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Thread: Prebuy vs. Annual

  1. #1

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    Prebuy vs. Annual

    I have always believed (but not always done) in a thorough annual as a pre-buy inspection of an aircraft. In my mind, a pre-buy should simply an annual that does not get logged into the log books (maybe because maybe the buyer and seller didn't agree...therefore the seller does not get a free annual), or gets turned into an annual if you do agree with the seller. However...recently I have been questioning my though patterns.

    However, I also believe whole-heartedly in the Waddington effect. So now we have coflicting conditions: An aircraft is annualed 4 months before the sell date. Is it appropriate to do another annual in which the whole thing is torn apart and inspected, just so you have piece of mind, or do you take a reduced version of a "pre-buy" only inspection and trust the previous mechanic to a degree (especially if the log books check out, A/D's are kept up, etc)?

    Along the same lines...what happens if you and your I/A take apart a plane, decide a problem needs addressed in the selling price but can't agree with the seller (therefore no signoff takes place), put the plane back together, and return the keys. Let's say you and your A&P/IA miss something, or worse, mistakenly forget to assemble something correctly (In other words, Waddington is in full affect). What kind of liability problems are you setting yourself up for? Would it have been better to do a simple pre-buy that does not require as much dissassembly? Where is the line to make the determination between a reduced inspection pre-buy and annual?

    Anyway, I know this is somewhat random...but it should get the conversation started...

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  2. #2

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    The amount of "pre-buy" inspecting and evaluating is a contract between buyer and seller. I'm guessing the agreement between the parties reflects what each one is comfortable with. I've bought an airplane sight unseen, one after a cursory preflight and some with a detailed inspection as part of the purchase so I don't have a "standard" for every purchase. It just depends on what's at stake.

  3. #3

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    Happy

    I will also note that the extent and focus of a pre-buy depends on the experience and familiarity of the buyer with the type aircraft and its powerplant. I have seen unfamiliar buyers insist on an annual as a prebuy, and similar buyers unwisely skip the prebuy, only to get burned later. Both are often more expensive than appropriate, but it is obviously better to err on the side of more inspection rather than less.

    The more knowledge the buyer brings to the pre-buy, the more you can charter the mechanic to focus on the known issues with that make and model, and have the mechanic spend the majority of their time looking for the big expensive hidden problem that you should run away from. Of course, the knowlegable buyer looks for a mechanic with lots of knowlegable about the target type of airplane first. But that's another thread.

    One misconception that I see folks bring to their first airplane purchase is the expectation that the pre-buy should find nothing worn on the airplane and/or nothing that needs work. I will offer the suggestion that the pre-buy should provide data that confirms that the offering price matches the current condition of the airplane. If the price is low, expect the pre-buy to identify the reasons for the low price. If the offer price seems high, the prebuy inspection should confirm the pristine condition of the airplane or offer data for negotiating the price lower. But all airplanes suffer wear and tear and when a prospective buyer attempts to haggle over minor stuff, the result is usually no-sale. If you are looking for a make and model airplane, you should start with a realistic budget and it helps to set aside a few $$ to fix something not too long after the purchase. If you don't need those $$, then you can put them towards your first annual. I once bought an airplane and as I taxied out for the first flight as the new owner, the generator died. The good news was that the seller was onboard and he generously paid for the repair. But that will not always be the case.

