Starting new Brokerage Business, Looking for insight.

[Ted]

In this case I don't think Wayne is trying to be discouraging, it's more that he's seen how this goes for many people. One of the things I found is that the majority of people who buy smaller end planes aren't really interested in a broker for a few reasons. I've also found that the people on that end are great at talking but less great at following up with a check to back up the talk.

I do hope it works out well for you, but don't expect me as a client. Nothing personal, just that I'm in the category of "I know enough about these deals to be able to handle myself." Or at least I think I do.

 

[comanchepilot]

the only way to make money in this business is to buy low and sell high - I just don't see much of a business model representing sellers of $45000 airplanes .. . which is probably a median selling price for singles. Twins are not much higher and might be lower . ..

The main problem lies in the quality of what you are selling - a garden variety decently kept randomly advertised Skyhawk or Cherokee 180 in the mid - high 40's can take a year to sell. And lots of work and effort on your part if you are actually going to do your job instead of take a few ads out and then sit back and answer calls -

I own a well-kept Comanche 260C with a very good avionix package [530/gpss/2 axis AP plus pre-select/HSI] now valued with a runout engine - I can sell that airplane in probably less than a month and perhaps sell it by simply telling a few people its for sale. So why would I EVER use a broker?

The airplanes that are easy to sell - ones that look good, fly good and have good solid avionics packages sell themselves. The ones that guys want too much for, or which are a little ratty - are not going to sell in a long time.

People who own airplanes that people are going to want to buy, are not going to generally use a broker until you get into the turbo prop and jet arena - and even then - who is buying a used CJ1/2 need hot section inspections soon? When for the same price you can charter modern aircraft for years the same expenditure of money - and have zero risk of large repair bills . . .

 

[Clip4]

For stuff smaller than say a King Air I really don't see why people think they need a broker ?
With the tools available on the internet I think a broker for small GA is about as necessary as a travel agent.

I can think situations where a seller might desire a broker - be assigned overseas and trying to sell a plane would be one.

 

[jimd118]

the only way to make money in this business is to buy low and sell high - I just don't see much of a business model representing sellers of $45000 airplanes .. . which is probably a median selling price for singles. Twins are not much higher and might be lower . ..

The main problem lies in the quality of what you are selling - a garden variety decently kept randomly advertised Skyhawk or Cherokee 180 in the mid - high 40's can take a year to sell. And lots of work and effort on your part if you are actually going to do your job instead of take a few ads out and then sit back and answer calls -

I own a well-kept Comanche 260C with a very good avionix package [530/gpss/2 axis AP plus pre-select/HSI] now valued with a runout engine - I can sell that airplane in probably less than a month and perhaps sell it by simply telling a few people its for sale. So why would I EVER use a broker?

The airplanes that are easy to sell - ones that look good, fly good and have good solid avionics packages sell themselves. The ones that guys want too much for, or which are a little ratty - are not going to sell in a long time.

People who own airplanes that people are going to want to buy, are not going to generally use a broker until you get into the turbo prop and jet arena - and even then - who is buying a used CJ1/2 need hot section inspections soon? When for the same price you can charter modern aircraft for years the same expenditure of money - and have zero risk of large repair bills . . .

Agreed, I am not expecting much from the low end aircraft either. Ive been in the industry and worked around that side of aviation enough to know they are not only not willing to pay for a service such as this, but many just simply cant afford to throw 5 grand at someone to do something they can do themselves. However I also have been around the industry long enough to know theres a lot of people out there with everything from cessnas to lears that find a brokerage service an incredible value as the time alone it takes to market and deal with the never ending line of tire kickers makes the cost involved very reasonable. A large number of aircraft owners are aircraft owners because they are successful somewhere else, their time is valuable and they have no urge or drive to learn how to market or find an airplane on their own from scratch. But yes, lots of people fail and so could I. Its a competitive, niche industry. Hard to start and hard to maintain. But here I go I am going to give it my all and learn as much as possible as I go. Honesty and hard work can go a long way even in the most challenging fields.

 

[wabower]

Many in OKC close to FAA registry, some in other places. Insured Aircraft Title, International Title, Aero Records, Griffin, to name a few. All do the same stuff, pricing is similar, always helpful to work with people you know and who know you.

A questions for those that have bought and sold, does anyone have any recommended Escrow services for larger deals? I have zero local options with experience within the aviation market. I already have a great partnership lined up with an on demand mechanic for questions and pre buys, a larger mechanic shop for any major work that may need done, experienced ferrying options, interior shop, and working on some decent insurance and financing connections.

 

[jimd118]

Many in OKC close to FAA registry, some in other places. Insured Aircraft Title, International Title, Aero Records, Griffin, to name a few. All do the same stuff, pricing is similar, always helpful to work with people you know and who know you.

Appreciate it!

