Whats the value of my plane?
Determining the Value of your plane:
Hello, Jake Huling here with Aircraft Sales Advisor. I’d like to welcome you to the second report in a new series called, 9 Steps to a Successful Sale or Purchase of Your Plane.
In the last report we discussed the top complaints and frustrations that I hear from clients, customers, and new contacts all the time about the industry. We also talked about the industry's reputation and why that is sad because it really doesn't have to be that way. I told you about my approach, and why it’s different than what you've probably seen out there.
We also talked about commission rates and whether or not you could expect a standard commission in the industry. And the benefits and disadvantages of both using a broker and buying and selling a plane yourself.
In this second report I promised you we would go over how the industry determines the fair market value of a plane that you are looking to sell or buy, and what information you will need in order to do that. There are four important sources of information needed to get an accurate valuation of a plane and determine its value. So let’s take a closer look.
Blue Book Appraisal:
You've probably heard of this one. This like when you go to buy a car, and the dealer has that Blue Book in his back pocket that you never get to look at it. Well I am going to tell you what it says, and how to use that information to your advantage.
An appraisal should be unique to each aircraft, with each plane's specific spec sheet information being used. We’re going to cover the spec sheet, what should be on it, and how to get that information, in one of the upcoming video reports in this series.
The reason you’ll want that information is so you end up with a more accurate appraisal than one that uses only general information, like year, make, and model. This information should include all upgrades, engine times, maintenance programs if any, and airframe times.
That’s another topic we're going to cover in one of the upcoming reports in this series, Understanding theValue of Aircraft Upgrades in both cost and desirability. Two very different things; one is how much it costs to add a particular modification to the plane, and two is how popular that extra is and whether or not it holds its value.
Listen to this next part very carefully; a Blue Book Appraisal will still only give you a general idea of the value of a plane. What really matters is what the market is doing.
And a word of caution: Don’t let anyone tell you what a plane is worth, or is not worth, or any specific amount based only on the Blue Book Appraisal. The numbers in an appraisal can be manipulated or simply changed to show any amount. This should only be one part of the information used to determine an accurate value of a plane. So let’s go over those different sources of information.
The Monthly Market Overview:
This is a report I created in response to a number of common questions that I am regularly asked about the status of the overall market. It covers several areas including the number of planes in the fleet, how many are for sale, and what the average asking prices are. It also takes a look at what the trends are showing over the last 6 month period. Whether they are up or down in both total number of planes for sale, and the average asking price.
It also covers the average number of days on the market before a plane sells. This one is important to help you have accurate expectations. This report is really designed to give you an overall look at what’s happening in the particular market that you’re interested in. If you would like to take a look at one of the reports, you can send me an email with the plane you are interested in.
Now, I specialize in the King Air Market but I can get you a report on a different plane if requested. There is just no way I can cover every plane in existence and still be effective. But I do help clients and customers all the time who are, for example, selling a different plane and moving up into the King Air, or are selling a King Air and maybe moving into a Jet.
So if you have a different plane and you’re interested in taking a look at that report, just let me know.
Let’s take a quick look at what I call, Buying Paths:
I also cover these in my Monthly Market Report. Buying paths are especially important when you’re selling a plane. A buying path will identify who most commonly buys your particular type of plane, or more specifically, what they usually upgrade from.
This is valuable information because now rather than just mass marketing, we have identified potential buyers who might actually be interested in seeing your plane, and what you have to offer.
But let me get back to the purpose of this particular report, which is determining the value of a plane.
The third factor in determining the value of your plane is our market survey. Your competition is going to be the year of your plane, one year above, and one year below. The reason for this is because of the overlap in asking prices, so we need to look at a three year range.
It’s also important to know that when a plane is listed, the listing price is often times not the actual amount the owner is willing to accept. In order to know the price the market is actually holding, a call is made to each owner or representative. It’s also a good opportunity at that time to ask about any offers they may have turned down and if so, how much they were for.
One mistake that’s important to avoid is trying to determine the value of a plane based on what’s currently for sale in the market. Listing prices are often times just what someone hopes to get for their plane and not what they would actually take or ever get as an actual price.
And here’s something you may not know, if you are selling did you know your competition is going to be the year of your plane, one year above, and one year below? This is because of an overlap in pricing between years. So the planes that are a year newer than yours may have some aircraft priced lower and the years below your plane may have some that stand out with low time and nice features that will compete with your plane, maybe for a little less.
And of course when you’re buying it’s also a good idea to take look at the years above and below for the very same reasons. Be careful with getting caught up on a year; you might find a really good value if you expand the years of your search.
Recently sold planes:
This one is of extra importance; these are actual sales that have taken place, preferably within the last six months. You should find at least three planes that are as close to the same year, same total time, and same equipment as yours. These are real world sales and they should match up fairly closely with your other estimates, if they don’t, something is off.
Now this amount can be a little higher or lower than what your other estimates are showing, and should be used to make final adjustments to the asking price of your plane, or to any offer you intend to make on a plane you’d like to buy. These reports combined will give you a complete overview of the market and allow you to determine an accurate value of a plane.
I told you in this report we would go over commission rates, what they should and should not be, but we are out of time. So a commercial for the next video report. Where we will go over the different ways you can bring a plane to market, the margin differences between Wholesale and Retail, and what that means to you. How to go about the search for your next plane, and the different types of buyers and sellers.
And I will make sure to cover not only the commission rates, what they should and should not be, but I’ll add to that and go over the different types of percentage based commissions, how to choose the right one if you go that route, and how to get the most out of them.
So that’s the next report, thank you so much for joining me on this second step in my newest series of reports called, 9 Steps to a Successful Sale or Purchase of your plane.
This is Jake Huling with Aircraft Sales Advisor, I look forward to seeing you on the next one where we find out if I can fit all of that into one report.