    Best of luck,

    Wes

  4. #4

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    To me a pre buy is somewhat less involved than an annual, for instance the a&p should check compression, but probably is not going to change the oil and not swing the gear. He is going to look more for what is wrong, or right, and not so much as doing all the maintenance items.
    Now it is going to vary a lot depending on how valueable and complex the airplane is, a simple C-150 is a lot different than a King Air or Lear.
    I think in very expensive corporate type jets, more reliance is placed on the logbooks and maintenance records, than on just a visual. I"d guess if the logbooks are not kept well there is not likely to be a sale, and if there is fraud then there may be a follow up lawsuit.
    One thing I would do if you can is to know the reputation of the seller. If someone has owned a plane for years, and flown it regularly and displayed it in shows, folks sort of know it is at least well maintained. There can be some deception here as some owners and pilots will invest in a great paint job or fancy GPS which looks good on sale, while the basic plane, like engine condition may not be up to par.
    If the plane is new to that owner or to the market or is just being sold by a broker, then I'd be much more careful.
    There are strenghts and weaknesses of most planes. For instance the Mooney 201 I sold: prone to leaks in the wing fuel tanks, and nose wheel damage, but my tanks had been resealed by a pro, and the gear was straight. The Lycoming IO-360 is pretty trouble free and mine still ran good even at TBO, just used a lot of oil. Things like spar damage or very rare in these planes, they are very strong, some have good King avionics as mine did, I still think the KX 175B was one of the best radios ever made.
    I have once offered the seller to do an annual on the plane that I was interested in buying and we split the cost, when I wanted more than just a pro buy.
    I may look at the log books of the last annual and may even talk to the a&p, but I would use another a&p, not the one who has been paid by the seller to do a new pre buy.
    And very important, there are a&ps and shops that specialize in different makes and even models, and are worth seeking out if you have anything more that a plain vanilla job.
    Consult the type or owner clubs to find out who the best shop in your area is and what to look for.

  5. #5
    Mike Busch's Avatar
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    Quote Originally Posted by teknosmurf View Post
    I have always believed (but not always done) in a thorough annual as a pre-buy inspection of an aircraft. In my mind, a pre-buy should simply an annual that does not get logged into the log books (maybe because maybe the buyer and seller didn't agree...therefore the seller does not get a free annual), or gets turned into an annual if you do agree with the seller. However...recently I have been questioning my though patterns.
    By the sheerest of coincidences (hehehe), I've written a number of articles on that very subject. Here's one that appeared in American Bonanza Society magazine awhile back. I've attach it below.

    My firm manages hundreds of pre-buys. We NEVER permit an annual inspection in lieu of a pre-buy. The objectives and rules of the road are totally different. The scope and detail should be quite different.

    The purpose of an annual is to make a regulatory determination of whether or not the aircraft is in airworthy condition. The purpose of a pre-buy is to determine whether the aircraft has any costly defects that could either cause the prospective buyer not to buy the airplane, or could trigger a renegotiation of the price. In a pre-buy, we're only interested in the $5,000 and $50,000 items, not the $500 or $50 items.

    For example, an annual must measure the brake discs and linings to ensure that they meet minimum thickness. In an pre-buy, we could care less about the condition of the brakes, because if they're unairworthy it's no big deal (and no big expense) to repair them. On the other hand, we care a great deal about corrosion (even if it's not an airworthiness issue yet), because corrosion can be very expensive to repair and in some cases could even make the aircraft uneconomical to repair. (One of my clients just discovered some wing spar corrosion in her Cessna 320 that will cost $80,000 to repair.)

    Also, an annual must go to completion once it is started. By contrast, a pre-buy should be aborted instantly when a show-stopper discrepancy is discovered. The buyer and seller go off and huddle to discuss the impact of the show stopper, and see if they can renegotiate the deal based on the adverse finding. If they can, then the pre-buy may be resumed. If not, everyone walks away. We perform our pre-buys in phases for exactly that reason. If we get through phase 1 with no bit show-stopers, then we authorize the shop to proceed with phase 2. That's NOT the way an annual inspection is performed, but it is the way a pre-buy should be performed.

    Another HUGE difference is this: As a matter of regulation, an annual inspection must be controlled by the aircraft owner. A pre-buy, in contrast, must be controlled by the prospective buyer -- he's paying for it and it is for his sole benefit -- with no influence whatsoever by the seller. As a matter of policy, we insist that the aircraft be flown at least 30 minutes away from home base for the pre-buy to keep the seller from interfering with the process.

