Jay Mesinger

Questions & Answers

March 1, 2006:

Q: Is there a traditional spread between asking prices and take prices of pre-owned aircraft that are for sale?

A: The short answer is no. In fact many people don't even put an asking price in their adverts; they simply say 'make offer.' But recently, just by complete happenstance, I had a client who noticed that the spread for almost all of the planes listed of his type had asking prices that were three per cent above their take prices. 

I had sent him a market analysis of the type of aircraft like his that were currently listed for sale, and being a numbers guy, the first thing he did was look to see if there was a pattern. I assured him that the three per cent trend was just by accident and by no means a recognised industry spread.

Nothing beats a direct call to the seller to try to determine if they have either turned certain numbers down or have a sense of where they want to be. Also, since 'make offer' yields absolutely no intelligence, a call to those sellers is imperative.

Much can be gleaned by the asking price of an aircraft as well as the time on the market of each individual offering. Usually aircraft, like anything else that has been on the market for a prolonged period of time, are either overpriced or at the very least not as equipped as the general market would expect them to be against their price.

Understanding a market segment and pricing correctly using day-to-day market knowledge can definitely shorten a selling cycle and lessen the aggravation to the process.

Q: I hear the term Warranty Bill of Sale used. Is that a different document than the FAA Bill of Sale?

A: Yes, you are quite right in your assumption. The FAA Bill of Sale, titled Form 8050-2, is used to transfer actual ownership of an aircraft with FAA recordation.

Along with an FAA Registration Certificate, form 8050-1, registering the new purchase to the new owner, all FAA documentation for the sale transfer is complete.

The Warranty Bill of Sale, however, is not an official FAA document but it is an important documentation of the sales contract between buyer and seller.

It documents the final condition of the mechanical status of the aircraft at closing and transfer and memorialises representations or warrants that the sale either does or does not survive closing.

This is where having a skilled aviation attorney on your team will prove invaluable and reduce post-closing challenges. Another important step to always follow for your clients, either buying or selling, is to run a post-closing title search about 90 days after closing to be sure all documents have been filed and accounted for properly.

There is nothing worse than finding oneself years in the future trying to clear liens that should have been cleared at closing, only to find out the bank or entity that has the improper lien is no longer in business. Close the file at the end of the process with confidence.


- Jay Mesinger