FIRST BUY AN EXPERT
It can be tempting for someone to consider handling an aircraft purchase or sale on their own. No one wants to spend money if he or she feels they have the resources to achieve the desired goal themselves. Perhaps they have a skilled aviation manager, or chief of maintenance, an excellent corporate lawyer or a business associate who has been down this road before. Consider, however, these people, no matter how skilled they are at what they do, have only gone through the aircraft purchase or sale process, once, twice, perhaps a few times in their lives. The aviation broker does it for a living, over and over again, under many different scenarios. Hiring a good broker is an insurance policy against making mistakes. In fact, it could be argued that an aircraft broker's #1 job is to prevent the client from making mistakes.
Today an aircraft broker is not just someone who puts a buyer and a seller together. Following is a list of some of the things, and by all means, not the only things a good aviation broker should be able to do for you:
• Even though considerable information is available on the internet, interpreting the information is critical. A reputable broker is following the market every day, knows and understands the market and can interpret trends.
• On the sell side a reputable broker will professionally photograph the aircraft, create a color brochure, utilize other marketing materials perhaps video, will utilize e-mail communication, print advertising and perhaps Facebook and Twitter.
• If purchasing an aircraft, an analysis of the client's aircraft utilization requirements should be made to determine appropriate aircraft models for their mission, whether to buy new or used, or supplement with fractional ownership or jet cards, for example. This process is useful even when the client believes they know exactly what they want. The analysis can serve to reinforce their decision or offer alternate choices that could be preferable. The ultimate goal is to have an informed client and to prevent costly disappointments. And part of this evaluation process is an exit strategy. Future market value and marketability should be part of the purchase equation. The value of an aircraft includes its life cycle: Purchase, Use, and Sale.
• With the above in mind, one of the most important functions a broker performs for either a buyer or a seller is establishing a price for an aircraft. Nothing exceeds good market knowledge for this process. Pricing an aircraft correctly is critical to the sale process. While the goal is to provide a seller with a good price for an aircraft, realistic pricing is required for an aircraft to sell. Conversely, understanding the market in a purchase transaction is even more critical in order to not overpay and get the best value.
• A reputable broker will go on site to physically examine an aircraft whether for sale or purchase. An examination of log books will be performed, maintenance status evaluated, service bulletins and airworthiness directives checked, cosmetics evaluated and equipment surveyed and enumerated.
• An aircraft broker typically negotiates the purchase or sale for the client together with the client's attorney. Market knowledge, technical knowledge and transactional experience are the tools for a successful transaction whether buying or selling, and this is especially true for international transactions. There are a host of considerations in an international transaction for which a good experienced broker can be of invaluable help. Regulations are different in other countries and an aircraft must meet FAA regulatory standards with regard to equipment and modifications if it is to be U.S. registered, and if being exported, there are the regulatory concerns of the foreign country. There are lien searches, de-registration and registration issues, and import and export requirements to be addressed.
• An experienced broker can greatly assist in the pre-purchase inspection, a process which is adversarial in nature because it involves issues for both the buyer and the seller. It determines the aircraft's condition and if it is as represented, what needs to be fixed and who is going to pay for the discrepancies found. Some brokers have in-house technical experts who will go on site for this important inspection to mitigate risk for their client. They will make sure the client is being protected from unnecessary expense, that only the scope of agreed upon inspection is being accomplished, and that no bill is presented for anything that has not been previously approved. If you are the buyer, you want all the discrepancies uncovered within the scope of the inspection. If you are the seller, you want to be sure you are not being held responsible and/or billed for something that should be for the buyer within the scope of the agreed upon inspection.
• A good broker can help to orchestrate a successful closing by coordinating with the various people and companies that may be involved in the transaction such as attorneys, an escrow agent, a like-kind exchange agent, tax people, an aviation manager, a chief pilot, a maintenance manager and financing banks.
Attempting to perform an acquisition or disposition on your own with the intent of saving the brokerage fee can be foolhardy. When this approach is chosen it typically costs the inexperienced aircraft purchaser or seller wasted time, motion and money. There can be missed opportunities, deals that go nowhere, higher legal fees, problems coping with the other side's employees or representatives, all of which can result in frustration, disappointment and most importantly money left on the table.