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setting a budget understanding trade difference
Hello Jake Huling here with aircraft sales advisor i'd like to welcome you
two the six video report
in a new series called nine steps to successful sale or purchase of your
plane
in the last report we covered one of the more confusing factors
when determining planes value and that is aftermarket upgrades
we look at a price from three different perspectives one if you want to play
with upgrades what they are worth
if you're thinking of adding upgrades what makes the best
type of upgrades and where you should spend your money and three if you are buying
airplane what type of upgrades should you be looking for and how much you should pay for them
in today's report
we're gonna cover budgets realistic expectations and the three most common
mistakes sellers and buyers make in this area
were also going to talk about the importance
of keeping your eye on the trade difference when by both selling and buying a plane and
what in the world is a build plane
so let's get right down to it
setting your budget, two of the most common and potentially challenging
questions
when setting a budget are one
how much of what we want and need in a plane can we get with our current budget
and two
how much of what we're hoping to get for our a current plan is realistic
if that sounds at all familiar you are not alone
and these two very common questions actually both had very similar answers
so let's start
by taking a look at the three most common states buyers and sellers make
in this area
number one is what i originally paid for my plane
now stay with me because this is one that gets a lot of owners in trouble
and i'll give you an example of how it often happens
Lets say an owner paid five million for their plane when they bought it used
and now it's three to five years old and they would like to get close to what
they originally paid for it, after all
a new plane is seven million and my paint and interior are in excellent condition
so shouldn't I be able to get close to what I pyed for it?
I can understand their thinking,
after all no one wants to lose money
but here's the thing
there are a ton of factors that come into play here
condition is one of them definitely and so is how much time you put on the
engines and airframe, how many years you've had the plane,
if you have added any upgrades and the biggest one is
what the market is currently doing
the good news is that I cover all those topics in previous reports
should at least check them out because
i cannot stress enough how important accurate in realistic expectations are
in order to have a successful outcome
with the sale of your plane
and the purchase of your next otherwise you you end up on a road that just leads to
frustration and disappointment
number two
what i needed to sell my plane for. another way i see owners deciding on the sale
price of their current plane is by basing it on the costs of their next plane they want
to buy
they'll take what they believe the next plane will cost, subtract the additional ammount
they're willing to pay above the sale price of their current plane
which is the trade difference, and we're gonna get to that in just a moment
and whatever and that amount turns out to be
is the sale price they want to set for the current plane
now it might surprise you to know this approach
can work if it's done properly and keeping an eye on the trade
differences is a way you can make up for the sale price and lower
than what you had hoped
if the trade differences greater than your budget or what you'd like to spend
you can't make that up by finding a plane almost always
isn't ends up being an off market plane that you can purchase
for a whole sale number instead of a retail price to make up some of that trade
difference
for this approach to be a success we need to keep our eye on the overall transaction
how much you will have paid after both the sale of your current plane and
the purchase of your next
which leads us to the third most common mistake
buyers and sellers make
what my next plane will cost
here's how a lot of plane owners decide what their next plane will cost
and what their current plane is worth
they will go to one of the more popular listings sights like controler for example
to see what planes are selling for
and that's the mistake the prices you see on the sites are not what the planes
are actually selling for
there are several things you should know about those type of sites
there's nothing wrong with them, its just important to know them.
the listed prices are almost always higher than what the market will support or even what
the sellers would actually take for their plane
which is great news if you're buying but can be
very disappointing if you are selling and that was the only source
that was used to determine the value of your current plane. Number two, it's important
to know and remember
these sites are not the only place you can find a plane to purchase, an off
market plane like we talked about earlier
that isn't listed on any of these sites
can often be a much better option because you or your brokerage work directly with the
owner of the planes instead of going through an additional broker it can be
faster, less expensive, and can help shrink that all-important trade difference
to fit it in your budget
and the third thing to remember when looking at those popular listing sites is
what i call
a build plane
this is excellent option if you are looking for a plane with a lot of
upgrades especially upgrade engines
but you won't find a build plane on these sights, in fact the build plane
doesn't actually exist yet
what do i mean? well this is something that I for clients
and customers where I look for a plane with stock engines that are as close to their
over all times as possible if not
completely ran out
they we will change out the engines with an upgraded version, new paint and interior if that's
important or needed
and any other upgrade
they might want
for performance and entertainment
the result is a brand new looking high-performance custom planet fits
your wants and needs and
saved you a bunch of money. it's a great option. last let me leave you with this,
it's very natural for us to look at each of these areas separately rather
than as a whole
we tend to focus
on that one problem or challenge thats right in front of our face and
that of course puts us in danger of missing the bigger picture
when going through this process it so important to look at
the end result instead of each individual process to have complete
success
if you sell for a good price but you to high your over budget and likewise if
you're unable to sell your plan for the price you were hoping
then you're not able to get the next plane you really wanted or needed
so my advice to you
is always look at this as a whole
and decide if you want or need any extra help
if you want to do this on your own be honest with yourself
and make sure you really have the extra time commitment that's needed
to have a successful out come and get your plane sold
for the top of the market price, find your next plane for wholesale price
and make sure it's the best one in the world for you
in my next report, we're going to take a look at the market and i'm going to show
you the three most important pieces of information you will need to determine
the value of your current plane and find out what your next plane will
actually cost
so that's it for this report thank you so much for joining me
on this sixth step in my newest series of reports called, nine steps to a successful
sale or purchase of you plane,
this is
jake Huling with Aircraft Sales Advisor, and I do look forward to
seeing you on the next one.