The Pilot's Lounge #71: "Fresh Annual" And Other Hooks For Suckers
The combination of a challenging national economy and fast-paced (but not face-to-face) internet communication is causing more planes to be sold in very poor mechanical condition with questionable -- if not illegal -- documentation. AVweb's Rick Durden updates the old buyer-beware maxim in The Pilot's Lounge.
I was sitting in the pilot's lounge at the virtual airport, quietly minding my own business and practicing new hand gestures in case I had to go to Brazil, when Mark -- one of the local pilots --caromed off the door frame and boomed into the lounge trailed by scraps of yellow paper emitted from a well-thumbed issue of Trade-A-Plane. I knew he'd been looking to buy an airplane: The prices were still low, he'd survived the most recent round of "restructuring" at his company and his job looked pretty secure.
"Man, I found a great one," he announced ebulliently as he shoved an ad in front of me. "It's just what I've been looking for: Low time, good avionics, no damage history, asking price is 10 grand under blue book and best of all -- look right here -- it's got a fresh annual and fresh overhaul. I've called the seller and gotten all the information on it; plus, he's got a local mechanic who can do the pre-buy for only $200. I'm going to overnight a deposit. Whaddaya, think?"
I'm afraid I did what Mark didn't want me to do: I went into cynic mode and started asking questions. "Did you have a title search run? Are there any liens on the airplane? Have you joined the owner's organization and gotten all of the back-newsletters and buying tips? Did you set aside a very minimum of a quarter of your budget for repairs after you get the airplane? Have you seen close-up, date-stamped pictures of the exterior and interior? Do you have the Form 337s on the airplane?"
I went back to reading the advertisement, but suddenly Mark angrily grabbed it from in front of my slowly moving lips and announced, "You're just jealous. You had to sell your airplane and you're jealous that I just found a great deal on something you'd like to have." Actually, he used some stronger words, but this is a family publication.
From Ebullience to Cynicism
For the next week or so I dropped by the airport each day to see if Mark had acquired his intended and brought it home. On Friday afternoon about closing time, I wandered into the shop and ran into Michael, the local guru and savant of everything aeronautically mechanical. He stopped me and said, "I think Mark's going to buy you a bottle of your favorite single malt."
I looked at Michael blankly and said, "What are you talking about? The last time I saw Mark he was pretty upset with me."
"Well, then maybe I shouldn't say anything to you," Michael commented, rubbing his chin, "and I know Mark is tighter with a buck than Old Hack. But last Tuesday he stopped in and asked if I could go with him to look at an airplane he was thinking about buying. I told him what it would cost and he only stammered for a little while before he agreed. We went out of here Wednesday night, stayed down by where the airplane was and I looked it over yesterday."
"You're telling me Mark sprung for you to go do a pre-buy?" I asked, incredulously. "I hope you got the money from him in advance."
"My mom drowned all the dumb ones," Michael rejoined. "You bet I got paid before I did anything. I've been through trying to collect from Mark.
"Anyhow, Mark had asked them to send him photocopies of the logs, but they kept having some sort of delay in getting them to him. That -- and whatever you said to him last weekend -- got him real suspicious, so he got the 337s and the airplane had a damage history. It looks as if it had been up on a wing, according to the 337s. I guess those two things caused him unlock his wallet and come see me.
"We got into the shop and the seller was not happy that Mark had brought his own mechanic along," Michael recounted. "He kept saying that Mark was wasting a lot of money because the airplane had a fresh annual and a fresh overhaul, and that his mechanic would have only charged $200 for a pre-buy. It was funny watching Mark wince at that one. It hit him where he lived."
Michael continued on: "I was initially impressed. The airplane had a great paint job so it really looked good. My first thought was that Mark had found a winner. Then the seller couldn't seem to find the logbooks. He started tossing things around and finally found airframe and engine logs that only went back about two years. Mark was getting kind of hot and reminded the seller that he'd said the airplane had full logs and no damage history. The seller said that it did have all the logs, but he'd have to get the other ones later -- he could deliver them after the sale. Mark hit the roof at that point and said nothing doing and started to walk out. That caused the seller to look again. While he was looking, I started walking around the airplane.
"Funny thing ... when I looked at it from the tail, the stripes on that sharp paint job didn't quite line up," Michael said wryly. "It didn't take long for me to realize that -- between the owner's behavior and some of the things I started seeing on the airplane -- this one was not going to be a keeper."
Michael looked at the ceiling and laughed, "About that time the owner found the rest of the logs. They were a mess. I sat down with them, the AD list and the Type Certificate Data Sheet, and started going through the paperwork. The owner was giving me grief about looking at the paperwork instead of the great airplane. I told him that if he didn't leave me alone I was telling my client to walk away from this thing here and now. That shut him up. He went over in the corner and just glared at me.
"I don't think I spent more than 20 minutes before it was obvious there were several ADs that hadn't been done, an unapproved prop was on the airplane, there was no log entry that matched the 337 for the wing replacement, and the engine overhaul was just a disassembly and reassembly -- no parts were replaced," Michael explained. "I told Mark that he'd be walking away from this one. He said he was pissed off now, and wanted some evidence that the signoff was bogus. You know how Mark is: When he gets mad, he goes after people."