    With an annual, there is an assumption that discrepancies (at least airworthiness discrepancies) will be repaired. In a pre-buy, no repairs are ever performed, because the person paying for the pre-buy (the buyer) does not own the airplane and does not have the right to authorize repairs. Only after the deal is done and title transfers can repairs be performed.

    The advice that "the best pre-buy is an annual inspection" is about as wrong as it can possibly be in my opinion. I hear it a lot. I disagree vociferously. --Mike

    It is common, however, for us to convert a pre-buy into an annual once the buyer has taken title to the aircraft.
    Attached Files Attached Files
    Michael D. Busch A&P/IA CFIA/I/ME
    President, Savvy Aviator, Inc.
    President, Savvy Aircraft Maintenance Management, Inc.
    2008 National Aviation Maintenance Technician of the Year

  6. #6

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    Mike has some good ideas, but not sure where he gets the idea that an annual must be completed.
    The FAA I.A. Inspection (FAA-G-8082-11) guide explains how to handle an incomplete inspection, page 11:
    http://www.agragami.in/Library/FAA R...test Guide.pdf

    Bill

    p.s. Mikes attached file doesn't open for me.
    Last edited by Bill Berson; 12-01-2011 at 07:28 PM. Reason: add p.s.

  7. #7
    Mike Busch's Avatar
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    Bill, there's an Advisory Circular that says that inspections, once started, should always be completed. I haven't looked at it for a long time, I think it's something that I probably uncovered back when I was originally studying for my IA practical test. I'll try to locate it if I can. For some reason, I can cite FAR rule numbers from memory very easily, but I've never been able to keep Advisory Circular numbers in my head for more than about 90 seconds. --Mike

    P.S. I just tried opening the PDF attachment from the forum link and it opened fine for me. Do you have the latest version of Adobe Acrobat Reader installed, or are you using Google Chrome (which has PDF display built in)?
    Michael D. Busch A&P/IA CFIA/I/ME
    President, Savvy Aviator, Inc.
    President, Savvy Aircraft Maintenance Management, Inc.
    2008 National Aviation Maintenance Technician of the Year

  8. #8

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    Quote Originally Posted by Mike Busch View Post
    Bill, there's an Advisory Circular that says that inspections, once started, should always be completed. I haven't looked at it for a long time, I think it's something that I probably uncovered back when I was originally studying for my IA practical test.
    It may have been a version of AC 65-19x. No matter, those are obsolete and have been replaced by the document Bill referenced. I remember the "should be completed" as well, however, it wasn't a mandate. More like advice to not make a habit of routinely ending inspections before completion. At any rate, point taken. I can't believe a seller would agree to an annual inspection if he knew it may be stopped if a disqualifying condition was found.
    Last edited by martymayes; 12-01-2011 at 09:55 PM.

  9. #9

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    Fantastic advice, just wish I would have read it earlier. In my experience (bad experience) a fresh annual done by an A/P that the owner knows/pays is next to worthless in determining the condition of the aircraft.

  10. #10

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    Quote Originally Posted by martymayes View Post
    It may have been a version of AC 65-19x. No matter, those are obsolete and have been replaced by the document Bill referenced. I remember the "should be completed" as well, however, it wasn't a mandate. More like advice to not make a habit of routinely ending inspections before completion. At any rate, point taken. I can't believe a seller would agree to an annual inspection if he knew it may be stopped if a disqualifying condition was found.
    Marty,
    Actually the 2004 FAA document I linked was not current. The current 2010 version has some important changes for I.A. renewal this year.
    Better check it out if you are an I.A., since it requires new documentation for 2011 and we have less than one month left in the year.
    After some research today, I found the I.A. guide has been split into two parts now:

    FAA-8082-11C http://www.faa.gov/training_testing/...g-8082-11c.pdf
    and
    FAA-8082-19 http://www.faa.gov/training_testing/...-g-8082-19.pdf

    The second one explains the new renewal documentation.
    Bill

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