Buying Aircraft 101: How to select the right aircraft! By Ken Dufour, ASA, MAM, ATP, CFI and Jason Zilberbrand, ASA, CAA, ISA AM, AOA AM, MRAeS
The purchase of an aircraft represents a significant commitment that should be approached carefully and cautiously, especially when buying a used aircraft. For many aircraft owners, it means the most extensive single lifetime investment next to purchasing a home. Quite often, the purchase price of an airplane approximates or exceeds the price of a new home. While not every aircraft acquisition will face obstacles, it is essential to know what potential issues are lurking and the best way to mitigate the process. In this article, we will examine buying an aircraft and offer some advice on the purchase process.
The majority of people entering aviation will purchase a pre-owned aircraft. Any aircraft, but especially when buying a used aircraft, it is wise to have the selected aircraft inspected by a qualified person or facilities before you complete the transaction. The condition of the aircraft and the state of its maintenance records can be determined by persons familiar with the particular make and model. Pre-purchase inspections should be performed by a Federal Aviation Administration (FAA) certificated airframe and powerplant technician (A&P) or an approved repair station. The buying an Aircraft Checklist found at the end of this article is a suggested list of items to consider when purchasing an aircraft. Keep in mind; you are on your own literally when you buy an airplane. There is no consumer protection, no lemon law, and every aircraft transaction is "as is, where is."
Selecting the Aircraft
One of the most common mistakes in purchasing an aircraft is to make a decision too quickly. Take the time to analyze your requirements carefully and be realistic. Consider the typical flight loading, trip distance, and conditions of the flight, then compare aircraft. This is called your mission profile, and it's smart to buy a plane that fits 80% of your flights; in other words, if you plan on going to Europe once a year, consider chartering instead of trying to buy a larger aircraft.
If possible, rent or charter the type of aircraft that interests you to determine how well it meets your requirements. Keep in mind that the most significant expense of owning a plane is not always the initial purchase price. So you will need to determine what your monthly budegtary limits are for things like maintenance, insurance, and storage.
Where to Look
Once you have chosen the type of aircraft that will fit your needs, shop around, and do some pricing. For retail and wholesale price information, check with an aviation trade association, bank, other financial institution, Fixed Base Operator (FBO), or the latest edition of VREF Aircraft Value Reference & Appraisal Services. There are several useful publications available that advertise aircraft for sale. Your local FBO can be beneficial as you look for the right plane. You might be interested in finding out that Facebook has become a great resource to locate aircraft for sale. So check those private groups often.
Factors Affecting Resale Value
Know the significant factors that affect resale value. Generally speaking, they are:
•Engine hours—perhaps the most common influence on resale value. The closer an engine is to its recommended time between overhaul (TBO), the lower the value. Many factors affect engine health, and a high-time engine is not necessarily bad. Regular use helps keep seals and other engine components lubricated and in good shape.
•Installed equipment—such as avionics, air conditioning, deicing gear, and interior equipment. The most valuable equipment is usually avionics, which can easily double the value of some older aircraft.
The newer the technology, the higher the value of the aircraft. You will get more buyers with a modernized cockpit!
•Airworthiness directives (ADs)—issued by the FAA for safety reasons. Once issued, owners are required to comply with the AD within the period allotted. It is essential to look at the AD history of an aircraft and ensure the logbooks show compliance with all applicable ADs.
•Damage history—it may be challenging to locate a complete damage history for an aircraft. Any aircraft with a damage history should be closely scrutinized to ensure it has been repaired correctly in accordance with the applicable Title14 of the Code of Federal Regulations (14 CFR) parts and recommended practices.
•Paint/Interior—as is the case with homes, paint can be used to give “tired” aircraft a quick face-lift. Check new paint jobs carefully for evidence of corrosion under the surface. Interior items should be checked for proper fit and condition.
Be careful of the terminology used to describe engine condition. Do not confuse a top overhaul with a significant overhaul, or a major overhaul with a factory remanufactured “zero-time” engine. A top overhaul involves the repair of engine components outside of the crankcase. A major overhaul involves the complete disassembly, inspection, repair, and reassembly of an engine to specified limits. If an engine has had a top or major overhaul, the logbooks must still show the total time on the engine, if known, and its prior maintenance history.
A “zero-time” engine is one that has been overhauled to factory new limits by the original manufacturer and is issued a new logbook without previous operating history.
