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Market values

hoodwink

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Jul 15, 2011
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Hello all,

First post here and sorry to make it a doozy. By way of background, I'm about halfway through the process of getting my ticket and I'm the market to buy a Cub -- a specific Cub that has some sentimental value to me because it was in my family for 30 years and is part our identity. [My father and uncle bought it in pieces out of a widow's garage and rebuilt it in the early 70's while in high school. Then my grandfather kept it for another 25 years after his sons flew the nest.] I've tracked down the owner, made contact, and he's be willing to entertain an offer.

I've never purchased an airplane so I don't have the intuitive sense for market value that you all do. As a platform for negotiating a fair price, I've developed a framework which I was hoping I could get some input on. The attachment takes 21 Cub classifieds I've found on Trade-a-Plane and Barnstormers and adjusts each asking price for the unique attributes of each Cub. [I have a finance background and this is what we would do as part of negotiating to buy a commercial building or company.]

[list type=decimal]
[li]First, each price is reduced for the value of floats & skis, if the plane comes with them to get a base price.[/li]
[li]Second, I adjust the price for the type engine (i.e., 65 hp, 75 hp, 85 hp, or 90 hp) to make each classified to represent a 65 hp plane. I am making the assumption -- which I think is a fair one -- that all things being equal, a Cub with a 90 hp engine will be worth more than one with a 65 hp engine. The Cub I want is a 65 hp, so that is why I 65 hp the baseline.[/li]
[li]Third, I adjust the price to represent a mid-TBO engine. Same logic as above. I assume that all else equal, the price of a Cub with a new engine will be higher than one with an engine nearing overhaul. Therefore, the price is reduced linearly if the engine has less than mid-TBO time on it and increased if it has more because I assume the price already embeds this value and I need to back it out.[/li]
[li]Fourth, I have a placeholder adjustment for Miscellaneous tweaks. Some Cubs have newer fabric, or upgraded instruments, or are in show condition quality. I haven't drilled down on micro adjustments yet, but the idea is to adjust each classified to represent an "average" quality Cub.[/li]
[li]Finally, I reduce the asking prices across the board by a factor to represent "taking" prices. In my industry, asking prices are always almost higher than the price a seller would ultimately transact.[/li]
[/list]

The goal is to end up with some apples-to-apples market values for an average condition, mid-TBO, 65 hp Cub. I'll use the average of this exercise to make the same adjustments for the target Cub and use that as my platform for a fair negotiation. Like any analysis, this one is dependent on the quality and validity of the assumptions. Right now, because I am inexperienced and new to the market, I am using placeholders. I was hoping you all might weigh in on some of these assumptions.

First, does the framework in general hold water?

Second, what is a rule of thumb value for Cub floats? Right now, I am plugging $10,000.

Third, what is the incremental value of an upgraded engine for each of the 75, 85, and 90 hp variants? Right now I am plugging $5,000, $7,500, and $10,000 respectively.

Fourth, what is a typical TBO time (understanding that TBO is simply a manufacturer's "recommendation") and a typical overhaul cost?

Finally, what is the typical delta between asking and taking prices in today's market?


It seems like other than engine and engine time, the other big driver of Cub value is the condition of the fabric, but it is too difficult to get a good read on that from classifieds, but I'm doing my best.

Thanks in advance. With luck, maybe this analysis -- once refined -- can help others get a fair price in future Cub transactions! PS. I did use the forum's search feature and I couldn't find any other posts that covered this topic in detail.

View attachment Piper Cub Pricing.pdf

View attachment Piper Cub Pricing.pdf
 

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