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Market values

hoodwink

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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
 

daluds

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The good ones sell before being listed on Barnstormers or Trade-a-plane. Don't over analyze it or you will never find one. I spent about two years looking, and flew out to see many Cubs. All had pros and cons. Most were in different shape compared to the information from the ad, phone conversation and photos. You have to actually see it or have someone look at it for you to understand the true condition of the Cub. Don't forget to factor in cost of looking for Cub's out of state since it adds up.

I basically gave up looking for a Cub (decided to buy a local Champ) until my local mechanic mentioned there was one for sale at the airport where I was waiting for a hanger... You might want to get the word out you are looking to buy a Cub, but I can tell you most Cub owners don't want to be haggled to death over price while selling their pride an joy.

The most important is the overall condition of engine, prop, airframe and fabric. The rest you can fix up as needed. The Cub configuration is personal preference. I prefer Yellow Cub with low/mid time C-85, metal prop for performance with round tips, wing tank, shielded plugs/p-wire, Ceconite covering, and running well. Standard brakes are fine. I have Scotts 2000 tailwheel and works good.

Good luck with your search.

Dave
 

hoodwink

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Thanks for the feedback and everything you says makes sense. I'm in a unique situation in that I'm not searching for the best deal or the Cub that comes out of the box with the configuration that suits me. Instead, I know the exact Cub I want because its a "family heirloom" of sorts and I want some rationale behind my offer. I'm definitely willing to pay up above fair market but I want to know by how much.
 

JimC

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There's nothing wrong with your framework, but the condition of the tubing and fabric completely overwhelms everything else about the value if a Cub, and you don't say much about that.

Personally, I don't attach much value to the engine -- they are consumables. You can buy a mid-time engine outright including 85's, 90's, and O-200's for $800 to $4000, run them a few hundred to a thousand hours till they go toes up, then sell them and buy another one outright. I paid $800 each for my C85-12 and my O-200 and ran them for several hundred hours. The O-200 is still in good shape -- the C-85 needs overhaul, but it made a thousand hours or so first. Rick paid the same for his C85-12 and did the same. It's still running OK. He paid 3-4000 for his current O-200 and its doing fine as well.
 

cubrath

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I also looked through your picing model and you are putting to much weight on the engine. In your model, the higher horespower airplanes are being reduced to much in price. If they really did have a 65hp engine, they would have more market value then you have assigned.

Like Jim C said, condition of the tubing and fabric is the most important issue as far as value is concerned.
 

newcub

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The problem with your analysis is that you want a particular cub for personal reasons so usual market factors do not apply.
 

JimC

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My suggestion would to just look the plane over with someone who is familiar whith Cubs. If you like it, and he says it is in decent shape, throw out an offer and go from there. You can buy a good J3 for a lot less than you'd pay for a car. I wouldn't worry about a $500 dollar difference in valuation here and there.
 

tophand

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If I understand this right you want to purchase a particular plane for sentimental reasons. Make him a reasonable offer. Then pay what he wants for it.
You don't say what engine it has, time on engine, condition of the plane, or whether or not it has bushwheels. So it's hard to tell you yeah your in the ballpark.

In my opinion on paper #1 is the best deal on the page. Best engine, floats, low time. Once you see it in person ... It may be a dog



good luck ............Mike
 

huston marlowe

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Sometimes flying basket cases go for 30K and really nice ones that need nothing go for 35k . As others have said (also the basis for my purchase) . Current condition and clean logs are the important things. Usually $ 5000 initially either way doesn't make much difference because if you later discover the bird needs fuselage repair, fabric, and engine work you will be another 30k into it. In your case what do you do if the pre buy deems it an airworthy basket case ? Pass ?
 

hoodwink

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Great feedback guys. I'll be getting more information on the current condition of the plane this week when I get to inspect it (the plane has been out of the family for 10 years) but it is a 65 hp with no upgrades whatsoever other than the EDO 1320 floats my father and I got for it in 2000. It's on gear right now though. The fabric is Ceconite from the early 90's as far as I know but I can't speak to the condition yet. The plane is getting its annual as we speak from a highly regarded mechanic.

A couple of you mentioned that I should give a "reasonable offer" (which is what I want to do!) but how do I know if reasonable is $25,000 or $45,000 or something else without doing some homework on the current Cub market? I might be overcomplicating things, but the purpose of this exercise is twofold: (1) to give me a sense of fair market value for a comparable Cub to that I'd be buying and (2) to give me the foundation for a reasonable offer and managing the negotiation.

How about a simpler, more direct question: What approximately do you guys think a reasonable range of value is for a 65 hp Cub, mid-TBO but decent quality engine, with no upgrades and in "average" condition (airframe and fabric)? I know average is more abstract than it should be but for our purposes assume this is not a prize-winning showpiece nor was it recently rebuilt, but it hasn't degraded in a barn somewhere for the past 20 years either. Somewhere in between.

I guess I could just ask the guy what his magic number is and give it to him, but where's the fun in that? I at least want to try to create some leverage using facts and logic. If I need to overpay by $10,000 to recover an heirloom, so be it. But I prefer to overpay for things eyes wide open.
 
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