Choose a broker. Referrals from other Sellers are always good. Referrals from within the industry occasionally have more to do with Finder’s Fees than actual qualifications. Be sure to ask prospective brokers who they work with – attorneys and escrow agents for example – for references. You’ll want a full-time broker (not a part time pilot or mechanic who might “list” your aircraft for you on the side) and be aware there are no U.S. or International training or licensing requirements for Aircraft Brokers. Active professionals are usually members of organizations such as NBAA or EBAA, and recently a couple of organizations have started certifying aircraft sales professionals (ICASP.org and aba-international.org) but these are still relatively new to the industry. The Seller’s broker is paid by the Seller and the Buyer’s broker is paid by the Buyer. Commissions vary from a flat fee to between 1% and 5% each. Hard costs of advertising (see Market The Aircraft below) are usually paid by the Seller in a slow market. Your contract should outline clearly all expenses and all fees to be paid or received by your broker relating to this transaction.

Set a Price. While it's a good idea to have a rough idea what others are asking for comparable aircraft on the market – you’ll almost certainly need the services of a broker or appraiser to determine your aircraft’s actual value since even minor differences can have huge financial impact on an aircraft’s sales price. Bluebook calculations are available thru publications such as Price Digest and VRef, however, standard bluebook figures are not typically as relevant as those used in the auto industry, due to issues such as lack of central reporting of aircraft sales for either tax or license requirements, and non-disclosure-of-price terms included in many transaction documents resulting in difficulty determining true "sold" prices.

Like any other asset, too high of a price may get your aircraft “skipped over” in the initial search; and while not setting any price at all is one sales strategy, some Buyers do not make offers on aircraft where there is no starting point to assess the motivational level of the Seller. Since an aircraft is likely to receive the most attention when it first appears on the market – appealing to the existing Buyers might be more cost effective than paying holding costs and waiting for the next round of Buyers.

Some holding costs should be included in your calculations. How many aircraft are currently for sale, current turnover (sales compared to aircraft entering the market), condition of your aircraft (maintenance, interior and exterior) and financing will all affect the time for your aircraft to sell – so you’ll need to allow for holding costs (monthly payment, insurance, upkeep etc.) for the aircraft until it is delivered to the Buyer. Be aware even an aircraft parked until sold will need some "exercise" and regular maintenance to be appealing to the most Buyers.

Last, Sellers should allow a reasonable budget for any maintenance or repairs that are part of the PrePurchase Inspection or outlined in your Sales and Purchase Agreement/ Offer. The Buyer typically pays for the PrePurchase Inspection (also called the PreBuy), and while most aircraft in current operation are obviously safe and well-maintained, it’s typical for an aircraft to need a number of items repaired or replaced as the result of the extensive inspection by the Buyer’s mechanics and/or pre-purchase inspection facility. When an item is borderline, the Seller typically will end up repairing or replacing it – and the PreBuy facility is effectively the final authority on what must be done.

Market The Aircraft. Your broker will have suggestions for marketing of your particular make and model. There are a number of online services they'll likely use, including broker-only sites such as JetNet and AmStat, online Buyer sites such as The Controller and JetList, and a multitude of printed publications (although the online versions of most publications seem to be supplanting their printed ones in readership). Your broker will also have his or her own website promotion and be able to arrange email and direct mail marketing. Upfront costs should include professional photos as these are key to proper marketing; if you are paying for them, you may wish to request copies for your files which do not include an FBO name in the background or have a permanent broker's logo affixed. Except in a fast (Seller's) market, hard costs for marketing and advertising are paid by the Seller.

Tax Notes. The sale of an asset of this size may have notable tax consequences. Also, if you are purchasing another aircraft or asset for offset you may wish to have escrow work with a holding company to assist in the timing of the asset transfer. Be sure your aviation professional (whether that be a broker, accountant or attorney) has reviewed your situation and advised you accordingly.

Jet Buyer

Ascertain Your Needs. This usually starts with a review of your current flying pattern. Distance you fly, preferred airports, number of passengers, baggage and turn around time. Add in your preferences such as size of aircraft (flat floor, lavatory etc) and finances (monthly payment and tax situation). THEN you’re ready to talk to a professional about options – simple charter, fractional, partnership, or straight purchase/lease – and variations on all of these such as owning an aircraft but putting it into Charter operations to help offset some of the costs or management oversight. Last, you can narrow down the make, model, year and amenities you’d prefer. A professional broker will also help you with the less obvious decisions such as avionics and engine programs – or aircraft with higher or lower values due to model options, damage, maintenance history, or even serial number sequences.

