Three Things About the Used Aircraft Market You Need to Know.
Hello Jake Huling here with Aircraft Sales Advisor. I’d like to welcome you to the seventh video report in a new series called, 9 Steps to a Successful Sale or Purchase of Your Plane.
In the last report we covered Setting Aircraft Budgets, realistic expectations, and the three most common mistakes sellers and buyers make in that area. In addition to that, we talked about the importance of keeping your eye on the trade difference, when both selling and buying a plane. And I explained to you what in the world a build plane was?
In today’s report we’re going to look at the used aircraft market, and I am going to show you three important pieces of information you'll need to know in order to determine an accurate value of your current plane, and to find out what your next plane will actually cost. This information combined will give you what you need to know, in order to determine an accurate value of your current plane, and to know what you should really be paying for your next plane.
So let’s get right to it.
First let’s start by taking a look at advertised aircraft, because this is really where most people will start their search.
These are planes that anyone can find because they're advertised on many of the popular listing sites like Controller. And these are the same Aircraft Listing Sites that I covered in the last report, when we looked at some of the common mistakes buyers and sellers make when looking at aircraft on these sites.
Now, the planes you'll find on these sites are listed by both brokers and owners and there’s a few things we can learn from the information that’s available to us on these sites.
· The first thing we can do is get an idea of how many planes are for sale in a particular fleet, like a King Air B200 for example. Then we can narrow down the range of years, so if you were looking at buying or selling a 2005 model, you should look at the planes one year above and one year below to see what kind of selection there is or how much competition you have.
And let me give you a quick word about competition.
If you're buying, competition is a good thing because you have a lot of choices and a better chance to negotiate a lower price.
However, if you are selling a lot of competition means, well you have a lot of competition. And you're going to have to really make sure your plane stands out from all the others in order to get it noticed. It’s also important when there’s a lot of competition that you highlight and sell your plane based on key features and quality, so that you can get a higher sale price. You don't want to get caught up in a price war about whose plane is cheaper.
But here’s the thing, you have to know why your plane is better and also why the computation's is not. You have to know the market, that’s what this is all about. You can't just say my plane is the best one out there, or still looks wonderful, or is in great condition because we always do whatever maintenance is needed. Because I can tell you that everyone says that and your plane won't stand out using this approach.
· The second thing you can find out on these popular listing sites is a general range of asking prices. Now, it’s important to remember, and we covered this in the last report, the asking prices that you see are almost never what the market will actually support or what sellers will actually take for their planes.
In order to find out what the owners would actually sell their plane for, you need to start calling every broker and owner on your list. And if you're going to sell or buy on your own, this is where the real work begins.
You have to find out what the owners will really take for their plane. And if you can, find out what offers, if any, they've received and turned down. This is needed in order to start understanding what’s going on in the market for a particular fleet. And you need to get this information for at least three planes to confirm your information.
And I can tell you, a lot of people don't like this part and I can understand why. It takes a lot of time and it’s honestly not much fun. In addition to that, you need to also be a good negotiator because this is a critical piece of the information you need to gather in order to establish an accurate value for your plane, or find out what you should really be paying for your next one.
Next let’s take a look at Unlisted and Off Market Planes.
These two types of planes will affect you when you are both selling and buying. And the reason you don't want to ignore these types of planes is because they're not known to the general public.
Why is that important? Well, if you're selling, it’s important because these planes are part of your competition. If a potential buyer has a broker, and that broker is doing a good job, they will provide their client with a list of off-market and unadvertised planes. In fact, a good broker will check with all of the owners in a particular fleet within the range of years the buyer is interested in, who don’t have their pane listed as "For Sale," to see if they can find an owner, or owners, who would work directly with them and sell their plane off-market.
This could also be one of the reasons you're not selling your plane. Because even if your plane is priced well compared to the other listed planes, you might be losing out to the off-market planes, and the competition you didn't even know you had.
And if you're buying, the reason Unlisted and Off Market planes is important to you is for exactly the same reason. If you have the option to work with off-market planes when buying, you or your broker get to work directly with the owner instead of through an additional broker. And as we talked about in the last report, that can make the process faster, less expensive, and give you a better selection. I often find the best planes to be Off-Market. And I think you would agree, saving money, time, and getting a better selection, in order to get the best plane available for you are all very good things.
The third and final piece of important information on our list today is recently sold plane prices.
This is a tough one, because you need to know what planes recently sold that were similar to yours, or the one you are wanting to buy in range of years, total time, and equipment, and you also need to know who bought and sold the planes.
And you’ll need to contact one, or possibly both sides of each sale, to see if they will share with you what the sale or purchase price of that particular plane was. And you need to find this information out for at least three planes, that again, are similar to yours in year, equipment, and TT on the engines and airframe in order for this part to work. And if you haven't been tracking the market it could be very difficult to gather this contact information. You may need to work with a broker, at least on a limited basis, to gather this information. And even then not all brokers track the sold information on planes.
Now, this is an important step so don't skip this one! You will need this information in order to accurately determine what the market is doing and the level of pricing it’s supporting. And you need to know that when you're both selling and buying a plane.
And lastly let me leave you with this.
Gathering together all three pieces of information can be a real pain, I know. But the return on this investment is worth it!
If you are selling it will give you confidence to know what your plane is worth, and to know what offer you should take and what offers you should pass on.
And if you are buying it will do the same thing, giving you confidence to know what offers to make and when to pass on a plane because the price is too high. You won't be affected by the brokers telling you to buy quickly because this is the best plane out there and someone else will get it if you don't act quickly. You'll know what’s out there and whether it’s a good price, or if it’s one to pass on.
So leave the guesswork out of it, make the commitment and take the time to gather this important information. And hear me on this part, if you don't have the time to make this commitment, or don't like the idea of making all the calls, or you aren't good at negotiating, find a broker who is honest, has the information you need or will get it, and who you can work with. Because the truth is some people just don't get along, and you really need to work together as a team on this, in order to have complete success.
You don't just want your plane to be sold, or to purchase a replacement. You want your plane sold for the top of what the market will support, and you want your replacement to be the best plane in the world for you.
In my next report, we’re going to cover the information you'll need to gather and have ready,for the sale of your plane, and what you need to know about the Pre-Purchase Inspection when both selling and buying.
So that’s it for this report, thank you so much for joining me on this 7th 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, and I do look forward to seeing you on the next one.