Mesinger Pulse – “Where Does An Aircraft Broker Add Value? Or Not!”
I promise this article is not meant to be self-serving but having been an aircraft broker for 43 years and interacting daily with other terrific professionals I do think it is a topic that is important and that I am capable of speaking about.
Aircraft sales professionals are hired by owners and sellers to successfully market and sell their aircraft. I compete in this arena daily. I, like many of you reading this, often lose a listing opportunity to others who might quote a lower price to perform the services, and/or overstate the value of the aircraft to be sold, or the combination of both. It reminds me a little of the Wizard of Oz. Behind the curtain the Wizard can claim anything. Of course, in practice promises do not always come true.
Everyone will promise hands on, out from behind their desk participation. Delivering on this is often a very different story. Let’s start at the beginning. Once your broker has signed up your listing do they actually travel to the aircraft with technical representation and start from scratch to build a current specification sheet? Do they really take the time to read all the logs and build what we call a site visit report? To us these elements are critical value adds and without them accurate representation will be next to impossible. I am finding more and more of my fellow brokers investing in full-time in-house technical personnel. We have had this component on staff with us full-time for over 20 years. There is no extra charge for this piece of our service but either working alone, or even better, with the sellers DOM magic occurs. Smart answers can be given to prospects and buyers. We hear too often from brokers that they have not actually ever seen the aircraft or the logs and records for planes they are representing. Many times, we will go see a plane on behalf of a buying client and are the first to really lay eyes on it, and more times than we would like, are disappointed with the findings.
Accurate pricing of the aircraft brings huge value to the seller because good solid pricing both in what to ask and what an accurate sale price will be means fewer days on the market. That is value! Having sellers try to impact the pricing discussion based on an amount owed on the plane or some misguided percentage of what was paid typically has no real bearing to the market today based on comps and recently sold intel. No question about the value added here by the broker and its research staff.
Aircraft showings are another place that real value can be added. Honestly, we like most of our counterparts, do not attend every showing of the aircraft. Very often a prospects pilot may just coincidentally be at an airport where an aircraft that is for sale is based and we get a call asking if they could stop by for a quick look. Sometimes a broker may go on a roadshow to look at perspective aircraft to build a list of aircraft to present to their buyer. In those pop-up cases, even we would ask the flight department to open the plane and show it. For all key showings, the broker should be on-site to sell the plane.
The pre-buy and closing functions are other obvious areas the broker should be hands on and on-site. The technical side of the brokerage firm should be at the aircraft movement to the pre-buy and input as well as key times during the inspection and rectification of discrepancies. Movement to the closing location and the actual closing are also very important times for the broker to be present to guide this final phase.
Let’s now talk a minute about how value is not added. This occurs when a broker suggests they have an exclusive listing on an aircraft and in fact really do not. Believe it or not this happens more often than any of us would like. This person that tries to wiggle in the middle will usual be the cause that a deal does not happen. They bring confusion and distractions to real buyers and sellers trying to make a deal. Offering price guidance to a buyer that is not really vetted by the seller is another way deals do not happen. One of the most problematic areas of non-value is the broker who really does not have the credible relationship with the aircraft and tries to craft a back-to- back deal. This can bring so many negative distractions and problems that deals seldom get done under this structure.
Bottom line, take the time to find a credible reputable broker. Ask probing questions, check references and be willing to pay an industry acceptable fee to the broker. Problems typically occur when a buyer or seller believes they can pay cut rate fees for full fare services. It never works. Then when the deal starts having problems the broker is blamed and our standing in the community suffers. If something is too good to be true it usually is and you get what you pay for!