Why should buyers pay their brokers?
By Ivan Veretennikov, Sales & Marketing Director, ArcosJet.
It’s hard to believe when you really think about it, but business aircraft brokers worldwide struggle to sign mandates or commission agreements with prospective buyers.
We hear it from colleagues in the industry every day. In short, buyers don’t want to pay commission. “Isn’t the seller going to pay you?” they say as if that explains everything. Here is why you want to have your own broker and pay his fees:
Because it’s hard work
The first point is self-evident but worth making. Being a highly-qualified, efficient, knowledgeable, and professional broker who can find the perfect aircraft and help you avoid the pitfalls requires experience and hard work that should be reimbursed.
So the broker is on your side
Sure, the seller could pay both brokers - his own and the one you’ve asked to help you with a transaction. However, with complex deals and expensive assets it’s better to know that the broker is really working for you and not trying to push some seller’s plane to receive commission from that side. For a good deal and 100% commitment to your success, he has to be employed by you.
To know how much you are paying
A company in the aircraft sales and acquisitions business is neither a charity nor an Internet celebrity. If you’re not paying for its services, it must be getting the money elsewhere. This means that when you buy an aircraft, you will overpay - but never know how much. Having an agreement with a reputed broker sets the size of commission and all other conditions, which ensures a transparent transaction and a pleasant experience.
To really make the decision
Signing an acquisition mandate with a broker is a big step. It marks the transition from talking about buying an aeroplane to actually buying it. It will make you sit down with yourself and say “I’m serious about this, I know that I want a plane and I’m ready to go through the process, find out exactly what I need, and get it.”
So everyone takes you seriously
The business aviation market is flooded with “tyre kickers” and casual enquiries. It’s a rare occasion that sellers or their representatives receive a request from a mandated broker working for a serious and ready buyer. It immediately makes your case stand out and cuts a lot of unnecessary dialogues, helping get straight to the point. Knowing that there’s a real prospect on the other side, they become a lot more willing to share the final price and conditions much quicker, as well as squeeze in something extra to keep you interested.
Have a 'one stop shop'
It’s a bigger problem for sellers, but aircraft buyers, too, can become entangled in rumours and misunderstings, distorting their initial request and eventually making them seem lacking seriousness. “Ah, it’s that guy who says he wants a Challenger 300 but never buys it,” people may say when a prospective buyer is reaching out to the whole market via different channels. The initial requirements get lost along the way and he never commits to any aircraft offered.
To conclude: it is always more efficient to have one professional broker who has carefully analysed all the buyer’s needs and preferences, works towards a budget, and knows the size of his commission as well as the time within which he must deliver results. Having an acquisition mandate greatly improves dialogues with sellers and their representatives, making deals faster, cheaper, and more predictable.