Don't Be Afraid Of Commitment

December 2022

SIX PITFALLS OF A NON-EXCLUSIVE RELATIONSHIP

Aircraft sales brokers frequently talk to owners who believe they are better served to have their aircraft represented by multiple brokers rather than committing to an exclusive agreement. They believe this will raise the aircraft’s market exposure, increasing the likelihood of it selling quickly, and result in a more lucrative transaction. This is rarely the case.

A reputable aircraft broker will typically not enter into a non-exclusive contract. Here are six reasons why you’re better off going exclusive.

EXCLUSIVITY COUNTS

I met with an owner who had two aircraft for sale. One was already on the market without an exclusive agreement, and the owner was planning to make the same sale arrangements for the second aircraft.

After 30 minutes of research, I found the first aircraft represented by five brokers at three prices, all with different total aircraft hours. One broker even failed to mention the engine programs. This illustrates the feeding frenzy mentality and misinformation that prevails when an aircraft is in the market without exclusivity.

After the owner discovered how his first aircraft was being represented, I secured the exclusive agreement of the second aircraft.

IN WHOSE INTEREST?

With no certainty of getting paid, non-exclusive brokers typically do not invest much time and money to represent an aircraft thoroughly. These informal arrangements create competition among brokers instead of buyers, so the non-exclusive broker may lean toward persuading the seller to lower the price quickly in an attempt to get the first bite. There is not the same incentive for a non-exclusive broker to ensure that the seller’s best interests come first.

SIGHT UNSEEN

An aircraft’s logbook records are critical to the sales process, and you want a representative who has thoroughly reviewed and understands all the details. If your aircraft is represented by a broker who has not invested the time to understand the details of your aircraft accurately, the chance for errors is high. And may result in deals falling through, wasted time, or problems being exposed that give negotiation leverage to the buyer late in the process. Non-exclusive brokers rarely, if ever, conduct an on-site inspection of the aircraft, review logbook records, or meet with the owner or a designated decision maker.

LOSS of CONTROL

If you enter into a non-exclusive agreement, you are essentially giving up control over how your aircraft is represented, what is being said about your aircraft, and by whom. This loss of control can damage your aircraft’s reputation in the marketplace.

The leading professional brokers talk to each other and work together for the benefit of our clients. If we cannot dispel rumors about poor maintenance, corrosion, damage history, or missing records, or we aren’t getting the answers we need to advise our acquisition clients confidently, we will recommend to our clients to walk away. No one wants to go on a wild goose chase to inspect an aircraft with many unanswered questions. This is compounded when an aircraft is located in a remote area where communication is delayed.

UNDEREXPOSURE

Getting an aircraft sold quickly is the primary objective of any broker, exclusive or not. With the business aircraft resale market being very challenging and overcrowded in recent years, you want your aircraft to appear on more than one small website listing. Is your broker investing their advertising dollars in getting your aircraft on the most visible channels, like Controller.com and AvBuyer.com? Are they planning to advertise in leading aircraft sales journals? How large is their customer base? Do they have the technical and import/export resources to deal with surprises? Without these efforts and resources, your aircraft is largely invisible to many buyers.

PAYING MORE FOR DIS-SERVICE

Everyone wants to obtain the best value possible for their investment. But ironically, a lack of transparency results when dealing with a non-exclusive contract. Are there multiple brokers with a hand in the transaction? Is an undisclosed back-to-back transaction being contemplated?

Obtaining a trusted advisor who stands shoulder-to-shoulder with you and provides a full complement of marketing, technical, and regulatory services is, at least, insurance against a costly error and, at most, an opportunity to net tens of thousands more for the aircraft.

Identifying a reputable aircraft sales broker whom you trust is time well spent. The right broker listens to your needs, advises you on the best course of action, exposes your aircraft in the best manner, and stays with it until the transaction is finished.

We recommend an exclusive mandate agreement with a professional with an international team and global reach. It is the right way to do business. It is how Duncan Aviation has done business for 66 years.