 

[hkyplr18]

I have owned an aircraft brokerage business for about 5 years that I do on the side from my full time job (corporate pilot). I get a decent amount of down time so it really works well for me. I am by no means an expert in this field but have been pretty successful in my business thus far, and have learned a ton! Here are some things I would suggest...

I started my broker business with the mind set that I would not be that
"Typical Broker" that has his business in Florida and tries to sell airplanes in California. I wanted to know everything I could about the airplane I was selling and actually see the airplane in person(something some brokers don't do). I also wanted to deal with airplanes that I am actually familiar with (very important!) If you don't know anything about the airplane you are selling then you are just doing disservice to your client and any potential buyers. The whole point of being a broker and being paid a commission is to alleviate all the burden from your client that comes with trying to sell an airplane. It made me so mad when I would call a broker about an airplane for sale and he couldn't answer the most simple question about the airplane! This is where I decided I would start a broker business the right way... So, if you don't know much about a particular airplane that a client wants you to sell, then I suggest learning EVERYTHING you can about it. Know all the Specs and Performance. Know exactly what AD's apply to the airplane. Know about any mods that have been done. One thing I do when I sell someones airplane is do a complete audit of the logbooks starting from page 1 and take notes of everything I find that is either a positive or negative. If there is something you don't understand then get a mechanic to take a look for you. Make damn sure the AD's have actually been complied with. I come across airplanes all the time that are pencil whipped during the annual. Remember.. You will have very sharp buyers come look at your airplanes and they know what to look for. If you missed some damage history in the logbooks and advertise the airplane with "No Damage History" but the potential buyer finds damage history in the logbooks, you will have egg on your face and possibly lose the sale right then and there(ask me how I know). Don't trust your clients word about anything he says in regards to the airplane, especially damage history. Most owners don't even know their airplane has damage history until I point it out, so do your own research. Hopefully you know the technical side of airplane fairly well.

Try and keep all of your airplanes somewhat local. Like I said earlier, don't sell an airplane that is 1000 miles away that you can't show at a moments notice or go jump into the logbooks if need be. If you have a client that is dead set on using you as a broker but the airplane is a million miles away, then make him move the airplane to your facility or kindly decline your service. It is a major PITA to work with an airplane far away and again a disservice to your client and potential buyer. I have a rule that I won't sell an airplane unless it's within 300 miles from me. There are some circumstances that I might deviate from that, but not many.

Don't deal with junky airplanes. If somebody wants you to sell their 1953 Bonanza that has been out of annual for 2 years and needs paint and interior then run far away. It will be nothing but a headache for you and won't make you much money in the long run. I won't sell airplanes unless they are in annual and have good paint and interior. Also, if a client thinks his junky 1953 Bonanza is worth $105,000 and it's really worth $25,000 then run far away. You don't need that headache either. Make sure you and your client are on the same page about what he wants out of the airplane and what it's really worth. This is a touchy subject and I get myself into this quite often. These folks bought these airplanes when they were worth something back in 2005 and now they have lost 25% or more of their value and are upside down. If your client won't get realistic with today's market then walk away. Deal primarily with airplanes that sell good. Cessna 172's,182's, 206's, Cirrus, Some Pipers, Late model Bonanzas, etc... One of the best airplanes I ever owned was a Bellanca Viking but I wouldn't try to sell one today because it is a very small niche market and you would sit on it for quite some time.

Know your contracts! You need good purchase agreements and contracts to protect yourself and your client. Get with AOPA legal or an aviation attorney and let them help you draw up your contracts. Unfortunately there are sue happy folks out there that will eat you alive if you are not protected. Liability insurance is not a bad idea either and will probably be required by your airport.

Know the aviation federal and state tax laws. You will have people that will want to know about excise tax, depreciation, write-offs, etc. I'm not saying to become a tax professional and it's really the buyers sole responsibility to handle this, but at least know the basics. AOPA has a lot of info on their website that will get you in the right direction if you're not familiar.

Advertising is, of course, one of the most important parts of being an aircraft broker. If you have crappy pictures and a weak description then someone is going to overlook or skip your Ad. I can't believe some of the garbage brokers put in their ads.. Take a BUNCH of HI-RES pics and make your ad descriptive enough to get the highlights across to the reader without overdoing it. Don't try and hide ANYTHING. Be up-front and honest from the start and a buyer might just overlook some fair looking paint that you told him about BEFORE he drives 500 miles to find it because you didn't tell him beforehand. Use every avenue of advertising(electronic, paper, flyers, ebay, forums etc). Have a website. Tell all your pilot buddies(A few airplanes I sold have been to local folks by word of mouth) Advertisement is fairly cheap and all tax deductible.

