Buying a Jet
How to send the right signals to the seller…
If you have found the jet that’s exactly right for your requirements, the last thing you want to do is lose it because of miscommunication or disorganization. Jet Tolbert of American Aircraft Sales advises on how to make your offer stick…
Let’s suppose that you’ve done your due diligence and you’re ready to make an offer for a business jet. You haven’t merely skimmed the advertisements and decided to buy the jet for sale with the most attractive paint job. Instead you have identified features you want, the amount you’re willing to spend in advance, and your annual budget for operations (with maintenance reserves).
Consulting your acquisition team (consisting of an aircraft broker, chief pilot and director of maintenance) you have determined the best aircraft for your budget and flight profile, and accounted for your projected ownership period. Financing has been secured, and an aviation attorney and escrow agent are on standby. You have a plan for your purchase, ownership and exit.
Gaining Seller Cooperation
From a seller’s perspective this is all very pertinent information. Although we live in a buyer’s market, sellers can still be more, or less cooperative depending on how they perceive the transaction will likely proceed with a particular buyer.
Understandably, the seller will want to know that they are dealing with an educated buyer who is experienced in aircraft ownership, or, if they’re a first-time buyer will at least have everything together to enable the efficient conclusion of the transaction.
Oftentimes the seller’s representative can get a feel for the buyer, assessing what they will be like in a business deal, and ultimately how likely it is that they will follow through to a successful closing. When you consider that an aircraft transaction can take anywhere from several days to months, it is understandable that the seller will be careful when it comes to committing time and resources to a potential transaction and removing the aircraft from the market.
Giving Sellers ‘Wrong Signals’
There are plenty of situations in which a seller can receive a ‘wrong signal’. A buyer needs to be aware of this, avoiding raising any red flags whether real or perceived.
One of the fastest ways for a buyer to downgrade the rating of their offer is to include no deposit or a fully-refundable deposit when they make their offer, subject to a demonstration flight. The seller will almost certainly pigeonhole that buyer as a ‘non-buyer’ who’s only interest is in getting a free charter.
Other ‘wrong signals’ might be communicated during early conversations with the seller’s representative. This stage of discussions can be something of a minefield for the buyer, and can result in the seller being less likely to make concessions. The wrong answers to some of the seller’s early questions can deal a fatal blow to the prospective transaction.
Buyers must remember that sellers who are not careful can get stuck with the associated costs of removing their aircraft from the market. Thus sellers want assurances that the buyer is serious, and that they have the means to get the transaction done.
Buyers need to be careful regarding advice. Input from the wrong source can lead to a lost deal, whether at an early stage or deep into a transaction that gets delayed or cancelled while the buyer scrambles to get the ducks in a row, at the expense of the seller – all because of unpreparedness and poor advice.
Remember that even in a down market the seller is likely to be in contact with multiple prospects, all of whom will be expressing different levels of interest. Sometimes competing offers will be in play at the same time.
In essence, the seller will want to know that they are placing their expectations on the pragmatic buyer who has a reasonable sense of urgency. As that buyer, you don’t want to waste time negotiating back and forth on items that are industry standards.