Buyer be aware

The cost of maintaining an airplane can far outweigh the cost of purchasing one. Major engine work, structural repairs, or a lack of parts supply are all potential gotchas that can quickly turn a $100,000 investment into a $200,000 spending spree. A prepurchase evaluation is designed to prevent that from happening. We spoke with Paul New, owner of Tennessee Aircraft Services, for his advice on how to approach the prepurchase evaluation process. New is a co-host of AOPA’s Ask the A&Ps podcast and a recognized Cessna 210 expert who travels the country performing prepurchase evaluations. Here are five misconceptions about the process.

It’s an inspection

An inspection is an inspection. The regulations define the scope of inspections and who is able to perform them. They focus on airworthiness only. Although it is possible to get an annual inspection as a prepurchase evaluation, New and other experts don’t recommend it. “A prebuy is almost all about money and not much about airworthiness,” he said. When New and his shop perform inspections, they are solely focused on whether that component or airplane is airworthy and safe to fly. By contrast, “a prebuy is all about what is this airplane going to cost me going forward.”

There are times when these things intersect. If New sees an issue that makes the airplane unairworthy, he’ll have a conversation with the owner or the owner’s technician, but far more often the opposite is true. The airplane is airworthy, but there are things on the horizon that will be expensive to fix. New says airworthiness directives are a great example. During an annual the IA is only required to confirm that the ADs due at that moment have been complied with. An AD that’s due in one hour or 100 can be ignored. But these are things you’d want to know as a potential owner. He also cites corrosion as a common area of concern. On an annual it could currently be in a wait-and-see condition. But a potential owner will want to know if there are going to be major corrosion issues in a year or two.

Anyone can perform one

A prepurchase evaluation isn’t maintenance, and it’s not an FAA required inspection. Thus, there are no requirements that someone performing the evaluation be a certificated technician, an IA, or anything else. Many owner communities promote pilot-owners as type experts and advise potential buyers to work with them. While that gives a potential buyer a lot of flexibility, it also opens a trap, which is to just get a warm body in there as a second set of eyes to keep the process moving. Here it pays to take your time and find the right person.

New was recently an expert witness on a case where a new owner had used a friend who was an airline mechanic to perform a prepurchase inspection on a Cessna 210. The airplane turned out to be a basket case, something the friend completely missed, and the owner was suing the seller and the seller’s broker as having misrepresented the condition. In New’s opinion, anyone with 210 experience would have easily caught the problems, if not anyone experienced in piston aircraft maintenance.

Just as a Cessna pilot wouldn’t profess to knowing how to fly a Boeing, mechanics are often just as specialized. Having the certificate doesn’t mean you understand the systems, and more important, the gotchas of that particular make and model.

This is a common place where breakdowns in the prepurchase evaluation occur because it can be difficult to find a knowledgeable technician who has room in his or her schedule. There are a few options. Obviously, it pays to start your research early. If you are buying a Beechcraft Bonanza, join the American Bonanza Society and speak to a few prepurchase evaluation experts so you can find one who is ready to go when the deal begins. Remote prebuys are becoming more common because the work takes only a few basic tools and is convenient for the seller. You can identify one in advance. A local shop that doesn’t currently work on the airplane is a usable back-up. Finding a disinterested third party is essential.

It takes too long to schedule

“It’s not a good time to be in a hurry,” New said. Although the seller and the broker will be pushing for a quick closing, try and negotiate at least a month, or even 60 days for closing in order to find the right person and schedule the evaluation. New’s schedule is four to six weeks out, and he said it’s hard for any shop to fit you in because they’re basically doing you a favor. A shop has to pull a technician off a regular customer’s airplane in order to fit you in, and chances are they’re never going to see you again. Sellers should understand this, and if they don’t, be wary.

Location is another sticking point in this part of the negotiation. Some owners don’t want to fly their airplanes away and let a stranger take it apart. That’s understandable. New likes to go to the owner’s hangar with just a few simple tools (mirror, flashlight, and so on). It’s convenient, and if he discovers a major airworthiness issue, the owner isn’t stranded.

The report will tell you whether to buy or not

A typical prepurchase evaluation report will include a list of potential repairs or issues, and sometimes, a rough estimated cost to fix them. The evaluator probably won’t tell you whether or not an airplane is a good deal. That’s a financial decision only you as the buyer can make. But they will be open about the need to repair certain items, the downtime, the parts availability, and the general cost.

Unless the evaluator has some sort of package business, they also won’t negotiate on your behalf. The report, which you have paid for and have exclusive rights to, could be a tool in your negotiations, but that’s something you or a buyer’s agent will have to use as a negotiation tool, not the person who evaluated the airplane.

New said his policy is to give the report only to the buyer and to turn over any future inquires to the buyer as well. Sometimes a deal will fall through, and a future buyer will contact him for the report. New refers the new buyer to the previous candidate and lets him or her decide whether or not to hand over or sell the report. The same goes for the seller or even the seller’s technician. As far as New is concerned, they aren’t the customers and don’t have the right to see the report, unless the buyer wants to share it.

It’s not worth the expense

There’s no question that prepurchase evaluations are expensive. Sometimes painfully so. New charges many thousands of dollars to travel to an airplane, spend eight hours looking it and the logbooks over carefully, and then traveling home.

But he says he’s invariably found enough items to cover the cost of his services multiple times over. Although he estimates only about 5 percent of deals are tanked as a result of the evaluation, using the information from the report as proof of future expenses or obviously deferred maintenance that must be corrected gives most clients enough peace of mind to justify the expense. It’s all about spending some money up front to avoid spending a lot of money down the road.

When the market went crazy a few years ago many buyers waived off the prepurchase evaluation process as a way to secure a deal or negotiate a better purchase price. Thankfully, today the market is more balanced, and negotiating a prepurchase evaluation is an expected and necessary part of the deal. If the seller balks, consider it a bullet dodged.

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