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Tips 3 - Buying or Selling a Plane?
Don't Get Conned.
Using a reputable aircraft broker may help you avoid common ripoff schemes.
By: Jerry Temple
As published in Cessna Owners Magazine Dec. 1995
Other Publications this article appeared in: The Twin Cessna Flyer Oct. 1995
I'm disturbed. I'm troubled. I'm concerned. As a professional aircraft broker, I get numerous calls every day. Often, I receive a call and I immediately sense a lack of trust, cynicism and a few other less-than-flattering terms. When I inquire what the problem is, I often hear the same unfortunate stories about certain "bad guys" who rip off aircraft Buyers. Usually, there is nothing I can do to help the unfortunate victims, but I do like to write articles that educate potential victims about the ways of the con man.
Regrettably, in my opinion, aircraft sales are not government regulated. I, too, do not want to see more government, but sometimes government control is the answer. Every state in the Union requires a real estate agent to have a license just to sell a $100 piece of real property for someone. Yet anyone can open an aircraft sales business tomorrow without having to apply for any type of license. In some ways this makes general aviation sales a con man's dream come true.
Every week I hear of stolen deposits, misrepresented aircraft, and numerous other bad incidents. Often, I am amazed that some Buyers are so naive, but the bad guys prey on the honest and trusting. They are out there just waiting for your call.
Let us examine a rip off scheme that you should be looking out for. One particular bad guy that I know of (there are probably many doing this) has been ripping off Buyers for years, and I do not understand why he is not in a penitentiary. The bad guy may simply advertise an unbelievable "phantom airplane" with such awesome specifications that you just have to call. Of course, when you call, this super plane has just been sold. That makes sense - great planes sell fast. But, while you are on the phone, the dealer asks, "What are you looking for"? Well, it is your lucky day and he thinks he may have one of those soon. Now the bad guy goes looking. You did not contract with him, but he believes you are his. So he calls an Owner with a plane close to what you are looking for. He tells the Owner that he has a hot buyer for the aircraft, and asks him/her to accept "X" amount for it and then pay him "Y" amount as a sort of "commission". The Owner may have no intent of selling his/her plane, and may never have advertised it. Yet the bad guy stays at it. If he can get the Owner to accept the offer, he is almost there. He may even show "good faith" by increasing the selling price until, finally, the Owner says okay.
The bad guy then goes out and gets a $1,500 to $5,000 deposit from the would-be Buyer. For this he will have the airplane flown from, let us say Florida to the Midwest for a Pre-Purchase Inspection. Now he tells the aircraft Owner that he needs to fly the aircraft to the potential buyer in the Midwest, for which he will be paid a non-refundable $1,500.
So the plane is flown to the Buyer who is outraged that it is a dog, has misrepresented hours, equipment, etc. Naturally, the Buyer wants his full deposit back. The bad guy, who may have already had the money for a few weeks (yes, I said "weeks"), refuses to return the deposit to the Buyer, claiming the Owner lied to him. The Owner, on the other hand, returns home to Florida without having sold the airplane, and will never see the $1,500 he was promised to fly the airplane to the Buyer. You see, and this is the key element to the scam, the bad guy knows from experience that the Seller and Buyer are not likely to hire a lawyer in the bad guy's home state to go after $1,500. Heck, you cannot even hire an attorney for that amount of money. And besides, if it gets ugly, the bad guy can always just give the deposit back. Often, both victims are just too embarrassed to do anything. It is just not worth spending $10,000 and lots of time to get back $1,500.
You may ask, "Why does the bad guy go through all this trouble for just $1,500?" Well, he or she can pull off many scams a year - just three such scams a month will "earn" the bad guy at least $54,000 a year.
I should note here that even if the bad guy cannot find a suitable aircraft, he will still tell you he has. He will then take your deposit and create mind-boggling excuses about why the aircraft cannot be delivered for an inspection.
I have got lots of stories to tell about con artists working in the aircraft sales business. So, when buying or selling your bird, remember to work only with reputable Brokers. Find several people who have worked with the Broker you are considering (people who are not necessarily suggested by the Broker) and ask them about their experiences with that Broker.
Also remember to send money only to an insured escrow firm - never directly to the Seller or Seller's Broker. And get all the details regarding a Pre-Purchase Inspection (i.e., dates, locations, who pays what, Logbooks, paperwork, etc.) in writing. I highly recommend utilizing the services of a professional aircraft Broker who sincerely wants your future repeat business. You will sleep tight at night and can just go about your regular business.
If you are ever in doubt about a request or procedure associated with an aircraft purchase, feel free to give me a call for free advice.