Unlike Real Estate, there are no rules or regulations to protect aircraft owners who use brokers to sell their aircraft.

It is very important, therefore, for sellers to thoroughly research the company or individual they plan to do business with. Equally as important, buyers should educate themselves on brokers and dealers that represent aircraft before purchasing through a particular firm. Lack of due diligence can significantly impact the quality of the transaction and the quality of the asset. Continue reading and you’ll learn some of the trade secrets that each buyer and seller should know.

SECRET #1.

ANYONE CAN BE A BROKER.

Forget everything you’ve learned about the real estate industry because it doesn’t apply in aviation sales. Even though the value of assets traded meets or exceeds most real property transactions, few standards exist. There are no licensing, continuing education, or experience requirements and no ethical standards. As amazing as it may sound, all it takes to become an aircraft broker is to call yourself one. There are many very, very good aircraft brokers, but there are also many who are simply in the business to make a quick buck and who do not know how, or are simply not interested in, representing aircraft professionally.

SECRET #2.

MANY BROKERS HAVE NEVER EVEN SEEN THE AIRCRAFT THEY REPRESENT.

In the industry this is known as a “paper” brokerage. Brokers and dealers who do not have firsthand knowledge of an aircraft can’t accurately relate information to prospective buyers. Ask prospective broker’s how they plan to market your aircraft. If they do not plan on inspecting the aircraft themselves, ask how they plan to relate its features to prospective buyers. If you’re the buyer, a broker who cannot relate first hand information is wasting your time and money.

SECRET #3.

FULL DISCLOSURE IS RARE.

Basic prudence demands you to be fully aware of all aspects of the transaction. You should demand that the broker representing your interests keeps you fully informed of all dealings involving your account. Secrets 4 & 5 below highlight two specific situations often encountered when a broker does not have a full disclosure policy in place.

SECRET #4.

FOLLOW THE MONEY.

Who is getting paid and by whom? Aircraft brokerage transactions are notorious for including payments to parties unknown to the buyer and/or seller. Call it what you like, but these practices are unethical and often cost buyers and sellers extra money. If your broker will not provide full disclosure as discussed in Secret #3 you can be certain the money trail will be a little fuzzy.

SECRET #5.

NO CONFLICT OF INTEREST STANDARDS APPLY.

Watch out here. Some of the more common practices include seller’s agents representing buyer’s for the same airplane, broker’s performing “certified” appraisals, broker’s acting as your escrow agent, and buyer’s agents accepting money “off the books” from the sellers broker to facilitate the sale. Getting back to Secret #3 again, full disclosure is imperative. Demand a full and complete accounting from your broker during and after the transaction. A reputable firm will provide this to you without your asking.

SECRET #6.

MARKETING EFFORTS ARE OFTEN LACKLUSTER, AT BEST.

Most owners want their aircraft to be sold as quickly as possible. This involves the expenditure of time and money by your marketing partner – many of whom are reluctant to commit significant resources on your behalf. Get answers to the following questions:

• Where will my aircraft be marketed?
• Are internet, e-mail, traditional mail, and telephone campaigns included?
• Will print advertising be used?
• Do you actively promote your company?
• How do your marketing efforts differ from your competitors?
• Will you provide me with regular market updates?
• Do you provide me with regular reports on your marketing activities and progress?

SECRET #7.

UNREALISTIC EXPECTATIONS ARE SET.

This typically comes in the way of broker’s telling you to expect a higher sales price for your aircraft than is realistic in order to earn your listing business. We all want to hear our aircraft is worth a staggering amount, but pricing an aircraft unreasonably high prolongs the sales process and may even taint the reputation of the aircraft as it languishes on the market for an extended period.