Choose Your Team. Many people start by choosing a broker. A broker can be the person with the Listing on the aircraft you wish to buy – in which case their “job” is to sell you that particular aircraft. This might save you a bit in broker’s commissions if the aircraft you are considering is truly the right aircraft for you. The other option is to hire a Jet Acquisition Broker/Specialist. This person is not hired just to buy you one specific aircraft – but to make sure you get the right aircraft and have the right information and team in place to put the transaction together smoothly. Your broker (or their contacts) will be able to estimate the cost and downtime for upgrades you want or your aircraft needs for the type services it will be used for. It’s important to realize the sales prices is not the only true “cost” of the aircraft. The usability, operating costs (cash and tax-related), plus resale values need to be worked out between you and your team going in.

Financing Basics. Aircraft are not typically sold “subject” to the Buyer qualifying for the loan, so you might wish to have a backup plan if your lender is slow to process paperwork – and not all lenders are as familiar with jet acquisitions as they profess. Be sure to check with both brokers (Buyer and Seller) to see if there is a lender you should consider. A number of jets are simply purchased with a wire transfer from a company or personal line of credit, with financing arranged shortly thereafter. Lenders will usually require an appraisal (at the Buyer’s expense) but since this is the ultimate “fly away” asset, the Buyer’s finances tend to be more controlling for the terms of the loan or lease.

Tax Notes. How you hold title to the aircraft, how it is operated, where it is delivered and resides, can all affect your tax consequences. Be sure your aviation professional (whether that be a broker, accountant, or attorney) has reviewed your situation and advised you accordingly.

Jet Sale Time Frames

Overall Time Frame. The first question everyone asks is how long from start to finish – and the proper answer is “it depends.” The two largest hurdles in every transaction tend to be attorneys fussing over contract details and PreBuy repairs which might require a little give and take. Want things to go quickly? Be prompt with your paperwork and flexible with your terms. It’s critical in jet sales or acquisitions to remember every person involved in this transaction tends to be a Type A personality – sometimes with notably quirky styles which have been successful for them in the past. When both the Buyer and Seller are reasonable, sales transpire quicker and with less overall stress. That said – the “rule of thumb” in jet sales is about six weeks from Offer to Delivery.

Offer and Acceptance. (3-7 Days) A Buyer or Buyer’s representative will make a written Offer (sometimes called a Letter of Intent) to Seller or Seller’s broker – usually a very short form outlining a price and general terms – including the length of time to be allowed for Buyer’s initial Visual Inspection and the length of time for both parties to agree to and sign a more detailed Purchase and Sales Agreement (PSA). The terms will usually include the amount of a refundable Deposit to go into escrow immediately upon acceptance. It is important to note there is NO standard Offer or Purchase and Sales Agreement in the industry – terms must be reviewed carefully. The initial PSA might be prepared by the Buyer, the Seller, or one of the brokers – and is approved by both Buyer and Seller during or after the Visual Inspection and prior to the aircraft going to the PrePurchase / PreBuy inspection.

Visual Inspection. (3-5 Days) After an Offer is negotiated and accepted, the aircraft, all original logs and maintenance records should be made available to the Buyer and his/her mechanics for the preliminary inspection. Buyer usually has a limited number of days (three to five business days) to do the Visual Inspection and assure the aircraft is as expected and approve or reject the aircraft. If the Buyer does not approve the aircraft, the Offer is void and the Buyer’s deposit is typically refunded by escrow and the aircraft is returned to the market. If and when the Buyer is satisfied the aircraft is as expected, the Buyer will notify the Seller in writing.

Purchase and Sales Agreement. (5 - 10 Days, Concurrent with Visual Inspection) An Offer may be made in a short form with a longer Purchase and Sales Agreement (PSA) to be negotiated by the parties’ attorneys within a few (usually ten) days, or the original Offer may be made thru a full PSA supplied by either the Buyer or Seller. The PSA usually indicates at what point the deposit becomes non-refundable and other terms such as the scope of the PreBuy Inspection and facility that will be used.

Formal Escrow. (Concurrent) Once the Buyer has approved the Visual Inspection and both parties have signed the PSA, the deposit in escrow becomes non refundable – subject to all terms in the PSA which usually include the Seller rectifying all airworthy items noted in the PreBuy Inspection to come, along with any other maintenance or general terms agreed by the parties. Escrow instructions are usually determined from the PSA. Escrow can confirm the Buyers deposit, Seller’s marketable title, and accept documents for funding, transfer of title, insurance etc. Escrow fees are normally split 50/50 by Buyer and Seller. Buyer usually finalizes funding arrangements (including the aircraft appraisal as required by the lender) while the aircraft is in the PreBuy Inspection.