The last bit of advise I would give you is to start small. This is a very tough and cutthroat business that has some highs and a lot of lows especially in today's economy. Keep your overhead as low as possible until you get some airplanes moving or you will be in the red for good. Don't expect to sell many airplanes in your first year until you get your name out there and a reputation with the locals. You mentioned brokering jets, and I hope you would because that is where the big money is, but until you get some experience and get your name out there it is a very tough market to get into. There are big name brokerage firms who deal exclusively in the turbine world and a fortune 500 company is going to use them way before they use you. Brokering jets is also a lot more complicated then brokering a 172. Your overhead cost will also be significantly higher once you get into the turbine market.

Hopefully some of this info doesn't scare you away but this is the real world life of a broker. You can make your business profitable if you do the right things. There are very successful brokers out there but I promise you they have had their share of hard times. This is a tough way to make a living if it's the sole source of income for you. I would suggest doing it as a side business in the beginning and have a real job pay your bills for now. It is a lot of fun and you get to play with airplanes but at the end of the day you have to make money and that can be really tough in aviation. I would be happy to answer any questions you might have thru a PM.

Take Care

Hi Guys,
I am in the process of starting up a new Aircraft Brokerage Business in North Carolina and would love to hear any insight, opinions, tips, or good as well as bad personal experiences with brokers you've had. I am 27 so fairly young for this side of the industry but very motivated and have worked in aviation and marketing for the past 10 years. I am a commercially rated pilot and currently have an aerial photography business as well as a photography business focusing on marketing for the outdoor industry. I have never worked as a broker before other than selling a few planes for friends and employers in the past, but feel my experience in both industries will help a lot and my focus is going to be on the marketing side over the legal side.

I am setting up an office currently at a decent sized regional airport in NC, nice office with lobby for my business with a nice sized ramp as well as additional offices for me to expand into if needed down the road. Attached to my office is a very large corporate hanger, to keep my start up price low I will just be having my clients rent space in it from the airport should they need to leave the plane with me. My goal is to work with a mix of everything from quality piston aircraft up to mid size corporate. As I said the focus of my work will be on marketing and handling all initial relations with potential buyers. My plan is upon completion of price negotiations Buyer and Seller will then come together and take care of title transfer etc., I will not take possession of title or offer any legal advice on the transfer of property. If needed I can get them in touch with Escrow and title services but I will not be offering this in house.

Anyways I would love to hear anyones personal experiences and what you would look for in a broker in the future. I am passionate about this and I want to do it right. Appreciate the help!

 

[Jeff K]

You need good purchase agreements and contracts to protect yourself and your client. Get with AOPA legal or an aviation attorney and let them help you draw up your contracts.

No.... you can't be a broker. I've not had not one but TWO deals go south because the broker advised the seller not to do an AOPA format contract, and instead insisted the sale be with the smallest as-is contract I've ever seen. This after we had exchanged letters of intent and I had all the funds (and proof).

So what is the name of your brokerage? Next time I'm in the market I'll look you up.

 

[wabower]

The AOPA contract isn't all that great. In 25+ years I've never seen one used by a broker, although some may do so. The primary reason is because the bulky boilerplate language must be distilled for use on each deal and many other formats (most of which are probably available on somebody's website) are much more clear, succinct and provide better flow and sequence.

 

[Jeff K]

We've covered this ground before Wayne. It's a start, not an end.

Anyways... never bought a plane from a broker because most abhor contracts of any sort (except those totally in their favor). Refreshing to see at least one (Joe) who understands their value.

 

[hkyplr18]

I'm not saying to use the default AOPA contract available on their website. I am saying to use AOPA legal services or a private aviation attorney to draw up and/or proof read your default contract you will use for the business. I would suggest starting from scratch or using a very good contract for a guideline and then let the attorney hash out the details. My contracts are made in a way that all I have to do is input the new data for a particular aircraft sale and hit the print button. Everyone signs it during closing and we're done.

Thanks for the kind words Jeff !

The AOPA contract isn't all that great. In 25+ years I've never seen one used by a broker, although some may do so. The primary reason is because the bulky boilerplate language must be distilled for use on each deal and many other formats (most of which are probably available on somebody's website) are much more clear, succinct and provide better flow and sequence.

 

[hkyplr18]

The default aopa contract is ok but it really doesn't outline much detail but is better then nothing. My contract, unfortunately, is 3 pages long and has been scoured over by an attorney but that's what it takes these days to try and protect yourself from some knuckleheads out there..

No.... you can't be a broker. I've not had not one but TWO deals go south because the broker advised the seller not to do an AOPA format contract, and instead insisted the sale be with the smallest as-is contract I've ever seen. This after we had exchanged letters of intent and I had all the funds (and proof).

So what is the name of your brokerage? Next time I'm in the market I'll look you up.

 

[Alexb2000]

I have no problem paying for a broker, either buyer or seller side. I will also pay the top of the market for the right person.

But...