Aircraft records maintained by the FAA are on file at the Mike Monroney Aeronautical Center in Oklahoma City, Oklahoma. Copies of aircraft records are available for review in CD format or paper. For information on ordering and costs, contact the FAA Civil Aviation Registry Aircraft Registration Branch (AFS-750). Copies of aircraft records may also be requested online. Visit www.faa.gov and select the “Aircraft Registration” link.
There may be other records on file at federal, state, or local agencies that are not recorded with the FAA.
Make sure the following documents are available and in proper order for the aircraft:
• Airworthiness Certificate
• Engine and airframe logbooks
• Aircraft equipment list
• Weight and balance data, placards
•FAA-approved Airplane Flight Manual (AFM) and Pilot’s Operating Handbook (POH)
CAUTION: Missing documents, pages, or entries from aircraft logbooks may cause significant problems for the purchaser and reduce the value of the aircraft.
The Federal Aviation Act requires the FAA to maintain a recording system for aircraft bills of sale, security agreements, mortgages, and other liens. This is done at AFS-750, which also processes applications for, and issues, aircraft registration certificates. The two systems are linked together because you must prove ownership to be entitled to register an aircraft.
“Clear title” is a term commonly used by aircraft title search companies to indicate there are no liens (e.g., chattel mortgage, security agreement, tax lien, artisan lien) in the FAA aircraft records. Title searches for the aviation public are not performed by AFS-750; however, the aircraft records contain all of the ownership and security documents that have been filed with the FAA.
AFS-750 records acceptable security instruments. Also, some states authorize artisan liens (mechanic liens). These also need to be recorded. Be sure to check your state’s statutes regarding liens.
CAUTION: Federal liens against an owner (drug, repossession, etc.) may not show up on your title search. State law determines lien and security interests. Although there is no federal requirement to file lien or security instruments with the FAA, the parties to these transactions can file their qualifying documents with AFS-750. You may search the aircraft records, or have this done by an attorney or aircraft title search company.
CAUTION: FAA registration cannot be used in any civil proceeding to establish proof of ownership. There is no substitute for examining the aircraft’s records to secure an ownership history and to determine if there are any outstanding liens or mortgages. This procedure should help avoid a delay in registering an aircraft.
The previous owner of the aircraft should provide the aircraft’s maintenance records containing the following information:
•The total time in service of the airframe, each engine, and each propeller;
•The current status of life-limited parts of each airframe, engine, propeller, rotor, and appliance;
•The time since the last overhaul of all items installed on the aircraft that are required to be overhauled on a specified time basis;
•The identification of the current inspection status of the aircraft, including the time since the last inspection required by the inspection program under which the aircraft and its appliances are maintained;
•The current status of applicable ADs, including for each the method of compliance, the AD number, revision date, and if the AD involves recurring action, the time and date when the next action is required; and
•A copy of current major alterations to each airframe, engine, propeller, rotor, and appliance.
Before buying an aircraft, you should have a mechanic you trust to give the aircraft a thorough inspection and provide you with a written report of its condition. While a pre-purchase inspection need not be an annual inspection, it should include at least a differential compression check on each cylinder of the engine and any other inspections necessary to determine the condition of the aircraft.
In addition to a mechanical inspection, the aircraft logbooks and other records should be carefully reviewed for such things as FAA Form 337, Report of Major Repair or Alteration, AD compliance, the status of service bulletins and letters, and aircraft/component serial numbers.
Buying an Aircraft Checklist
This checklist is intended to provide a suggested list of items to consider when purchasing an aircraft. It is not an all-inclusive list, and if you have any questions, you should consult with an experienced aviation professional before purchasing an aircraft.
For more information on aircraft appraisals or to get an appraisal, please contact Jason Zilberbrand, ASA, CAA, ISA AM, AOA AM, MRAeS at Jason@VREF.com.
The above article is intended to provide an explanation and augment in pilots or technicians' language, topics to introduce aircraft owners and operators with supplemental information for our VREF subscribers. It is intended as a guide. Contact your nearest FAA Flight Standards District Office (FSDO) or FAA.gov for additional information. The data/information is obtained from numerous FAA and other industry sources. It is edited and believed to be accurate. VREF does not warrant the accuracy or the source material and assumes no responsibility to any person in connection with the use of this VREF article. Permission to reprint this article is granted, so far as the context of the information remains intact and appropriate credit is given to VREF Publishing.