A frequent question we get from airplane owners is “When is the best time to sell my plane?”  It’s a great question, but not necessarily an easy one to answer.

A flippant, yet accurate, reply is “NOW.”  Airplanes cost money to keep around, and because most modern aircraft devalue over time, there is probably no better time than now to sell.  Sure, a few exceptions exist, but even in an upward market the carrying cost of an airplane (insurance, maintenance, hangar, debt service, employees, depreciation, loss of capital opportunity, etc.) may overshadow any hopeful gains. 

A seasonal cycle also impacts the sale of an airplane.  What do you think?  Is Winter, Spring, Summer, or Fall the best time to sell (not to buy, but to sell)?  We recently ran a poll on the home page of our website (www.WildBlueLLC.com) asking this very question.  I was a little surprised by the results.  By a 9 to 1 margin, “Spring” was given as the answer.  My gut feeling is that people are inclined to believe that an increase in the desire to go flying (after being shut in all winter) translates to buyer activity.  That response makes sense to me, but unfortunately, is wrong.  Spring is traditionally a strong selling season, but it comes in second to fall.

Why?

Remember, we’re looking at what prompts buyers to buy, and few things motivate these folks as much as the bottom line.   True, Spring may be an emotional time for buyers to come out of the woodwork, but numerous end-of-year financial incentives really spur buyers into action.  A lot of buyers are told by their financial guru’s that they need to spend money before year’s end and they’re worried that unless they do, they may lose out on an opportunity because their greedy Uncle Sam will take the money instead.  Some are taking advantage of temporary tax incentives.  Many are looking at year-end avionics or engine deals.  After all, there’s no better time than winter to do have your airplane down for maintenance and upgrades.

Just about any timeline that impacts the buyer, whether perceived or actual, is good news for the seller.  A buyer who is looking at serious tax consequences if money isn’t spent is a buyer who is often willing to negotiate a higher price.  Seller’s often miss the importance of this situation and convince themselves that they can wait a little longer and net a higher price.  Unfortunately, if the wait involves going into the next year, they may cost themselves dearly. 

Let me share with you two real-world examples.  The first involves “Bob” who owned a Beech Bonanza we just sold.  Bob got an offer on the airplane, albeit a little lower than he had hoped for, but very close to the market value for the airplane.  The buyer was pressed to get a deal wrapped up by year’s end.  Bob accepted the offer but, due to the price, made it clear that very little consideration would be given for any discrepancies found during the pre-purchase inspection.  We counseled Bob throughout the process and felt strongly that the additional price reduction being suggested by the buyer for inspection items was not only inappropriate, but also one he would quickly abandon in order to get the sale closed by year’s end.  Accordingly, Bob offered a minimal reduction to compensate for some of the items and the deal closed without a hitch.  This worked out well for Bob.  If, hypothetically speaking, he had decided not to take the offer and had found himself without a buyer before year’s end, he would likely had owned the airplane through the winter and into the spring before another qualified buyer appeared.  All of the costs Bob would have incurred by keeping the plane for a few extra months would have easily eaten up the difference in any higher price he might hope to get.

The second example involves a client we’ll call “Larry.”  Larry has a nice high performance single engine airplane he bought new, but one that has an airworthiness directive which will ground the airplane in a few short months unless he spends the necessary money to have it fixed.  It’s not a cheap fix.  We’ve had several written offers for the airplane at a number we feel is very representative of the market.  Larry however thinks he should get more.  Frustrating for everyone involved, Larry’s course of action has removed any advantage he had by taking him in to the new year.  To add insult to injury, his airplane is now pressing up against a mandatory grounding thereby transferring nearly all leverage to the buyer.  Had Larry chosen to take our advice and sold the airplane last year I’m absolutely certain he could have saved tens of thousands of dollars.

The moral of the story is this:  if you’re thinking about selling there are at least two things you need to do.  First, put yourself in the shoes of the buyer and look for reasons buyers buy.  Use those reasons to your advantage.  Second, plan ahead, because unless they’re priced to give-away, few airplanes sell overnight.  Some airplanes do sell quickly but most take time.  If you’re an owner contemplating a sale you need to think 3 to 6 months down the road.  If you envision being out of the airplane ownership business by November, for example, the time to put the airplane on the market is May, not October.

As always, we’re happy to give you a complimentary analysis of how your airplane might fare in today’s market.