The Savvy Aviator #64: The Pre-Buy
Lately, my maintenance management company SAMM has been receiving an increas-ing number of requests to oversee pre-buy examinations on aircraft ranging from Skylanes to Cirruses to Bonanzas to Golden Eagles. Now, I've been an aircraft owner for more than 40 years, but in all that time I've only bought three airplanes. One of those was a new airplane that I picked up at the factory, so only two of my acquisitions involved pre-buys. This hardly qualifies me as an expert on the subject.
But I do know an expert. His name is Jerry Temple, and he's one of the most successful aircraft brokers in the piston-powered GA field. Jerry has a long and interesting background in GA aircraft sales, having worked for Cessna in Wichita in the 1970s, then for one of Cessna's largest regional distributors (AirFlite) in the 1980s, and finally starting his own one-man aircraft brokerage operation fourteen years ago. Jerry is based near Dallas, but his brokerage business covers all of North America. In an average year, Jerry finds new homes for a few dozen piston-powered airplanes (mostly cabin-class twins). As you might imagine, he's got a lot of interesting "war stories" to tell.
Indisposed in Idaho
Jerry told me of a situation that occurred in 1999 involving a light twin that he had listed for sale. A prospective buyer in Idaho was interested in purchasing the aircraft for his son. (Nice dad!) He'd put down a deposit, and asked that the plane be ferried to Boise to have a pre-purchase inspection done by his mechanic. The son took an airliner to Dallas, and then he and Jerry flew the twin to Boise for the pre-buy.
In 1999, that particular model of twin had suffered a rash of exhaust-related fatal accidents, and the FAA had announced that it would soon be issuing an Airworthiness Directive against the exhaust systems of these airplanes. So the shop in Boise went over the twin's exhaust system with a fine-tooth comb, and found some things they didn't like the looks of.
Based on the shop's findings, the prospective buyer said he wanted thousands of dollars worth of expensive exhaust components replaced, and wanted the seller to pay for it. The seller was unwilling to do that, but the buyer was adamant. Ultimately, Jerry concluded that the deal was falling apart, and he told the prospective buyer so. He indicated he would fly the airplane back to Dallas and refund the buyer's deposit.
At this point, the shop in Boise told Jerry that they "couldn't let him fly the airplane" until the exhaust was repaired, and that the airplane was grounded. To make matters worse, a big storm was due to arrive shortly — a real blizzard — and it was obvious to Jerry that if he didn't launch soon, he was going to be stuck in Boise for a week or more.
Ultimately, Jerry left the airplane in Boise and took an airliner home to Dallas. The owner wound up paying the Boise shop for some costly exhaust repairs (but a lot less than what the buyer was demanding), and Jerry hired a pilot to ferry the airplane back from Boise. All in all, it was an expensive and aggravating experience for the seller, not to mention a frustrating one for Jerry (who put in a lot of time and came away without earning his commission).
Trapped in Teterboro
Jerry related another similar experience that had occurred some years earlier. In this case, an airplane based in New England was flown to Teterboro, N.J. for a pre-buy at the request of a prospective buyer who was based there.
The shop at Teterboro was not terribly experienced with the particular make and model, but the buyer had heard that these aircraft were prone to develop cracks in the wing ribs, and that the cost of repairing such a problem was quite high. So the buyer instructed his mechanic to inspect this area very closely.
The shop inspected the aircraft and found what they believed to be a crack in the wing rib. The buyer decided he didn't want to buy the aircraft. The shop declared that the aircraft was unairworthy, and couldn't be flown back to New England until the alleged crack was repaired by installing a beef-up kit, a big and very expensive job.
To make a long story short, Jerry raised hell, the shop ulti-mately backed off, and the aircraft returned home to New England … but for a while it got pretty uncomfortable for the seller.
"Let the seller beware." Based on these and other experiences, Jerry offered some thought-provoking recommendations for both buyers and sellers with regard to pre-buys.
First, Jerry recommends that sellers not permit their aircraft to be flown an unreasonably long distance from home to accommodate the desire of a prospective buyer to have the airplane examined by the buyer's shop. In Jerry's view, a "legitimate distance" is perhaps an hour or an hour and a half's flying time. If the buyer is further away than that, Jerry believes it's more reasonable to have the buyer fly his mechanic to the airplane than the other way around. It's usually possible for the seller to arrange for his local shop to provide hangar space and tools for a buyer's mechanic, and to arrange for the aircraft to be opened up upon the visiting mechanic's arrival.
Second, Jerry suggests that prior to any away-from-home pre-buy, the buyer obtain advance agreement from the inspecting shop (in writing) that the aircraft will not be held hostage or detained for an unreasonable length of time, no matter what the examination reveals. According to Jerry, a typical pre-buy on a high-performance single-engine airplane takes three to four hours, and the inspecting shop should agree not to tie up the aircraft for more than a day.
