So, You Want to Hire a Broker to Sell a Plane: A Step-By-Step Guide
Are you thinking about selling a plane?
It is possible, but it can be quite challenging to do it on your own. That's why you need to consider hiring a broker.
However, you shouldn't hire the first person you meet. In this article, we will go over how to hire a broker to sell your plane correctly.
So let's go over what you need to know, to sell a plane.
What Should You Expect?
First and foremost, an expert broker should be trustworthy, experienced, knowledgeable, and have an extensive network within the industry. You are hiring the broker because he or she has a qualified list of potential buyers, along with a long list of closed transactions. A broker should be able to identify critical attributes your aircraft has or doesn't have, and be able to provide an accurate assessment of both price and time to sell your aircraft.
A broker should act to protect your best interests, and be willing to provide you with all of the support necessary throughout the process. This includes gathering the data to list the aircraft properly. A correctly listed aircraft should be seen in person by the broker, although with these trying times, that might not always be the case, so consider a virtual walkthrough. This should include records, logs, and aircraft. Your broker should be able to recognize if maintenance is not up to date or advise you on conditional issues that may impact the sale. As a seller, do your self a favor and clean/detail your aircraft before the visit. While you are at it, get those logs and records organized, and please don't intentionally hide an issue. Not only will it cause problems down the road, but any reputable buyer and their representatives will find it.
In any case, let's go over some points of interests and questions you can ask to determine if the broker is right for you.
Do I need a large firm, a smaller firm, or a person?
Transparency, disclosure, and ethics all go hand in hand. You should know who is selling your aircraft.
Is there a difference when you select a large firm versus an individual?
Yes and no, and in some cases, this all boils down to the aircraft type. The truth is any broker who regularly advertises aircraft for sale, and then closes sales on a regular reoccurring basis is an active broker. An active broker will have a better pulse on the market and be aware of issues that may affect your aircraft like AD's or common pre-buy problems and how to mitigate them.
Some of the best firms are one-person operations, and they have to choose clients wisely as their only commodity is time. You might like having a dedicated person working with you and not having to deal with a ton of other transactions.
You might also be in a position that your dream aircraft is one that is considered specialize,d, and therefore, your list of brokers will be short.
So there is no advantage over the size of the firm, just in the quality of the listings, activity levels, and expertise.
How Will You Market the Plane?
Ah, don't you miss the days of the Rolodex? Are you old enough to know what it is? Some things get ruined with technology, and the "pocket" listing along with the buyer's contact information was one of those things that separated the wannabe from the legitimate broker. However, now with the internet and the variety of marketing opportunities - you no longer have to depend on your broker knowing every buyer, just how to find them. The brutally honest truth is that if your aircraft is listed correctly, and advertised in all of the normal channels that buyers will seek it out. Just make sure your broker's phone personality is one of a deal maker, not breaker because dealing with tire kickers is part of the process.
Is the plane going to be listed on all databases? Will the broker send marketing emails? Will they handle videos and photos? Is their website attractive and usable?
Ask them for the marketing plan, and look at all the other listings, so that you can get an idea on how your plane might be promoted shortly.
Want to know exactly how much your plane is worth? Check out our appraisal guide.
Do You Take a Percentage or Charge a Flat Fee?
Each broker handles the commission differently. You want to know precisely how the broker will charge you their commission's fee.
A seller needs to engage the broker with a contract, and those sellers looking to accomplish a sale with a committed brokerage firm should be prepared to sign a contract. One common issue that I see coming up over and over is how much to pay a broker.
There are two options, the flat fee or a percentage of the sale. There is no right or wrong, and in some cases, a flat fee is the only logical option for a broker based on the value of the aircraft.
Some brokers will eat the marketing expenses, and some will pass it on to you. These are all items to be negotiated.
Most brokers will work without a retainer, and some will make it mandatory based on the location of the seller, the aircraft type, and any extended term challenges to sell it.
How Long Will It Take to Sell my Plane?
Each transaction is different, but you should still ask for an approximation of time the broker expects it to take to close. If it sounds too good to be true, then ask for some proof of the closing period. Has the broker recently sold a like-kind aircraft?
Again, you want to work with someone who sells planes regularly. But if that is an issue you are seeing, you might look elsewhere.
Pay the fees out of Escrow at Closing
Quite rarely will a broker take money upfront, so don't expect to see this. So unless your agreement states some sort of financial compensation or retainer in the beginning, pay only upon completion of the sale. Your escrow agent (yes, you need to use one) will handle the disbursements, including the fees to your broker.
Don't wait until the 11th hour to discover there is a disagreement and make sure everyone has signed off on fees, who gets what, and, more importantly, who is being paid. Do not wait until the closing call to ask.
Sell a Plane - the Right Way
Now that you sort of understanding the pragmatics behind hiring a broker to sell a plane, you are well on your way to doing just that: selling an airplane.
No matter what size, type, condition - your plane should be capable of selling in some shape or form. So its best that you vet out and find the right broker who will be able to perform on the highest level and find the best buyer for your aircraft.
If you're interested in our appraisal services, get in touch with us now, and we will happily accommodate you. Jason Zilberband is a Senior Accredited Appraiser with the American Society of Appraisers (ASA), he can be reached by visiting HERE.