Finance: Now or later?

The prepurchase inspection report will determine what must be fixed, what should be fixed, and what could be fixed later. All airworthiness items and airworthiness directives must be fixed. What should be fixed relates to operational integrity. Anything else could be fixed later. Generally, the buyer wants the seller to cover the cost of all AD issues.

Of course, there are exceptions. Say the seller’s estimate to fix all the AD-related squawks is $100,000. The buyer has a good relationship with an A&P who says the work can be done for $80,000. In that case, it may be more attractive for that buyer to negotiate a price reduction of $100,000 instead of having the seller fix those items. But the logistics involved in obtaining a ferry permit and flying the aircraft to the mechanic’s base must also be factored in. If those costs approach the $20,000 the buyer hoped to save, it might be better to put the onus on the seller.

What should be fixed are items that may have an operational or usage impact, but don’t otherwise jeopardize the airworthiness of the aircraft. For example, a spot of corrosion the size of a baseball on the rudder should be fixed. But if the buyer’s intention is to repaint the aircraft anyway, it might be better to negotiate a price reduction than to make the seller eliminate the corrosion pre-sale.

An intermittent HSI or DG are examples of what could be fixed later. If the buyer’s intention is to upgrade the panel post acquisition, it’s better to lower the price accordingly and then take care of the failing device during the entire avionics upgrade.

Determining what the seller should fix is also influenced by the buyer’s general attitude toward an aircraft purchase. Some folks don’t want to deal with any aircraft issues—they just want the airplane delivered squawk free. Others have a higher tolerance for addressing issues.

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