They better be a stone expert on the type of aircraft I am buying or selling. They should have numerous transactions behind them and far more knowledge than I have. Sometimes this knowledge is very specific, there is a guy on Beechtalk that is considered the best rep. for P-Barons. If you want a P-Baron this would be the person to talk to. He knows about everything there is to know about them. For example I'm sure he could rattle off the year by year changes for the entire production run off the top of his head. This is the kind of person that can save you a 1000 headaches and prevent a really big mistake. I would be really PO'd if I hired a buyers rep, bought an airplane that almost meet my needs other than fuel capacity, and then I later learn about a long range fuel option that came out the next model year.

I believe that "brokers" representing everything that flies is a dying breed. The new successful brokers IMO will be those that are truly experts on a certain type of aircraft and will add huge value to a deal on the buyers or sellers side.

 

[jimd118]

I have owned an aircraft brokerage business for about 5 years that I do on the side from my full time job (corporate pilot). I get a decent amount of down time so it really works well for me. I am by no means an expert in this field but have been pretty successful in my business thus far, and have learned a ton! Here are some things I would suggest...

I started my broker business with the mind set that I would not be that
"Typical Broker" that has his business in Florida and tries to sell airplanes in California. I wanted to know everything I could about the airplane I was selling and actually see the airplane in person(something some brokers don't do). I also wanted to deal with airplanes that I am actually familiar with (very important!) If you don't know anything about the airplane you are selling then you are just doing disservice to your client and any potential buyers. The whole point of being a broker and being paid a commission is to alleviate all the burden from your client that comes with trying to sell an airplane. It made me so mad when I would call a broker about an airplane for sale and he couldn't answer the most simple question about the airplane! This is where I decided I would start a broker business the right way... So, if you don't know much about a particular airplane that a client wants you to sell, then I suggest learning EVERYTHING you can about it. Know all the Specs and Performance. Know exactly what AD's apply to the airplane. Know about any mods that have been done. One thing I do when I sell someones airplane is do a complete audit of the logbooks starting from page 1 and take notes of everything I find that is either a positive or negative. If there is something you don't understand then get a mechanic to take a look for you. Make damn sure the AD's have actually been complied with. I come across airplanes all the time that are pencil whipped during the annual. Remember.. You will have very sharp buyers come look at your airplanes and they know what to look for. If you missed some damage history in the logbooks and advertise the airplane with "No Damage History" but the potential buyer finds damage history in the logbooks, you will have egg on your face and possibly lose the sale right then and there(ask me how I know). Don't trust your clients word about anything he says in regards to the airplane, especially damage history. Most owners don't even know their airplane has damage history until I point it out, so do your own research. Hopefully you know the technical side of airplane fairly well.

Try and keep all of your airplanes somewhat local. Like I said earlier, don't sell an airplane that is 1000 miles away that you can't show at a moments notice or go jump into the logbooks if need be. If you have a client that is dead set on using you as a broker but the airplane is a million miles away, then make him move the airplane to your facility or kindly decline your service. It is a major PITA to work with an airplane far away and again a disservice to your client and potential buyer. I have a rule that I won't sell an airplane unless it's within 300 miles from me. There are some circumstances that I might deviate from that, but not many.

Don't deal with junky airplanes. If somebody wants you to sell their 1953 Bonanza that has been out of annual for 2 years and needs paint and interior then run far away. It will be nothing but a headache for you and won't make you much money in the long run. I won't sell airplanes unless they are in annual and have good paint and interior. Also, if a client thinks his junky 1953 Bonanza is worth $105,000 and it's really worth $25,000 then run far away. You don't need that headache either. Make sure you and your client are on the same page about what he wants out of the airplane and what it's really worth. This is a touchy subject and I get myself into this quite often. These folks bought these airplanes when they were worth something back in 2005 and now they have lost 25% or more of their value and are upside down. If your client won't get realistic with today's market then walk away. Deal primarily with airplanes that sell good. Cessna 172's,182's, 206's, Cirrus, Some Pipers, Late model Bonanzas, etc... One of the best airplanes I ever owned was a Bellanca Viking but I wouldn't try to sell one today because it is a very small niche market and you would sit on it for quite some time.

Know your contracts! You need good purchase agreements and contracts to protect yourself and your client. Get with AOPA legal or an aviation attorney and let them help you draw up your contracts. Unfortunately there are sue happy folks out there that will eat you alive if you are not protected. Liability insurance is not a bad idea either and will probably be required by your airport.

Know the aviation federal and state tax laws. You will have people that will want to know about excise tax, depreciation, write-offs, etc. I'm not saying to become a tax professional and it's really the buyers sole responsibility to handle this, but at least know the basics. AOPA has a lot of info on their website that will get you in the right direction if you're not familiar.

