. But I'd really hate to see you sell it before you pass your checkride and have a chance to fly wherever you want in your own plane.

 

[John Baker]

The guy doesn't want to mess with it, unless he can get you to list it at a fire-sale price so he can bag his $4k commission fast.

As others have said, values are lower now, so you'll have to take quite a bit less than what you paid for it if you do sell. But I'd really hate to see you sell it before you pass your checkride and have a chance to fly wherever you want in your own plane.

I couldn't agree more, it is frustrating for me, but my business is barely paying the bills. In August it needs an annual, my medical is due, and insurance is due. I have not been able to fly in almost a month, so I doubt if any check ride is on the horizon any time soon.

It is beginning to look like I am going to have to satisfy myself with a full log book and two sixty day sign offs.

That is the big problem with retail, you never know what lies ahead in just a few days. Anything can change. All I can do now is consider options.
Like I said in my first post, I was simply information gathering.

I know my enthusiasm for flying has definitely dwindled.

John

 

[Trapper John]

I couldn't agree more, it is frustrating for me, but my business is barely paying the bills. In August it needs an annual, my medical is due, and insurance is due. I have not been able to fly in almost a month, so I doubt if any check ride is on the horizon any time soon.

Surely there's someone around San Diego that's looking to fly a nice Warrior that you could partner up with, non-equity partner, whatever.

It is beginning to look like I am going to have to satisfy myself with a full log book and two sixty day sign offs.

That is the big problem with retail, you never know what lies ahead in just a few days. Anything can change.

Yep, anything can change. But you've got a plane, you're healthy enough to have a medical and you're this close to finishing. Not trying to lecture, but my dad used to say, "Money, energy and time are mutually exclusive" and the older I get, the more I think he was right.

 

[somorris]

John: I hate to see you give up on your dream but understand economic realities. What a bummer! Too bad you can't go to one of the intense focus finish up flight schools and just get your license finished. That might change your perspective.

Stacey

 

[BillTIZ]

.... He explained they charge eight per cent of the selling price, or a minimum of four thousand dollars. The seller has to also pay for any advertising or related costs as well. ...

hmm 8% straight commission (or$4K) plus sales cost.
Sounds like a cost plus contract, he could spend $3000 advertising your $30K airplane and you have to trust his invoices for the cost of advertising.

... maybe that's why all his has in his inventory are two cessnas and a lot of junk.

 

[Henning]

John, what the guy gave you was a reality check of what you are goiing to have to do to get rid of the plane. He is not incorrect. Can you get more? Probably, the thing is, how long will it take? You have carrying costs to deal with, so every month you have it, it becomes that much less return when it is sold. When you want a quick sale, you have to price it as such, and you do it right away. He's not lying about listing "Overpriced pieces of junk" either. There are so many unrealistic owners out there, his statement just reflects that. That's why he charges back advertising. The owners say "List my plane, I want $50,000 for it".. "But it's worth $27,000" "Just list it, someone will buy it." so rather than refuse because he will lose money on advertising it, he lists it, if the guy wants a TAP ad or any non free ad, he charges them what ever the rate is for the ad. I don't see him as a bad guy, just a realist, perhaps you need to wake up to this reality before it costs you another $10k in carrying cost especially if you aren't using the plane. Either that or find a busy school to stick it on leaseback.

He is also correct about doing it right away. People watch the market for deals. If you start high and then start coming down, the sharks will keep watching as you circle down waiting to see how low you'll go. If the plane comes on the market fresh at a price that represents a good value, the sharks attack right away because if they don't, someone else will. May even try eBay.

The thing is, how fast do you want the plane to sell. You never get repair money out of a plane, whatever you spent to fix squawks is part of operating cost. You overpaid for the plane if you payed $47,000 without having a Garmin stack plane with at least one 530w in it. You are going to lose money selling this plane, you have no options there. Put it to work, find partners, or sell it for what you can get quickly which will be <$30k.

 

[John Baker]

Henning, thanks. I agree that the guy is not a bad person, he is just in business to earn a living, like I am. My thoughts for a selling price were at 35K, just because it is a nice bird, doesn't burn much oil, about a quart every eight hours of run time.

Last month I asked my mechanic what he thought it would bring on a quick sale, he figured 35K, but then he fixes them, he doesn't sell them.

I haven't even decided what I want to do. Normally I fly once or twice a week, but the weather and my days off haven't been working together lately, so it's been almost a month. Mary, my assistant, took a week off to go up to Colorado, she got back yesterday. I threw my back out the day after she left, and I'm still all twisted, so I doubt if I will fly this week either.

Staying within 25 miles of my home airport was fun at first, but now it almost seems like I'm wasting gas. Don't get me wrong, I still enjoy flying, but the years of red tape have taken their tole on my passion for it. Once I'm in the cockpit, I'm fine and enjoy it. I'm starting to find it tedious to drive out to the airport and go through the preflight, get the weather and all, just to fly around the back hills or along the coast.

I know if I sell the bird, I will probably just call it quits rather than keep pouring money into trying to get that green piece of plastic. Therein lies my quandary about selling it at all.

From the books I've read, I originally did not think it would be such a huge deal to get a pilots license, perhaps at one time it wasn't, but now it is.

John

 

[weilke]

Is there any way to take a week off and get the license done with ? You have a capable training plane, with a dedicated instructor, you should be able to get this done pretty quickly.

 

[mantakos]

Arithmetically speaking, if I'm a salesman and my commission is "8% of the selling price, but no lower than $4000", then my commission is the same whether I sell the plane for $5k or $50k, but I make that commission a whole lot quicker for the lower selling price.