Third, Jerry says it's important for everyone agree in advance on the scope of the pre-buy examination. The shop needs to ask the prospective buyer "how deep do you want us to dig?" and the seller needs to be sure that shop understands that the cost of the pre-buy examination is strictly the responsibility of the buyer, regardless of what is found.
Some prospective buyers want the pre-buy to be a full-blown annual inspection, but Jerry believes this is almost never a good idea. An annual inspection on a high-performance single or light twin is both expensive and time-consuming. What if the inspection turns up problems and the buyer winds up deciding not to buy the aircraft? How happy will the prospective buyer be about paying for an annual inspection on the seller's airplane then? How many sellers are going to be willing to have their aircraft tied up for a week or more for such an inspection? What if the shop (chosen by the prospective buyer) tells the seller that it can't sign off the annual and approve the aircraft for return to service unless the seller agrees to have the shop perform a bunch of costly repairs?
The purpose of a pre-buy examination, says Jerry, is to uncover any "show stoppers" — big-ticket problems that might cost the buyer many thousands of dollars to resolve. For most aircraft, the focus is normally on the powerplant, electrical system, flight controls, landing gear, and any airframe corrosion — plus a test flight and brief operational check of all major systems.
In fact, some shops are reluctant to undertake a pre-buy examination that's much more exhaustive than this because of concern that if the sale falls through, they might not get paid — and if the sale does take place, the buyer might hold them liable for any problems that escaped detection. In fact, knowledgeable shops and mechanics avoid using the term "inspection" in connection with a pre-buy, preferring "survey" or "examination" to emphasize that what they're doing is not really an "inspection" as defined in FAR Part 43, and that they will not committing maintenance, making logbook entries, or approving/disapproving the aircraft for return to service.
Jerry says that it's essential for a prospective buyer to have reasonable expectations when evaluating any previously-owned aircraft. A buyer who expects the aircraft to be 100% perfect and demands that the seller fix every nit-picky squawk is a prescription for a doomed deal. Jerry's view is that a buyer should reasonably expect that all major systems will work, and that any major airworthiness discrepancies ("show stoppers") will be repaired at seller's expense — or the seller will lower his asking price accor-dingly — but that minor squawks and cosmetic items are properly the responsibility of the buyer.
As a broker, Jerry believes that a big part of his job is making sure that both buyer and seller have reasonable expectations, and offering a "sanity check" to both parties when differences arise. Of course, many (perhaps most) GA aircraft sales do not involve a broker, but Jerry's advice about pre-buys has always struck me as spot-on, and has had a big influence on the way my company now manages pre-buy examinations for its clients.
Take It to an Expert
About all I can add (and I'm sure Jerry would agree) is that the prospective buyer might or might not be well-served by having his local shop do the pre-buy. It all depends on whether or not that shop has a lot of experience with the particular make and model of aircraft involved. If you're buying a Beech Bonanza, for example, you'll be wise to have the inspection done by the most experienced Bonanza mechanic you can find, even if it means having the inspec-tion done some distance away from home base, or paying the inspector to travel to wherever the aircraft is.
Since the pre-buy is typically only a half-day exercise, the inspector won't have time to look at everything. He needs to focus on the weak points of this particular make and model of aircraft … and to do that, he needs to know exactly what those weak points are. That's why when it comes to picking a mechanic to perform the inspection, there's no substitute for "time in type."
A shop with lots of experience working on the particular type of aircraft will know which problems are expensive "show stoppers" and which are non-critical and/or can be repaired easily. As a buyer, you want to avoid any big-ticket surprises—but you also don't want to walk away from purchasing an otherwise-great airplane because of some trivial squawk. A mechanic with lots of "time in type" will know the difference.
As Jerry's war stories illustrate very clearly, sellers need to be very careful to establish ground rules for pre-buy ex-aminations that ensure that the prospective buyer and his mechanic won't paint the seller into a corner. In particular, a seller should never permit a pre-buy to be treated as an annual or 100-hour inspection, nor for the results of the pre-buy to be recorded in the aircraft maintenance records. (If and when the deal goes through and the prospective buyer becomes the new owner, he can then ask the shop to convert the pre-buy into an annual inspection by doing the requisite paperwork and making the necessary logbook entries.)
By the same token, prospective buyers need to be very careful in their choice of mechanics or shops to perform the pre-buy, and ensure that the inspector they choose be extremely knowledgeable about the specific make and model. If you need help finding a well-qualified inspector to perform a pre-buy examination, the applicable type club for the particular make and model—e.g., American Bonanza Society, Cessna Pilots Association, Cirrus Owners & Pilots Association, etc.—is probably the best place to start.
See you next month.
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