Advertising is, of course, one of the most important parts of being an aircraft broker. If you have crappy pictures and a weak description then someone is going to overlook or skip your Ad. I can't believe some of the garbage brokers put in their ads.. Take a BUNCH of HI-RES pics and make your ad descriptive enough to get the highlights across to the reader without overdoing it. Don't try and hide ANYTHING. Be up-front and honest from the start and a buyer might just overlook some fair looking paint that you told him about BEFORE he drives 500 miles to find it because you didn't tell him beforehand. Use every avenue of advertising(electronic, paper, flyers, ebay, forums etc). Have a website. Tell all your pilot buddies(A few airplanes I sold have been to local folks by word of mouth) Advertisement is fairly cheap and all tax deductible.

The last bit of advise I would give you is to start small. This is a very tough and cutthroat business that has some highs and a lot of lows especially in today's economy. Keep your overhead as low as possible until you get some airplanes moving or you will be in the red for good. Don't expect to sell many airplanes in your first year until you get your name out there and a reputation with the locals. You mentioned brokering jets, and I hope you would because that is where the big money is, but until you get some experience and get your name out there it is a very tough market to get into. There are big name brokerage firms who deal exclusively in the turbine world and a fortune 500 company is going to use them way before they use you. Brokering jets is also a lot more complicated then brokering a 172. Your overhead cost will also be significantly higher once you get into the turbine market.

Hopefully some of this info doesn't scare you away but this is the real world life of a broker. You can make your business profitable if you do the right things. There are very successful brokers out there but I promise you they have had their share of hard times. This is a tough way to make a living if it's the sole source of income for you. I would suggest doing it as a side business in the beginning and have a real job pay your bills for now. It is a lot of fun and you get to play with airplanes but at the end of the day you have to make money and that can be really tough in aviation. I would be happy to answer any questions you might have thru a PM.

Take Care

Thank You very much! This was by far one of the most helpful, realistic, and productive comments I have had on here. You sound like you have went into the business thinking in the same way I am. I am not reliant upon its income to survive so I want to do things right, slow, and not get in over my head with deals I shouldnt be in. My goal is to eventually be doing mostly turbine business but I am smart enough to realize starting out that having a 5 million dollar aircraft under my contract and then finding out I was not prepared for something that my client was expecting is not a good move. My goal is to stick with piston singles and smaller piston twins the first year or two. If something bigger comes up great but I will be upfront and honest about my experience and what I will be offering.

As for advertising, this will most likely be my strongest point when it comes to what I have to offer over the crowd. I am coming from a photo and video marketing background so for every aircraft I will be providing professional quality images edited and color balanced marketed by properly designed graphics in digital and print form. I will be offering video presentations of each aircraft in full HD 1080 video as I have always thought listings with video walk arounds give such a much more realistic understanding of the aircrafts cosmetic condition.

As for the legal side my brokerage contract is a bit long and detailed at 3 pages but I put a lot of time into making sure the things I wanted to cover were covered and had everything checked and tightened up by a lawyer that specializes in a lot of high dollar property. I am pretty happy with it and if I am going to lose a client because of a thorough contract then I am guessing it is for the best anyway. I will definitely look into getting the AOPA legal insurance, what are the typical rates on this? I do have liability insurance for the business

I do need to become more educated on the tax laws within these transfers and title issues. I in no way plan to handle titles and transfers for people however I would like to be able to offer a bit of knowledge to those with questions. People with real concerns though I will just be forwarding to trusted title services as I would hope they would be willing to pay a service such as that to make sure there are no questions at the end of the deal. Overall I am excited to get going and I am not expecting it to be easy and to have money thrown at me. Its going to be slow going over the next year without a doubt but I am fine with that and its probably for the best as I will need to catch my breath at times. Again thank you very much!

 

[N2124v]

Remember, some of the best deals you will ever make are the ones that don't happen.

Good luck with your new venture.

 

[wabower]

Knowing more about a plane than the guy you're talking to is a definite advantage, as is some PIC operational experience. For example, I have historically recorded trip times and fuel burns for each trip flown (in any plane) to a spread sheet for my own use as well as when those conversations inevitably arise at the airport.

If a prospective buyer is interested in realistic expectations vs. published numbers on a website, I can quickly document 228 gph for more than 1k hours (long trips, short trips, MX flights, repositions, etc. as would be flown by typical owner) in a Citation III (650), and 507 gph for 600+ equivalent hours in a G-V.
Thousands of hours in most King Airs (other than Garrett-powered 100's) are also in the files, so we can present credible information for the planes in which we are involved.

I maintain copies of all part 142 CRH and checklists as well. In most cases they contain sufficiently-detailed information to determine capability for desired trip profiles by a new buyer. But sometimes they don't, as in a current assignment from a Toluca (MX)-based client who wants to fly long non-stop legs in a C-650 after departing his 8,400' elev. airport. In this case we know he will be range-limited due to GW limitations from lack of fuel, and have requested accurate information from the seller's crew that will require use of the somewhat voluminous flight planning section of the AFM.

