What hidden costs can you expect when buying or selling an aircraft?

When buying or selling an aircraft, there are several hidden costs and considerations that individuals or organizations should be aware of. These costs can add up significantly and impact the overall transaction budget. Buying an Aircraft. Before finalizing the purchase, a thorough pre-purchase inspection is usually necessary to assess the aircraft’s condition. This inspection can be expensive, especially for larger or more complex aircraft. Escrow services are often used to hold and disburse funds securely during the transaction. The buyer and seller typically share the cost of escrow services. Legal fees are incurred for the review and preparation of contracts, agreements, and the transfer of title. Documentation fees may also be required to process the transfer with aviation authorities. Depending on the jurisdiction and the specifics of the transaction, sales tax or use tax may apply. It’s essential to understand the tax implications, which can vary widely. If the aircraft needs to be transported from its current location to the buyer’s location, shipping and delivery expenses can be substantial, especially for long distances. If the buyer is not already certified to operate the aircraft, training and type rating costs may be necessary. Aircraft insurance premiums can vary based on factors like the type of aircraft, its intended use, pilot qualifications, and more. Ensuring the aircraft is properly registered and complies with all relevant regulations can entail additional costs. If financing is involved, interest and financing fees can add to the overall cost of the aircraft. Selling an Aircraft. If a broker is involved in the sale, they typically charge a commission, which can range from 5% to 10% or more of the sale price. Promoting the aircraft for sale may involve advertising fees on various platforms, which can vary in cost. To make the aircraft more attractive to potential buyers, sellers may need to invest in inspections and repairs. This includes addressing any airworthiness issues. Similar to buyers, sellers also incur legal and documentation fees for contracts, agreements, and the transfer of title. If the aircraft is not being actively used, there may be ongoing costs associated with storing and maintaining it while it’s on the market. Sellers may be liable for sales or use tax, depending on the jurisdiction and the specifics of the sale. Expenses related to negotiations and the final closing of the deal can add up, including any potential legal or financial advice. If the aircraft is not sold locally, the seller may be responsible for the costs associated with delivering the aircraft to the buyer. If the buyer requests specific inspections or tests as part of the negotiation process, the seller may be responsible for these costs. It’s important for both buyers and sellers to conduct thorough due diligence and work with experienced professionals, such as aviation attorneys, brokers, and certified appraisers, to understand and plan for these hidden costs. Additionally, the specific costs and their amounts can vary widely depending on the type and value of the aircraft and the terms negotiated in the transaction.