TIPS FOR
SELLING YOUR AIRCRAFT
Tip 1:
Choose Proper Representation
An experienced broker knows how to navigate the intricacies of the buying and selling process. We can recommend legal counsel, tax professionals, and trust companies that will help insulate you from potential pitfalls. We provide marketing in multiple media outlets that connect with the largest possible buying audience to showcase your aircraft. We engage professional photography and aircraft cleaning services to ensure your aircraft makes the best possible impression on buyers. If privacy is a concern or your company has strict public relations policies, we ensure the transaction is private with a discrete closing.
Tip 2:
Obtain an Aircraft Appraisal and Set a Realistic Asking Price
Establishing an accurate value of your aircraft is more complicated than looking at vREF. It involves experience, market research, and a fundamental understanding of the market and condition of the aircraft. Your airplane is only worth what the market will pay for it. A good broker will help you set realistic expectations of when it is going to sell and for how much, and know what potential hurdles stand in the way. Once you and your broker have gone over the current market and a review of your aircraft and its potential value and/or challenges, a typical starting ask price should be clearly discussed. Let us know if you’re motivated to sell the aircraft swiftly or have time to wait for the right buyer at the right price.
Tip 3:
Prepare for the Pre-purchase Inspection
Pre-purchase inspection is the most important, complex and invasive part of the sales process. Some pre-purchase inspections go smoothly, and some can be complex with issue after issue. It’s important for you to be prepared. Collect, organize, and update all logs and maintenance records. Don’t try to hide anything. Missing logbooks, damage history or past-due maintenance will be caught. Get ahead of it and make sure you are fully disclosing the condition of the aircraft. You should identify a couple of potential third-party maintenance facilities to perform the pre-buy inspection. The buyer will select the facility and pay for the costs of the pre-buy, but they usually appreciate suggestions. Pilots that are qualified in the aircraft and approved on the seller’s insurance will need to be arranged if the aircraft will be flown to a maintenance facility, and for the acceptance flight.
Tip 4:
Communicate and be Transparent (Expect it too)
Communicate your expectations of the selling process to your broker and ask your broker to tell you theirs. You can save yourself and your broker a lot of time by identifying whether there is a fit or a mismatch in expectations before the process starts. A gooD broker will tell you if you have unreasonable expectations and a better one will tell you why!
As brokers, we have a lot of experience keeping deals together by informing the seller of any issues or “squawks” and communicating with the buyer or buyer’s agent of any potential areas for concern. Having someone paying attention and properly communicating with all parties can keep even the most difficult of sales pushing towards a close.
THE AIRCRAFT
PURCHASE PROCESS
Most aircraft acquisitions involve a team of professionals including an aircraft broker, an aircraft mechanic, an aviation attorney, a CPA, an aviation title company and a lender, among others. The process can take a week or a few months, depending on the nature of the transaction. Crow Executive Air is dedicated to guiding aircraft buyers and sellers through every step of the process.
Aircraft Selection
First, you select the aircraft type you want. This step requires detailed discussions with our aircraft brokers. We will help you identify the best aircraft for your mission. We will search our network of aircraft and identify a few aircraft that meet your mission. You may go and visit those aircraft and receive a demonstration flight which, is typically at the purchaser’s expense.
Letter of Intent
Once you have made your selection, a Letter of Intent (“LOI”) is drafted with the general terms of the purchase, in particular setting forth the purchase price, amount of deposit, general terms of the pre-buy inspection and the expiration time for the offer. The purpose of the LOI is primarily to see if the parties can come together on the primary terms of the agreement. We have example LOIs available, but aviation attorneys can also be retained by the seller/buyer to assist in drafting the LOI.
Deposit
If the LOI is accepted, a deposit of 5% to 10% of the proposed purchase price is immediately wired to a third party aviation escrow company. The LOI explains what happens to the deposit in the event the LOI is terminated.
The Purchase Agreement
The Aircraft Purchase Agreement provides the purchase amount, the amount of the deposit, whether the deposit is refundable and if so, under what terms, the timing for the pre-purchase inspection and the purchase, the place for the pre-purchase inspection, certain representations by both parties, the warranties provided with the airplane, what happens if there is a default and much more.
Pre-Purchase Inspection
This is one of the most important and critical steps in the entire process. Once the purchase agreement is executed by both parties, a pre- buy inspection will begin at a maintenance facility agreed upon by both the purchaser and seller. Jet and turboprop aircraft are highly complex machines that have maintenance requirements based on the calendar (day, month or year limits), hours flown or cycles (number of landings). A purchaser needs to know whether everything is functioning correctly, the exact maintenance status of the aircraft and its components, and whether the records are complete and accurate. The best way to accomplish this is through a comprehensive pre-purchase inspection by a maintenance facility familiar with the type of aircraft the purchaser is buying. The level of the pre-buy inspection is determined by consultation with the maintenance facility and can take as little as a few days, or as long as several months. At the end of the pre-buy inspection, the maintenance facility produces a list of discrepancies that they discovered during their inspection and will also point out those items that are due for replacement or overhaul because of time, cycles or calendar. Most Aircraft Purchase Agreements provide that the Seller repair the airworthy discrepancies at their expense. There is usually still some negotiation between the parties about what is considered “airworthy.” This negotiation can get quite complicated and is best left up to an experienced broker and experienced mechanics.
Technical Acceptance
At the conclusion of the negotiation over what discrepancies will be paid for and by whom, the purchaser will then execute the Technical Acceptance. The purpose of the Technical Acceptance is for the Purchaser to commit to buy the aircraft subject to remediation of the discrepancies. The deposit normally becomes non-refundable at the time the Technical Acceptance is executed. This is appropriate since the seller now has to commit the resources and time to fix the aircraft. Further, it provides a partial remedy should the purchaser default.
Closing and Aircraft Delivery
At closing, the escrow company coordinates the exchange of the purchase funds, files the FAA Aircraft Registry, the FAA Bill of Sale and the FAA Application for Registration. The filing of the FAA Bill of Sale effectuates title transfer and the FAA Application for Registration causes the aircraft to be registered in the name of the purchaser. If there is a lender, lien documentation is filed with the FAA. Aircraft liability and hull insurance is dropped by the seller and added by the buyer at this time. Brokers for both sides are involved in the Closing and help to coordinate the Aircraft Delivery, which is done as part of the closing. An Aircraft Delivery Receipt is the written evidence of the acceptance of the aircraft by the purchaser and is executed at closing.
Post Closing Issues
There are many post-closing issues. The new owner needs to be thoughtful about that first flight. Insurance should be in place and a properly trained crew should be retained. Pilots will need to have a means for paying for fuel, emergency maintenance, hotels, rental cars, airfare, etc… during the reposition flight. If you are using an aircraft management company, most of the post-closing logistical issues will be taken care of for you. You should have the agreement with them completed, negotiated, and executed prior to the closing. Navigation database subscriptions for the aircraft’s navigation systems must be current to fly legally. Required paperwork must be on the aircraft. If you intend to fly the aircraft at, or above 29,000 feet, the aircraft must be RVSM certified and a manual must be filed and approved by your local FAA Flight Standards District Office. Maintenance must be current and documented. You should know who is going to maintain your aircraft and generally what to expect in terms of annual maintenance costs.
