Posted 14 years 20 days ago ago by Admin
By Andre Kerllenevich - As a broker of used Robinson Helicopters, I receive two or three calls a day from prospective sellers and buyers inquiring as to the state of the market. My response is always the same: the market is active but depressed. While this may seem like a contradiction, it means that while there are still many buyers out there with the funds and desire to buy, they expect to pay much less than they would have paid just nine or ten months ago. Where a helicopter would have sold quickly for $375,000 last summer, the highest offer I might receive on the same ship today is $315,000. The result is that there are a lot of ships for sale, a lot of buyers making very low offers, and very few sales taking place.
Buyers call me every day making low offers and seem genuinely perplexed when sellers do not gratefully accept. They proclaim indignantly that the economy is in a recession and that the sellers have no choice but to sell at these prices. One of the main points they are missing, however, is that the vast majority of these helicopters are owned free and clear of any loans. As a factory authorized dealer, I know from experience that less than 5% of my customers borrow money to purchase their helicopters. In this way, the used helicopter market is unlike the housing market where homeowners, who are behind on their mortgages, must sell quickly or face foreclosure. In addition, where the housing market is awash in foreclosed properties, there is no such deluge of repossessed Robinson Helicopters.
In order for a sale to take place at rock bottom prices, a seller must find himself in a situation that requires him to take a significant financial hit. Given that most sellers are not carrying debt on their ships, they can usually afford to park their helicopters and wait for the market to improve. Unfortunately, when such deals do occur, the aviation rumor mill exaggerates and disseminates knowledge of them at light speed creating the unrealistic notion that sellers a lining up to give away their helicopters.
Buyers hoping to buy at rock bottom prices must be prepared to make dozens of low offers before, possibly, finding a seller that will accept. In most cases, that seller will not be found. Invariably when such a deal is found, the buyer has spent months calling every ad in the trades (as well as calling the author of this article) making one low offer after another. As I tell prospective buyers looking for the deal of a lifetime, "you will earn that deal with your time". If a buyer needs or wants to buy a helicopter relatively quickly, it is unlikely he will find a steal in a short period of time.
One sure way for a serious buyer to find a well priced helicopter is to purchase one of the canceled orders sitting at the factory. These ships are not going for fire sale prices but they are significantly discounted and represent very good deals for the serious buyer who does not have weeks or months to spend making countless fruitless calls.
Sellers, on the other hand, have to be realistic in that if they want to sell quickly, they will have to accept a price substantially lower than they would have received a year ago. If a seller is not in a hurry, he should set a reasonable price and hold out for a buyer who does not have time to waste or until the market firms up. In any case, the seller must be prepared to receive countless ‘low ball’ offers and endure every bargain hunter’s detailed arguments as to why he must sell at fire sale prices.
One way for sellers to avoid the deluge of tire kickers and bargain hunters is to hire a broker. The broker will field the dozens of low offers and filter out the time wasting bargain hunters and efficiently communicate offers. The active broker will also have a network of interested parties to whom he can present the helicopter. In addition, there is no public source of sales data for piston helicopter sales, and an active broker will have recent sales data. He will also assist in negotiations, prepare purchase agreements, schedule pre-buy inspections, and coordinate the exchange of funds and title documents.
That is, of course, the million dollar question. At some point, the economy will bottom out, the inventory of canceled orders at the factory will be sold, and pricing will return to normal. Whether this takes one month, one year, or more, nobody knows. In the meantime, anyone looking to buy or sell should do their best to obtain reliable recent sales data in order to make the best deal possible without wasting valuable time.
Andres L. Kerllenevich is a factory authorized Robinson Helicopter Dealer and broker who operates the website www.R44Sales.com. He can be reached at [email protected] or 904-824-5506.
So where is the market going?