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Tips 7 - I Got A Guy
By: Jerry Temple
Publications this article appeared in: General Aviation News, 7/5/96; The Twin Cessna Flyer, 4/97
I Got A Guy is not the title of a hit song by one of the girl groups of the 60's.
It is a phrase used all too frequently in general aviation aircraft sales. It is a phrase when examined and understood that costs Buyers money. However, it is the aircraft Buyer that gives rise to the phrase and thus causes the phrase, when put into practice, to cause an airplane to cost more.
Every aircraft Broker/Dealer receives numerous calls from other Broker/Dealers that start out with "I Got A Guy". And, the recipient of such calls likely makes them too.
So what does it mean?
The inexperienced Broker/Dealer receives a call from a prospective purchaser. The caller may be inquiring about an aircraft that the Broker/Dealer has advertised.
Let us assume that the advertised aircraft simply does not work for the caller. Maybe the Broker/Dealer can immediately inform the caller about another aircraft, send information, etc. Hopefully for everyone a sale results with all parties happy and satisfied.
Very often however, the call simply ends with the caller saying something like "Well, you have got my number and know what I'm looking for". What does that mean? Is that a job offer? Is there an agreement between the Broker/Dealer and the caller? No.
Immediately after the above-described conversation, the prospective Buyer calls another Broker/Dealer about another aircraft. The call ends like the first call. And the prospective Buyer makes several more similar calls each ending with words such as, "Well here's what I what. I am a cash Buyer. I am ready to move".
We now have let us say a dozen Broker/Dealers that we will now refer to as "Hunters" plus the prospective Purchaser all searching for what is actually one airplane. Do any of these hunters have a business agreement with the Buyer? No.
Can the Buyer purchase an aircraft himself the next day? Yes.
The hunters now begin the search. Some may have private contacts (good pros do), but most will simply look at Trade-A-Plane, just like the Buyer. So the cycle is set. And an unfortunate by-product of this cycle is the lack of trust and honesty that such a process creates. The Broker/Dealer (Hunter) realizes that he is one of a dozen all looking for one aircraft and that the Buyer extends zero loyalty to any hunter. In fact, the odds are great that no hunter will ever sell the Buyer an aircraft. So it is just money that motivates the hunter. There is no future business at stake and, therefore, all that matters is selling and delivery. It is as simple as the actual Seller and the hunter really care little about the Buyer. And thus a Buyer feels no need to be honest and straightforward with any of his army of hunters. He may just use all of them. The cycle gets worse.
If the real Seller is an inexperienced private party the flood of calls may cause him to believe the demand is greater than it really is. He may, therefore, become firm on price or raise the price. Other persons selling a similar aircraft may adjust their price up. The interest of just one prospective Buyer has perhaps caused a market increase based upon false demand. The cycle continues.
The hunters usually ask the selling Broker/Dealer for a "dealer net amount". This is the number one most ridiculous term in general aviation sales. Trust me, there is no wholesale and retail price structure in general aviation. Dealer Net is simply a term for a Seller stating here is my bottom line. Here is what I must have. And, the Seller does not care if the money comes directly from the Purchaser or a hunter is involved. He just wants his price.
Next the hunter asks the Seller to protect him for a certain amount, let's say $5,000. That is code for add my commission to the selling price. The Seller says sure, no problem. So let us say the Dealer net (the amount the Seller wants) is $100,000. Add $5,000 protection. The price now given by a hunter to the Buyer is $105,000. The cycle continues.
The Seller may have been speaking with the Purchaser, sent specifications and perhaps given a price of $100,000. When a hunter calls the Purchaser with the good news about locating that special aircraft, the Purchaser may say that he already is aware of it, has specs, etc. And, he has a better price. Now things start falling apart. The Purchaser expresses that he too can read TAP. And he's not paying $5K just to get specs faxed to him that he can also get directly.
A friend in commercial real estate once told me of the phrase "Everybody's business is No One's Business". He went on to explain that since real estate is local by tradition, an area's developers and brokerage firms tend to communicate better and must continue to live with each other. In general aviation, Brokers often never meet their customer for this high ticket item and never meet a Seller or the Seller's representative. The sale item is far away and mobile. And above all else, there is very little formal law regarding general aviation aircraft sales.
Further complicating the process is the concept of the hunter registering "his guy" (that may be you) with a Seller, or Seller's representative for protection. Many hunters do not want to reveal the Purchaser's name. He does not trust the Seller. He's afraid that the Seller and Buyer will cut him out of the deal. A Seller may warn the hunter that if he does not "register" the Purchaser's name it's possible the seller may speak to a Buyer and do business. If that happens, there's a hunter angry with the Seller and with the Purchaser. There are claims and threats. It can get complicated. It can take much of the fun and enjoyment out of what should be grand experience.
I regularly hear from both current prospective Buyers (someone shopping) and from current Owners about all of the problems and hassles that they have, or had, with a Broker/Dealer that they once called which resulted in someone becoming a hunter. But they insist they had no agreement with this person. It can get messy and expensive. There are two sides.
Important point. The original caller, the looking prospective Buyer, is in my mind an equal partner in the problem. It's the Buyer that ends a call with some type future business statement. It is the caller that does indeed want the Broker/Dealer to locate the special aircraft. But is he offering to employ the Broker/Dealer to locate the aircraft. Probably not.
Hereis one solution. Employ, under a formal Acquisition Contract, an expert in the sales of that type of aircraft. Yes, just as with the Buyer's Broker in real estate, you are ultimately responsible for paying this person, but in reality, the Seller or the Seller's Broker may actually pay for the expertise you get. Why not have some expertise working for you too, not just for the Seller.
Totally discounting for a moment, the value of your time, a formally employed expert in the type of aircraft you seek, will often save you thousands of dollars, thus more than paying for his fee.
A formal Acquisition Contract can be structured to address a Buyers needs. It may include actual selection of aircraft type/model, locating finalists, research, negotiations, Test Flights, Pre-Purchase Inspections, finalizing the sale, delivery, all paperwork, Post-Sale Maintenance and Modifications, etc.
Travel to go see aircraft is expensive. I weekly hear from recent lookers and Buyers about their anger and frustration with both Dealers/Brokers and the private party Sellers over aircraft that are misrepresented, problems and hassles with deposits, escrow, contracts, inspections, deliveries and numerous other details. The professional will likely be handling all of these details for you. And a pro that does it all the time will get it all done right.
Try to keep the process of purchasing an aircraft fun and aggravation free. Yes, its a high ticket item and must be treated as such, but if you go about it in a disorganized way, the problems are predictable.
Think medicine, law, taxes, real estate, accounting, etc. When we want things done right, when the stakes are high and when the associated costs are high, we seek out and employ experts. Wise men do not try to cram in the knowledge and experience needed to do the assignment. They employ the best. Maybe that is why they can afford a personal airplane.