"I showed Mark the ADs that weren't done, and I pulled the cowling to show him that one AD from several years ago -- which only allowed 10 hours before replacing the part involved -- hadn't been done," Michael said. "The old part was still on the engine. Mark had a digital camera and shot some pictures of the logbook pages and the parts involved. That reminds me, I'm going to start taking a digital camera to pre-buys so I can record stuff if anyone ever questions my inspection."
Michael went on, "I drained just a couple ounces of oil and you could see the reflection of the metal in it. I showed him some of the things that were required to do on an annual on that airplane. None of them had been done. The plugs were awful, one pulley for an aileron cable was shot, and there was a bunch of corrosion in the lower portion of the aft fuselage."
Michael had a glint in his eyes as he said, "I told Mark that -- just looking at what I'd seen in an hour or so -- it would take a minimum of $45 grand, which included an engine overhaul, to get that bird up to minimum airworthiness standards. Mark was livid. He told the seller that he wasn't buying the airplane and he wanted his deposit back right then and there. The seller refused, saying Mark was being unreasonable in refusing a perfectly good airplane. Mark called his bank but found out his check had cleared. We went out of there, got in a taxi and Mark had the cabbie take us to the local small claims court. He actually filed the suit right then and there to get his deposit back from the seller. Mark is going back next month for the hearing. On the way home he told me that he was glad you'd said to be careful, otherwise he would have bought the thing and really been out a pile of money. On top of that, he took the pictures he shot and overnighted copies of everything to the FSDO over there with a complaint against the owner and the mechanic who signed off the annual and overhaul."
Must Sell! Today Only!
OK, the above is based on about four episodes I've been through with airplane buyers over the last couple of years. Naturally, the things are disguised somewhat to protect me from sellers who employ knee breakers. The problem is, the example is not exaggerated in any way, shape or form. It is real-life right now, in the 21st-Century world of buying used general-aviation airplanes. It is more than "buyer beware": It is "Buyer, there are folks out there trying to screw you big time, because a lot of financially hurting owners are trying to unload junk."
Let's put it in plain language: For the last several years the economy has stunk. I don't care what political persuasion you are, we've had some hard times and the current recovery is occurring without the expected job increase. In the last few years our country has lost very nearly 2 million jobs. A certain percentage of those people who lost jobs or who got otherwise hurt are airplane owners. When things got tough for them, the first thing they did was defer maintenance on their airplanes, hoping things would get better. For some, things did, and they are happily flying again. For some, things didn't and the next step was to unload the airplane.
Face it, when times are hard, a lot of airplanes get crummy maintenance, if they get any at all. The airlines that were sucker enough to buy the garbage that passed for airplanes that Eastern Airlines unloaded in its bankruptcy can attest to how incredibly awful those airplanes actually were, despite pious claims from the FAA that it was monitoring Eastern's maintenance. So when people want to dump airplanes, a certain percentage of them will be unscrupulous or at the very least will do what they can to dress up the bird so it will move fast -- at a good price -- when the market is weak.
Airplane buying, like life, is a test. Despite the hype and popularity of casinos, and with apologies to Robert Heinlein: TANSTAAFL -- There Ain't No Such Thing As A Free Lunch. You aren't going to get a great deal on an airplane five states away that is for sale at a cheap price. If it were so great, the locals would have snatched it up. No seller is going to make you a great deal because he likes the way you part your hair.
The seller is as big a tightwad as you are. He knows you're thinking that because it has a fresh annual -- even if it isn't perfect -- the airplane is "legal" for a whole year, so you won't have to put anything into it. You'll be able to let the minor stuff go, so you'll fly cheap. Good grief, do you clap for Tinkerbell? There aren't any cheap airplane fairies in this world. If you were about to sell your airplane and you had an annual done, would you tell the mechanic to fix any of the squawks? That's right: Only if they involved big pieces falling off; otherwise, hell no. So, what are you buying? Massive squawks on an airplane that was probably signed off illegally. Yes, you just might be able to fly it for a year, "legally," because of the signature in the logbook. But are you willing to put your family into that machine? What kind of lout are you? Do you have any idea how many "legal" airplanes have had catastrophic mechanical failures in flight? Unless you know the mechanic and watched the annual, you are making one of the most irresponsible decisions of your life. Me? Upset? No, not at all. I've just looked at way too many accident reports of pilots who discovered that their "legal" airplane was just legal enough to kill them and their families.
It's the same concept in the fresh engine overhaul, only worse in practice. What was done on the overhaul? Who did it? What was replaced? To what tolerances? How may engines overhauled in anticipation of sale make it to TBO? You say you are only planning to put 500 hours on it before you sell it, so you'll be OK, right? Next question: How many of those engines even make 300 hours before they need cylinders? How many fail catastrophically at 40 hours? As I said, if you were doing an overhaul to sell the airplane, how much would you pay for it knowing you absolutely cannot get the full cost of a good overhaul back on the sale price?