We know that others have blown smoke that "LAX and Panama no problemo, Señor" which is obviously untrue, as the trips are simply beyond the plane's capability. Our goal is to provide accurate information prior to purchase rather than disappointment after.

The information we have accumulated also dispels some of the notions about speed and trip-time advantages for various head-to-head comparisons (Bo vs. Mooney) and other myths, but it's largely unused since we don't work those markets.

For most planes we also have training "tech" manuals from 142 centers that provide expanded operational and systems information including extensive pictures.

I have no problem paying for a broker, either buyer or seller side. I will also pay the top of the market for the right person.

But...

They better be a stone expert on the type of aircraft I am buying or selling. They should have numerous transactions behind them and far more knowledge than I have. Sometimes this knowledge is very specific, there is a guy on Beechtalk that is considered the best rep. for P-Barons. If you want a P-Baron this would be the person to talk to. He knows about everything there is to know about them. For example I'm sure he could rattle off the year by year changes for the entire production run off the top of his head. This is the kind of person that can save you a 1000 headaches and prevent a really big mistake. I would be really PO'd if I hired a buyers rep, bought an airplane that almost meet my needs other than fuel capacity, and then I later learn about a long range fuel option that came out the next model year.

I believe that "brokers" representing everything that flies is a dying breed. The new successful brokers IMO will be those that are truly experts on a certain type of aircraft and will add huge value to a deal on the buyers or sellers side.

 

[hkyplr18]

No problem. Hope I was able to give you some insight to what you're getting into. Using an escrow service is a good deal for all parties involved and you will learn some stuff from them too.

I might pick your brain on some of the HD video stuff. I've recently started shooting video with a GoPro and learning how to edit and make a decent video. It really is a great way to present an aircraft!

Joe

Thank You very much! This was by far one of the most helpful, realistic, and productive comments I have had on here. You sound like you have went into the business thinking in the same way I am. I am not reliant upon its income to survive so I want to do things right, slow, and not get in over my head with deals I shouldnt be in. My goal is to eventually be doing mostly turbine business but I am smart enough to realize starting out that having a 5 million dollar aircraft under my contract and then finding out I was not prepared for something that my client was expecting is not a good move. My goal is to stick with piston singles and smaller piston twins the first year or two. If something bigger comes up great but I will be upfront and honest about my experience and what I will be offering.

As for advertising, this will most likely be my strongest point when it comes to what I have to offer over the crowd. I am coming from a photo and video marketing background so for every aircraft I will be providing professional quality images edited and color balanced marketed by properly designed graphics in digital and print form. I will be offering video presentations of each aircraft in full HD 1080 video as I have always thought listings with video walk arounds give such a much more realistic understanding of the aircrafts cosmetic condition.

As for the legal side my brokerage contract is a bit long and detailed at 3 pages but I put a lot of time into making sure the things I wanted to cover were covered and had everything checked and tightened up by a lawyer that specializes in a lot of high dollar property. I am pretty happy with it and if I am going to lose a client because of a thorough contract then I am guessing it is for the best anyway. I will definitely look into getting the AOPA legal insurance, what are the typical rates on this? I do have liability insurance for the business

I do need to become more educated on the tax laws within these transfers and title issues. I in no way plan to handle titles and transfers for people however I would like to be able to offer a bit of knowledge to those with questions. People with real concerns though I will just be forwarding to trusted title services as I would hope they would be willing to pay a service such as that to make sure there are no questions at the end of the deal. Overall I am excited to get going and I am not expecting it to be easy and to have money thrown at me. Its going to be slow going over the next year without a doubt but I am fine with that and its probably for the best as I will need to catch my breath at times. Again thank you very much!

 

[ActiveAir]

Rule number one...........answer your phone - be responsive and dependable. Good luck.

 

[Jeff K]

Using an escrow service is a good deal for all parties involved and you will learn some stuff from them too.

I've run across two brokers who insisted that they hold the deposit... complaining loudly about escrows as a waste of time and not needed. Another got upset that I wanted to make the buyer paid for title search showing clear title a contingency.

 

[wabower]

In many cases airplane brokers are just guys who couldn't make it in the car or boat business. Some because they're stupid and some because they're crooks.

One of the King Air brokers who advertises heavily in TAP tried to sell us our own plane a few years ago. Just remove these defects from the list of those you'll call and move on.

I've run across two brokers who insisted that they hold the deposit... complaining loudly about escrows as a waste of time and not needed. Another got upset that I wanted to make the buyer paid for title search showing clear title a contingency.

 

[hkyplr18]

I've run across two brokers who insisted that they hold the deposit... complaining loudly about escrows as a waste of time and not needed. Another got upset that I wanted to make the buyer paid for title search showing clear title a contingency.

