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Tips to craft a mutually beneficial sales/purchase agreementHow to Craft a Mutually Beneficial Sales Purchase Agreement

It may come as a surprise that I believe having a good sales/purchase agreement in place is as important or more important than securing appropriate financing. A sales/purchase agreement allows the buyer to move more quickly and confidently toward the actual purchase.

Think of the sales/purchase agreement as a good preflight inspection, checklist, and flight plan. You get all the details nailed down and are aware of what you need to accomplish to move forward. But, just as the best flight plan can change, so can a sales/purchase agreement. The buyer and seller can negotiate its points along the way.  

Creating a sales/purchase agreement early on gives you a good idea of how the purchase process and ultimate delivery will go with a particular seller. These agreements are mutually negotiated. A seller who is unable to compromise in the first stages of the purchase will affect how smoothly things will go from there. If the seller is unreasonable, it will tell you a lot about having squawks addressed and the future sale.

At the same time, you, as the buyer, need to be reasonable as well. For example, don’t require that the seller pay to have the purchase airplane flown to your mechanic or shop. That’s not reasonable. If you want the airplane inspected (and you should), you pay for that flight. There are areas where you will need to use your own best judgment as to what constitutes “reasonable.” In general aviation, we go through periods where the supply of airplanes for purchase goes from thin to deep so there are a lot of options. Sometimes, yes, you can ask for more concessions from the seller if it’s a buyer’s market.

When you identify an airplane you want to buy, you as the potential buyer create the sales/purchase agreement and send a copy to the seller. In this agreement, you stipulate who pays for which items need to be fixed or price adjustments and how much you’re willing to pay for the airplane. That’s the starting point of the negotiation. For the elements that belong in a good sales/purchase agreement, refer to a sample document prepared by AOPA (Sample Purchase/Sales Agreement). This is a good starter. There are also other examples of sales/purchase agreements online; check them out and use what works best for you. This probably goes without saying, but as in any negotiation, it’s always best to first discuss and work out the conditions, come to a consensus, then put it in writing. Anytime someone tried to put a condition into a document without first discussing the salient points, the transaction will almost always become contentious. A mutually agreeable deposit needs to then be put in place to make the agreement binding. I suggest you use a third party to hold the deposit or a well-known escrow agent.

Again, if the buyer is problematic in the beginning, it’s only going to get worse. How much time do you want to spend on this process? Some people find back-and-forth negotiation fun, while others have a low tolerance for it. What’s your personality? The buying process can quickly go from “fun” to a grind. Be prepared for the possibility of some challenging negotiations. I find the most satisfying negotiations are focused on what we both agree upon about the aircraft as opposed to starting out by pointing out what I don’t like. Someday, I may be a seller!

After you complete your pre-buy inspection, you will provide a list of the issues with the airplane and the second round of negotiations for final delivery will begin. That’s when you can adjust the delivery date, price, and who is going to pay to fix the issues identified in the pre-buy inspection. The sales/purchase agreement is a binding contract that both the buyer and seller sign once agreement is reached.

As painful as it may be to contemplate, don’t be afraid to walk away from an aircraft purchase if agreement can’t be reached with the seller. That can be tough when you’ve fallen in love with a particular airplane and dream of it being yours. And when it comes time for financing, you have a great resource with AOPA Aviation Finance.

Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (75263) or click here to request a quote.

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