I don't know an experienced airplane buyer who will buy an airplane with a freshly overhauled engine unless he has a lot of information about it, and then he'll negotiate the price down a long ways because he knows the odds are he's going to be putting several thousand into that engine soon. The smart ones either buy mid-time engines that show good compression and have an oil analysis history, or they buy airplanes with run out engines and have them overhauled the way they want so they can break them in right. Which reminds me: If that "fresh overhaul" has over two hours or so on it, how can you be sure it's been broken-in correctly? If it has 10 hours on it and it hasn't been run at darn-near full power the entire time, you may get to pay to have a set of cylinders rehoned in the next 100 hours.
A decent, inexpensive paint job usually pays for itself when selling an airplane. We humans, especially males, are very visual and react well to something that is attractive. If the logs show the airplane was painted for the sale, be suspicious and see what it was intended to cover. Your mechanic can spot where the shop went cheap, and you two should look for attempts to hide that killer of older airplanes, corrosion. Its better to shop for an airplane that has a paint job that is a couple of years old, rather than brand-new.
Missing or Swapped Components
If something is on the equipment list for an airplane you are considering, it must be in the airplane. At a very basic level, that includes the tow bar and baggage net. If there is an empty or plugged instrument hole -- for instance, the equipment list says the airplane has a carb temperature gauge and there is no 337 for its removal -- the gauge has to be there or a 337 has to be filled out. Some sellers don't seem to understand that if the prop on the airplane isn't of the sort approved on the Type Certificate Data Sheet, the airplane is not airworthy. Don't agree to buy an airplane that isn't airworthy because it has unapproved parts on it. You may be the one who comes up against buyers who weren't as foolish as you were, and discover that it's unmarketable unless you can find another sucker. And, in doing so, your sucker may turn around and sue you for fraud because you knew the airplane was illegal and didn't disclose it.
Also, make sure that the radio serial numbers match the logbooks. One theft technique is to pull radios out of one airplane, put them into another airplane with the same model avionics and then take the ones out of the second. The first owner reports the theft, with serial numbers. The second owner doesn't report anything because he doesn't notice the swap. Naturally, the reported radios are never found and the ones out of the second airplane at not the source of any search.
I was recently involved in an airplane sale where the owner was most indignant that the buyer wouldn't pay the agreed price unless everything worked. The Hobbs meter and oil temperature gauges weren't working. The buyer got a quote for repairs and wanted to deduct that from the sale price. The seller said that since he never used either item, he shouldn't have to cut the price. It was only when the buyer said he'd walk away that the seller made the price reduction.
As the FAA points out, if it's on the airplane, it has to work or be disabled and placarded. It's pretty silly to buy an airplane in which something doesn't work. Murphy's Law says that a bunch of stuff is going to break after you get it, so why start in the hole? Do not ever agree to buy an airplane unless everything works or unless you get a price break because of repairs that have to be made.
Online Auction Sites
The sale of used airplanes online is rapidly increasing in popularity. Naturally, technology has provided those of questionable integrity with more tools to fool the marks. P.T. Barnum may be long dead, but he continues to be proven right on a daily basis. The rules of buying an airplane haven't changed:
- Don't ever buy sight-unseen
- Have your mechanic do a prepurchase inspection and make any sales agreement subject to a prepurchase inspection
- Get the chain of title and 337s before you commit to anything
- Join the owner's association and get all the information you can before searching
- Don't get so emotionally involved with one airplane that you can't walk away
- Be suspicious of anything that smacks of a seller who is the least bit hesitant to disclose everything about the airplane.
These basic rules haven't changed since I wrote about the process a few years ago. And modern airplane buyers seem to be just as na´ve or eager to be taken advantage of as they were then; it's just that technology has provided new ways to turn buyers into suckers.
One of the current scams that was discussed over lunch the other day was having brokers put airplanes up for Internet auction, posing as the owner. A friend had looked at a complex single online and started investigating prior to bidding. The airplane was in another state and never seemed to be available for inspection. The guy on the phone wouldn't give straight answers to questions about minor things. My friend didn't like the way things felt, so he stopped pursuing that airplane. A few weeks later he started looking at a different brand of complex single that was on the same auction site and was supposedly at an airport about 40 miles away from his home. He called the owner, desiring to stop by and see it, only to find out the airplane was actually in that other state, at a broker, and, as it developed, never seemed to be available for inspection. When my friend looked very closely at the pictures on the auction site, it turned out that both of these airplanes had been photographed in front of the same t-hangar. Both planes were being pushed by a broker claiming to be the owner of each.
Any time new technology comes into the selling game, the policing and the warnings take some time to catch up with the scams. As a result, be extra careful when utilizing new technology in buying old airplanes. There is still no effective substitute for taking a mechanic you know and trust to look at the airplane and spending at least a full day going through every bit of paperwork and inspecting the airplane with great care. Then, if you buy it, bring it home and have that same mechanic finish the annual. That way you get a fresh annual that you can really trust.
See you next month.