If you were buying a $15,000 Cessna 150 then yes it's probably not worth the $400 that escrow is going to cost. I will usually leave it up to the parties involved if they want to spend the money, and they usually split it. I have also acted as the escrow agent on a few occasions, but I usually like to stay away from that. High dollar deals need to be run thru an escrow service IMHO. It keeps everyone in check and having that un-biased party involved makes everyone feel comfy.

Industry standard is for the buyer to pay for the title search. It is their responsibility to make sure the airplane they are buying is free and clear. I used to buy title searches when I would sell an airplane, but ran into issues if it took a few months to sell an airplane. The prospective buyer would not except a title search that was 2-3 months old, and I understand that..

 

[wabower]

It's part of the standard service that an escrow agent provides and is included in the fee. The escrow company knows they can't close a deal without clearing a a clouded title.

If you were buying a $15,000 Cessna 150 then yes it's probably not worth the $400 that escrow is going to cost. I will usually leave it up to the parties involved if they want to spend the money, and they usually split it. I have also acted as the escrow agent on a few occasions, but I usually like to stay away from that. High dollar deals need to be run thru an escrow service IMHO. It keeps everyone in check and having that un-biased party involved makes everyone feel comfy.

Industry standard is for the buyer to pay for the title search. It is their responsibility to make sure the airplane they are buying is free and clear. I used to buy title searches when I would sell an airplane, but ran into issues if it took a few months to sell an airplane. The prospective buyer would not except a title search that was 2-3 months old, and I understand that..

 

[wsuffa]

For stuff smaller than say a King Air I really don't see why people think they need a broker ?
With the tools available on the internet I think a broker for small GA is about as necessary as a travel agent.

I would strongly disagree. Unless, of course, BOTH buyer and seller are clueless.

I can't tell you how many times I (as a buyer) have told a small business owner that wants to sell their business to retain a financial advisor/investment bank/broker that specializes in small/midsize business. The larger businesses either have a clue or retain qualified folks as a matter of course. The smaller businesses tend to have an inflated view of the value of their business (and are totally mismatched when dealing with a more sophisticated buyer). The probablility of a successful transaction goes up materially when both parties know what they're doing and/or have good advice.

 

[Tony_Scarpelli]

For stuff smaller than say a King Air I really don't see why people think they need a broker ?
With the tools available on the internet I think a broker for small GA is about as necessary as a travel agent.

And yet we hear daily about 1st annual inspections running 20-25% of purchase price or $20-40k.

 

[hkyplr18]

It's part of the standard service that an escrow agent provides and is included in the fee. The escrow company knows they can't close a deal without clearing a a clouded title.

Yes, you are right Wayne, but if an escrow service isn't involved then it's the buyers responsibility. I've seen more and more that the banks are actually doing their own title searches now.(Of course charging the fees back to the loan). They used to just request a copy of clear title...

 

[Tony_Scarpelli]

Jim,

I think your age will be a problem. It might help if you were an A&P/IA with a terrific sales and marketing back ground.

It just seems you are too young to have the knowledge and skills required.

Also I am curious as anyones experience with acquisitions as well. I have not decided on a pricing structure for this service and not having much luck finding info on the industry normal. I was fixed prices for this side of the business as I want my clients knowing I am actually motivated to get them the best pricing rather than if I was charging a percentage as with the brokerage side.

 

[hkyplr18]

Jim,

I think your age will be a problem. It might help if you were an A&P/IA with a terrific sales and marketing back ground.

It just seems you are too young to have the knowledge and skills required.

You are kidding right?

 

[wabower]

+1 'til the cows come home.

A guy who consults with a realtor before listing his house will typically come away with a much better idea of comps, and find that nobody is interested in listing his $200k house for $400k just because "that's what I've got in it" or "I know what they're worth" or other BS notions of value.

Unfortunately, most aviation transactions are not tempered by any such advice, and asking prices are predictably nutso.

I would strongly disagree. Unless, of course, BOTH buyer and seller are clueless.

I can't tell you how many times I (as a buyer) have told a small business owner that wants to sell their business to retain a financial advisor/investment bank/broker that specializes in small/midsize business. The larger businesses either have a clue or retain qualified folks as a matter of course. The smaller businesses tend to have an inflated view of the value of their business (and are totally mismatched when dealing with a more sophisticated buyer). The probablility of a successful transaction goes up materially when both parties know what they're doing and/or have good advice.

 

[Tony_Scarpelli]

You are kidding right?

Not at all. If you think that a 27 year old will carry the same weight and authority of someone who has spent a lifetime in aviation then you are not going into this with your eyes open.

Not saying it cannot be done, only that its a mark against you.

 

[Alexb2000]

Knowing more about a plane than the guy you're talking to is a definite advantage, as is some PIC operational experience. For example, I have historically recorded trip times and fuel burns for each trip flown (in any plane) to a spread sheet for my own use as well as when those conversations inevitably arise at the airport.