In other words, this commission provides no incentive for the salesman to seek a higher selling price.
-harry

 

[German guy]

Maybe you should get in contact with some other aircraft brokers? There should be a few in your area!?

 

[Henning]

Henning, thanks. I agree that the guy is not a bad person, he is just in business to earn a living, like I am. My thoughts for a selling price were at 35K, just because it is a nice bird, doesn't burn much oil, about a quart every eight hours of run time.

Last month I asked my mechanic what he thought it would bring on a quick sale, he figured 35K, but then he fixes them, he doesn't sell them.

I haven't even decided what I want to do. Normally I fly once or twice a week, but the weather and my days off haven't been working together lately, so it's been almost a month. Mary, my assistant, took a week off to go up to Colorado, she got back yesterday. I threw my back out the day after she left, and I'm still all twisted, so I doubt if I will fly this week either.

Staying within 25 miles of my home airport was fun at first, but now it almost seems like I'm wasting gas. Don't get me wrong, I still enjoy flying, but the years of red tape have taken their tole on my passion for it. Once I'm in the cockpit, I'm fine and enjoy it. I'm starting to find it tedious to drive out to the airport and go through the preflight, get the weather and all, just to fly around the back hills or along the coast.

I know if I sell the bird, I will probably just call it quits rather than keep pouring money into trying to get that green piece of plastic. Therein lies my quandary about selling it at all.

From the books I've read, I originally did not think it would be such a huge deal to get a pilots license, perhaps at one time it wasn't, but now it is.

John

Hey John, FWIW, here's what I'm seeing, you've lost a lot of interest and you're finding it difficult to justify aviation to yourself especially in a tightening economy, to that I say "fair enough". I'm not sure why this is taking you so long to get the license, but you just aren't dedicating the time and effort required, ("Once or twice" a week does not cut it unless they are 2 intensive sessions of about 4-6 hrs consisting of 2-1 hr flights or more. More optimal would be 4-5 lessons a week that take 1.5-2hrs plus sneak in a quick 20 minutes of pattern during lunch. That is the level of dedication required to learn to fly and the reason your progress is slow. Learning to fly is NOT easy and requires effort, hard work and sacrifice) and you are realizing that and questioning if you will have anytime in the foreseeable future the combination of time, energy and financial resources to actually make it happen, to that I say fair enough as well. The fact that you are willing to honestly address issues they may not have an answer you like though shows a trait that indicates you could be a good pilot. Can you sell the plane for $35,000? Maybe, but not next week. $27,000 will sell it next week. But it's not just taking a bath on the plane that bugs you, there's still a part of you that wants to continue flying even though it's an unreasonable decision.

I think you can sell 2 $10,000 shares though or 3 $7500 shares, if you put in a G-530w 2 $15,000 shares or 3 $11,500 shares if you wanted to recoup some equity, or take on a few non equity partners who pay an hourly rate for use. Most Business/Recreational insurance policies allow up to 5 pilots/partners before moving to a more complex/expensive policy. This does a couple things for you as it reduces your fixed cost out of pocket, and it keeps the plane flying which keeps down the maint and repair costs, as well as getting some money set back.

Also an option, contrary to the common horror story (because it is commonly true), there are leaseback arrangements that work and make the owner an actual return as well. Just remember, that every day that plane sits, not only is a day it costs you money for no return, it is also a day that it loses value. What you want is an agreement where they pay a fixed amount per hr and they are responsible for all operational expenses which will include maintenance, inspections, overhauls, insurance.... everything.

So do something before you get drug under by the plane because as it sits, it's going bad on you as well. Nothing worse on a machine than sitting. It's better to mercilessly flog it WFO than let it sit and rot.

I suggest you do one of the partnership routes depending on if you need equity back or not, to do it best though, you may want upgrade or promote the intention of upgrading, the panel.

BTW, you say you have 1500 hrs on the engine, what was the date of last overhaul Return to Service? Even if the engine is still good for another decade and possibly another 2000hrs, if it is over 12 years ago, for valuation purposes, it is a "runout" valued at core price. Even with 1500 in 7 years which would be the low end of optimum usage to keep things moving, you would not be far off the runout valuation.Engine overhaul has the highest residual percentage of recovery on sale of anything you can spend money on. You get the highest resale returns on engine work in desirability and cash return. If the engine is 1500 hrs and 7 years old, I would figure my engine reserve to pay at 3000hrs or 15 yrs old. A Warrior that flies a lot is easily run to that on condition. It's a gamble, yeah... If it was 1500 and 20 years old, I would go ahead and do a field overhaul locally while most parts will withstand inspection and freshen the engine up before it gets damaged. You should be able to do an overhaul around $12,000. You can then sell shares with a relatively low time airframe, "0" SMOH engine. You can also first find interested partners and offer a scale of condition and price options. You select those that chose the condition and price option level you are comfortable with as well. At least you're all starting off on the same page. If you manage a 5 way partnership (lots of guys like you around BTW), you can afford to do a full resto on it without it breaking anyone's bank.

 

[Capt. Geoffrey Thorpe]

I think you can sell 2 $10,000 shares though or 3 $7500 shares, if you put in a G-530w 2 $15,000 shares or 3 $11,500 shares if you wanted to recoup some equity, or take on a few non equity partners who pay an hourly rate for use. Most Business/Recreational insurance policies allow up to 5 pilots/partners before moving to a more complex/expensive policy. This does a couple things for you as it reduces your fixed cost out of pocket, and it keeps the plane flying which keeps down the maint and repair costs, as well as getting some money set back.

Bingo.

Look on Barnstormers to see what the asking price is on similar aircraft.

For $20 there is a non-zero chance that you can find someone who wants to buy in which will make a huge reduction in the financial pressure.