There used to be a sentiment among sellers that if there are no buyers, why lower your price? That used to be a fair question in 2009. Today there are buyers, albeit mostly in North America. So that old adage is not a sound reason to not truly identify Right Pricing. As you look at the number of days on the market, most planes are approaching 180 days or even longer. I have never received a blue ribbon from anyone for having a plane on the market for most days! I can also tell you that when a seller says to me, “I have patience”, they are really saying they will be OK with taking less sooner than later. In a declining market, the longer you are on the market the less someone will pay you. It is simple, aircraft are a declining value asset.
What is Right Pricing? It is the price that sells the plane, simple as that. But getting there is not simple. I once ran a series of New Yorker-like cartoon ads. One of my favorite, which I am going to re-run soon, was of two well-dressed business men walking out of a conference room and over their shoulder you can see into the conference room and those around the table were throwing money in the air in what looked like a celebration. The caption says, “Do you think we left any money on the table?” Please do not mistake right pricing for leaving money on the table. It is not a dart at the wall. It is created by employing good solid research, including not just the reporting books or the listing services, but actual constant calls to brokers and sellers and buyers coupled with very detailed comp comparisons. It is not a vague overarching comparison, like just comparing a category of plane against the other with simple components of comparisons such as one age against the other or one total time against the other. It is a deep dive into each of the comps, breaking the planes up into their constituent parts, then assessing value. This will begin to give one the real comparative analysis to see what is really selling at what price and why.
We in our firm are beginning to see that right priced planes sell in days, not weeks and certainly not months. It is all about price. So, the answer is not that there are no buyers so don’t lower your price. The answer is there are no buyers at the wrong price. By the way, rather than lower your price once on the market, come to the market right priced to begin with. Sometimes that is not an easy sell for you to make to your seller and I said before it is not simple. They might say things to you like, “Well if it is a real buyer they will ignore your asking price and make you an offer regardless of a high ask.” Not true. Today buyers call those planes that appear to be right priced first and they may never get to yours!
So now let’s explore the other side of this, Wrong Offering. This occurs when a buyer comes to a market and believes they can just throw a dart at the wall. They ignore all the great research their aircraft professional provides. They just say if they are asking this offer that. Very frustrating when such hard work and market research has been accomplished. Usually after a few failed attempts at wrong offerings real buyers come around and make great buys. Remember the cartoon? Buyers as well as sellers are and should be sensitive to either over paying or selling too cheap. Today neither has to occur if good solid guidance is adhered to.
While I was writing this article, I had a broker call and say, “Hey is that Hawker still available?” I told him it was in a pre-buy and under contract. He said he figured so since it was so well priced. He then went on to say his buyer has gone silent since he has been calling him to advise that the airplane was priced right. This also sounds familiar when one is working with a prospect that says they are a buyer, then a real buy comes along, and they either disappear or throw up a distraction.
Now back to the title of this important article, Right pricing, Wrong Offering. I assure you that if a plane is right priced to begin with or ultimately right priced, it will sell, and sell quickly. If a buyer proposes a wrong offer they will not be the buyer. It is so simple yet requires the utmost trust among your team. I promise for a buyer and seller to come together for a purchase there is no reason that either side will leave any money on the table. There is no cookie cutter formula, it is complex and based on the facts of the market. The leap of faith comes when the sales professional works to take the hand of the buyer or seller and guides them into the real world. The two key words today are trust and price. Or said even more directly, Trust the Price!