Vref, market prices, trade-in value...aarrgh!

drhunt

Pre-takeoff checklist
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Moose Air
Where are the "real prices" in the market? I'm considering an upgrade which would mean parting with my first aircraft. After some initial discussions with a few dealers and looking at Vref and current asking market prices I'm seeing huge gaps between what sellers are asking and likely transaction prices.

I'm seeing nearly 40% between Vref and quoted trade-in value for my aircraft. Vref seems to be at the high side of current asking prices. A few dealer estimates of net settled price are about 20-30% below average asking price (my analysis). For those of you who've bought and sold many times, what are your insights?

Yeah, I know...buy low, sell high:)
 
Well Vref tends to be high, but not that high. There are so many variables, especially in avionics, engine time, type of overhaul, etc. The valuation tool in Trade a Plane seems to be more realistic. If you're a member you can go to their website and plug in the variables. When I sold my Cherokee to buy the Tiger, I used both Vref and the TAP tool. I also looked in TAP for similar aircraft with similar equipment and got a general ideas of the competition for selling my plane. Your lender, if you have one, should also be able to give you the bluebook value. Good luck.
 
David:

I've been in the market off and on for the last year. Vref has consistently been high. The Trade a plane evaluator has been much closer. There is also blue book which I have access to. Please consider that if you go to a dealer, they have to make money on your old plane just like when you trade in a car. There's a retail market value, a wholesale value (more like dealer price) and a liquidation value a lender may consider if they have to take the asset back and want to be sure they don't lose money.

If you purchase retail and sell wholesale that can lead to the kind of differences you're mentioning. You have to determine if it's worth your time and trouble to market the plane yourself; list it with a broker or sell it to a dealer.

I have passed on many aircraft because they just weren't priced reasonably in light of the above. I really hate to pay retail, so, have to shop harder.

Best,

Dave
A-36TN ADS
 
The last two planes I've sold I've gotten fairly close to vref valuation
for them. I'd say vref price is probably a fair asking price with the expectation
you'll end up between it and TAP valuation price.
 
Dave,

Thanks. I am aware of the retail, wholesale, trade-in values,etc...I just think a 40% gap is a bit wide between Vref and trade-in value. TAP evaluator and Vref are actually within a few thousand on my plane so the bigger issue is probably selling as an individual versus using a dealer. I think dealers may quote expected (gross) transaction prices that they could achieve more quickly (during the sales contract period) rather than prices that you might get if you are a bit more patient. I have no loan and am in no rush so I think I've quickly eliminated trade-in from consideration.
 
drhunt said:
Dave,

Thanks. I am aware of the retail, wholesale, trade-in values,etc...I just think a 40% gap is a bit wide between Vref and trade-in value. TAP evaluator and Vref are actually within a few thousand on my plane so the bigger issue is probably selling as an individual versus using a dealer. I think dealers may quote expected (gross) transaction prices that they could achieve more quickly (during the sales contract period) rather than prices that you might get if you are a bit more patient. I have no loan and am in no rush so I think I've quickly eliminated trade-in from consideration.

David:

Sounds like you're thinking through it real well. Pricing can be quite a bit different for different planes; sounds like you know how yours is affected. I've found Baron pricing to be quite a bit off.

Good luck. Hope you get something reasonable worked out.

Best,

Dave
A-36TN ADS
 
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