If a prospective buyer is interested in realistic expectations vs. published numbers on a website, I can quickly document 228 gph for more than 1k hours (long trips, short trips, MX flights, repositions, etc. as would be flown by typical owner) in a Citation III (650), and 507 gph for 600+ equivalent hours in a G-V.
Thousands of hours in most King Airs (other than Garrett-powered 100's) are also in the files, so we can present credible information for the planes in which we are involved.

I maintain copies of all part 142 CRH and checklists as well. In most cases they contain sufficiently-detailed information to determine capability for desired trip profiles by a new buyer. But sometimes they don't, as in a current assignment from a Toluca (MX)-based client who wants to fly long non-stop legs in a C-650 after departing his 8,400' elev. airport. In this case we know he will be range-limited due to GW limitations from lack of fuel, and have requested accurate information from the seller's crew that will require use of the somewhat voluminous flight planning section of the AFM.

We know that others have blown smoke that "LAX and Panama no problemo, Señor" which is obviously untrue, as the trips are simply beyond the plane's capability. Our goal is to provide accurate information prior to purchase rather than disappointment after.

The information we have accumulated also dispels some of the notions about speed and trip-time advantages for various head-to-head comparisons (Bo vs. Mooney) and other myths, but it's largely unused since we don't work those markets.

For most planes we also have training "tech" manuals from 142 centers that provide expanded operational and systems information including extensive pictures.

Hopefully the OP will read this with an open mind. This doesn't just apply to larger aircraft either.

If the OP doesn't have this level of background, perhaps find a way to work for someone who does. Otherwise, how can you answer a buyer or sellers questions intelligently?

 

[Jeff K]

Industry standard is for the buyer to pay for the title search. It is their responsibility to make sure the airplane they are buying is free and clear. I used to buy title searches when I would sell an airplane, but ran into issues if it took a few months to sell an airplane. The prospective buyer would not except a title search that was 2-3 months old, and I understand that..

While I agree the buyer should pay for the title search, I strongly disagree it is the buyer's job to clear the title. I'm not going to be chasing down 30 year old zoombie liens like some broker wanted me to. I'm willing to wait (and did with my last plane) for them to be cleared... but that is the seller's problem not mine.

If I get a loan, the bank sure isn't going to accept liens on their collateral. Just because I'm paying cash doesn't change that. I don't close unless a title insurance policy is issued (I pay for), and that almost always requires liens be cleared.

I've walked away from two broker deals where we agreed on price yet they wouldn't work within these parameters. But every individual owner I bought from (3) could work within these parameters. One had a 30 year old lien from a 4 time sold bank that it took him 3 weeks to clear. But he did.

 

[hkyplr18]

Absolutely Jeff. It should be the Sellers responsibility to handle old liens. I won't purchase an aircraft until the liens are cleared for good or I have a copy of the lien(s) release(s) in my hand. When I said it's the buyers responsibility to make sure the title is clear I meant by way of a title search, NOT clearing them up.

Take Care

While I agree the buyer should pay for the title search, I strongly disagree it is the buyer's job to clear the title. I'm not going to be chasing down 30 year old zoombie liens like some broker wanted me to. I'm willing to wait (and did with my last plane) for them to be cleared... but that is the seller's problem not mine.

If I get a loan, the bank sure isn't going to accept liens on their collateral. Just because I'm paying cash doesn't change that. I don't close unless a title insurance policy is issued (I pay for), and that almost always requires liens be cleared.

I've walked away from two broker deals where we agreed on price yet they wouldn't work within these parameters. But every individual owner I bought from (3) could work within these parameters. One had a 30 year old lien from a 4 time sold bank that it took him 3 weeks to clear. But he did.

 

[jimd118]

No problem. Hope I was able to give you some insight to what you're getting into. Using an escrow service is a good deal for all parties involved and you will learn some stuff from them too.

I might pick your brain on some of the HD video stuff. I've recently started shooting video with a GoPro and learning how to edit and make a decent video. It really is a great way to present an aircraft!

Joe

Yes, very helpful. Im not going to pretend to be an expert in areas I am not so I will be highly suggesting clients use professional services for title issues and dealing with the safe transfer of finances.

I would also be happy to lend you a hand with any video questions you have, Photo as well. Photography is something I feel is extremely overlooked in the marketing of aircraft. Quality images that are high resolution and properly colorbalanced, etc., not only draw attention in listings over others, but also allow the buyer the capability to better make a decision on overall cosmetic condition of the aircraft and if its what they are looking for. I can tell you how many aircraft I went and looked at when I use to purchase aircraft for my previous employers flight school that looked nothing like they did in the pictures because of the low quality images. Many were much worse in person, some however were much nicer than the poorly lit low resolution images were to lead you to believe. What a shame when you have a gem and you project it to you potential customers as something less. I would be happy to give you some basic info and affordable options to do some basic editing without getting overly involved in the technical side of editing.