Tip 11 – I Got a Guy – Part II
By: Jerry Temple
As published in Twin Cessna Flyer March 1998
Phone: (972) 712-7302 Fax: (972) 712-7303
Other Publications this article appeared in: Flyer 7/10/98
Like Rocky and the Godfather, the good ones have a sequel. In the April, 1997 Twin Cessna Flyer I wrote an article about aircraft buyers creating an army of hunters, plus themselves all looking for the same aircraft.
In that article, I focused on certain aircraft dealers and brokers that often search for an aircraft for a buyer. These hunters have no agreement with the buyer, have probably never met their “client” and I know this process creates some of general aviation’s most distasteful experiences. It’s why you often see classified ads that say “No Brokers.” The private party aircraft owner gets tired of hearing from several dealer/brokers a story about a buyer that sounds awfully familiar.
But, I purposely left out of the article, another participant in this general aviation sales process. The local corporate pilot. Sometimes a buyer’s instructor is also involved. And, sometimes a mechanic. All are not bad news!
So, if you are perhaps now in the market to purchase an aircraft, and you matter of factly have talked to a corporate pilot friend who might be your advisor/consultant, your instructor or others, please read on. Also, keep in mind that the communications chain can get long and thin. A friend might say to his pilot that his friend (you) might be getting one of those 340’s as one taxis by. Suddenly, a thought scented with dollars passes through the pilot’s head as he takes the active.
Here’s how the story often plays. The professional dealer or broker, regardless if he’s inventorying or brokering an aircraft, will advertise it. Buyer inquiries are the objective. But, often a call is received from a corporate pilot who says something like this, “I’ve got this fellow over here in Tyler and he’s thinking about a 340. He’s got a 210 that I helped him get and I see where you’ve got a ’75 340.” Stop – Time out. The professional seller must now assume, unless told otherwise, and should specifically ask, if the buyer is paying “his trusted advisor” a fee for finding the aircraft and overseeing the purchase, or is the caller seeking a payment from the seller?
Further, and this determines a great deal, is the pilot, or instructor, or mechanic, calling with the specific knowledge of the buyer, or not. And, if the buyer is asking for the support, or was it left with a “If you can get something out of the seller, be my guest.” Some call this being a verbally respected and yet unpaid advisor/consultant.
Let me, at this time, be clear that paying a legitimate referral fee is a common practice in aircraft sales and business in general. But, of course, seeking a fee from the seller where there is a conflict of interest is unethical, if not in some cases illegal.
Most aircraft professionals will pay a referral fee, but certain items must be established early in the sales effort. Full disclosure of all persons involved and their involvement, who’s who. Money – how much is requested and promised? Associated conditions. Example: $2,000 if a certain aircraft is sold at a certain amount. Timetable.
But, here is what often happens and how things can get distasteful. Again, the pilot calls and says that he has a buyer for the 1975 340. He may not want to give the seller the buyer’s name. If he’s not authorized to make calls for the buyer, then he must constantly work in an atmosphere of secrecy and distrust. Without this registration, problems are almost guaranteed. Or, he gives the seller the buyer’s name, but not enough other details for the honest seller to “protect” this pilot.
A typical problem forms when the true buyer is also making calls about advertised aircraft. (Tips 7 – I Got A Guy). Without disclosure of names from the pilot, the seller has no idea of any connection between the caller and the pilot. Or, a partner, that was mentioned by the pilot, calls the seller and requests specs, price, etc. The seller provides the caller with the information, especially the price.
Suddenly, the seller gets a call from the pilot who is angry about not being “protected” and cut-out. The call can include a threat to kill any sale of the particular airplane or any sale to that buyer. Suddenly the buyer hears from the pilot that the previously great ’75 340 now is a dog with all kinds of serious problems.
Now, close your eyes for just a moment. Can you see him? He flies a couple of King Airs for 3 or 4 local firms at your airport. He tries to be a consultant to some local aircraft owners. He says things like, “Dr. Doe goes through me for all his aircraft.” Is this relationship official? Does Dr. Doe know his consultant is requesting and/or receiving a payment from the seller, if Dr. Doe purchases the aircraft?
Again, professional aircraft dealers and brokers have no problem with paying a referral fee. How much involvement the referrer will play in the sale will vary from no involvement to significant.
If you are considering purchasing an aircraft, be selective in whom you discuss this with. If there is a pilot, instructor, or mechanic that you wish to have supporting you, then is his/her time not of value to you and worth your compensation? Do you want him/her supporting your interests, yet forced to seek payment from the seller?
Advise anyone that you have previously had involved in an aircraft purchase or sale, where they stand on this purchase. Be clear. Should they be making phone calls for you?
Will you compensate them regardless if you purchase an airplane or not? How much? Don’t be vague. It might cost you.
If you want the corporate pilot, instructor or mechanic working for you in this acquisition, then I suggest a written agreement. Discuss what you expect of them. Address that they are only compensated by you. Discuss expense reimbursement.
All too often, a considerable sum is factored into an aircraft’s sale price, and yet, you may also be paying someone a fee for support. Most often, you’re simply paying more for an aircraft, because of someone’s attempt to seek a referral fee for little or no real effort.
Last, if much of the referral fees, questions of effort, secrecy, etc. seem distasteful, then consider retaining a professional to entirely oversee the acquisition of an aircraft. Your aviation needs and wants will be discussed in detail. Decisions will be made. Budgets and timetables established. A comprehensive services contract will be signed. A retainer is paid. Now a professional, whose daily business is working to create a pleased and satisfied buyer, is on the job.
The next time you hear someone say, “I gotta guy”, you might add, “It’s not me.” Or, if you’re selling your airplane and hear these words from a caller, immediately shift gears and realize all of the questions that now need to be asked. Be careful, there are bad guys out there that will try to muddy up the sale and some will try to force someone to pay them a commission. Here again, an aviation professional managing the sale of your aircraft will eliminate these problems and possible scam attempts.
Call JTA if you have a problem where you’re getting bad smells from a party other than the buyer and seller, or, any time you need some advise.
Jerry Temple Aviation can be reached at (972) 712-7302 or FAX (972) 712-7303.