PreBuy Inspection. (5 – 21 Days) PreBuy can be as simple as performing the next maintenance event at the Seller's expense, or quite complex, expensive, and invasive. The Buyer usually pays for the inspection, and the Seller is usually committed to paying for any Airworthy discrepancies discovered. Which facility does the inspection, and the scope of the inspection should be clearly outlined in the PSA. Both Buyer and Seller may wish to have a mechanic representative involved or even onsite for the inspection which can take from a couple of days to a month or more (including repairs). Keep in mind Airworthy discrepancies may differ from aesthetic expectations for completed work. There can also be items where it is in the Buyer's best interests to have work done at the Buyer's expense during the PreBuy – an example might be replacing light bulbs in a panel that has been removed for inspection where the cost of new bulbs as a preemptive repair is cheaper than replacing them as a separate maintenance item later. [There is NO standard PreBuy inspection, although many facilities refer to a standard “Stage 3 PreBuy Inspection” for all makes and models. Be aware only a few manufacturers have actually established what would be in a Stage 3 PreBuy Inspection. While there is also NO preset estimated costs of repairs, another rule-of-thumb in the industry is the Seller can expect to incur about 3x in repairs what the Buyer pays for the inspection.]

Final Documents and Delivery. (3 Days) As inspection and any discrepancies from the PreBuy Inspection are addressed, both Buyer and Seller should be placing appropriate documents into escrow (registration, bank payoff and new financing, insurance etc.) Buyer usually has two or three days to transfer final funds once the aircraft is certified complete by the PreBuy facility. Depending on the PSA terms, the aircraft is then moved to a tax friendly location for the final transfer of funds, title, and delivery to the Buyer.

One Last Note. No one person knows everything about jet transactions. This is a complex and ever-changing industry. You want to work with professionals who are upfront about what they know (or need to research) and have good rapport with other professionals – accountants, tax and aviation attorneys, insurance agents, maintenance and refurbishment centers, lenders, and management companies.

Please let us know if you have any suggestions for making JetSales 101 more helpful - suggestions and comments are always welcome!

“Flying commercially instead of privately is like having your employees use slow computers - the work gets done - but it's a classic case of penny-wise and pound-foolish.”

- Tina Bartel, President of Mach+Media Inc.

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Additional information on jet purchasing and professionals:

Top Recommended Aviation Websites - www.jetlist.com/top-aviation-websites.php

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Additional information on jet makes, models and manufacturers:

Airbus Jets - A318 Elite, A319CJ
Beechcraft Hawker Jets - 1000 A/B, DH125, 700 A/B, 4000 Horizon, 400XP, 750, 800A, 800B, 800XP, 850XP, 900XP
Beechjets - 400, 400A
Boeing Jets - BBJ, BBJ2, BBJ3, BBJC
Bombardier Challenger Jets - 300, 600, 601-1A, 601-3A, 601-3R, 604, 605, 800 /850, 870 /890
Bombardier Learjets - 23/24/25/28/29, 31/31A, 35/35A, 36/36A, 40/40XR, 45/45XR, 55/B/C, 60, 60XR
Cessna Citation Jets - 500/525, Bravo, CJ1/2/3/4+, Encore+, Excel, I/II/III, Mustang, Sovereign, Ultra, V/VI/VII, X, XLS+
Dassault Falcon Jets - 10, 100, 20, 200, 900, 2000, 7X
Diamond D-Jet and Mitsubishi Diamonds - D-Jet, MU Diamond I/ IA/ II
Dornier 328Jets - Envoy
Eclipse Jets - EA500 VLJ
Embraer Jets - Legacy 600, Legacy Shuttle, Lineage 1000, Phenom 100, Phenom 300
Global Express Jets - 5000, Express, Express XRS
Gulfstream Jets - Astra, II, III, IV, V, 150, 250, 250, 350, 450, 550, 650
Premier Jets - I, IA, II
Sabreliner Jets - 40, 50, 60, 65, 75-80
Westwind Jets - 1, 1123/1124, 2

Jet Sales 101 includes general scenarios only - every aircraft transaction varies.
Please consult with your appropriate tax, legal and aviation professional !