Addison: Everybody hates a down market. Sellers hate it. Brokers hate it. The guy who bought at the top really hates it. But here's what nobody wants to tell you. A down market is the single best buying environment you will ever see in your life. The problem is most people sit on the sidelines waiting for it to feel safe again. And by the time it feels safe, the deal's gone. So today I want to flip that thinking on its head. I want to talk about how to flip the market to your advantage, what a down market actually hands you, and how to milk it while it's still here, because it won't be here forever. It never is. So let's get into it. Welcome back to the truth about the market. I'm your host, Jason Zilberbrand. I'm president of VREF. I've appraised nearly every type of aircraft out there. My clients range from private owners to lenders to insurance companies, operators, Fortune 500 businesses. Law firms, government agencies, including the FAA, and I've owned aircraft, operated aircraft, I bought them, I sold them, I financed them, and I have spent decades watching how this market behaves when conditions change. So when I talk about the aircraft market, this is not theory. It's not social media commentary, and it's definitely not scraped internet data wrapped in a chart. It is, however, real-world transactional experience. This podcast also has no sponsors, there's no advertisers, there's no outside influence, nobody pays for my opinions here, nobody dictates my conclusions. Because aviation is a capital-intensive market, and the market punishes misinformation every single time. And right now, today, we are sitting in one of those windows. We're in a down market, inventory is up, prices have softened, and a lot of owners are nervous. If you're a buyer, that nervousness is your opportunity. So let's break down exactly how to use it. Now, this episode is built for buyers. Sellers, this is how the people across the table from you are thinking. So listen up. But stick around to the end because I've got one piece of advice for brokers and dealers listening that you're not going to want to miss. It might just change your whole business this year. So I've got a handful of advantages, a down market and what it gives you. And I want to walk you through each one. And more importantly, what to actually do about each one. Not theory, but actual tactics. So let's start with the big one. In a down market, cash is king, right? Here's why that matters. More than any other time. When the market's hot, everybody's got money, everybody's pre-approved, everybody's waving offers around, your cash doesn't stand out. Because everybody looks good. But in a down market, financing tightens up. Buyers get skittish. Deals fall apart at the eleventh hour because somebody couldn't close. And every seller in this market has either lived through a deal collapsing or know somebody who has. So when you show up as a cash buyer, you're not just another offer. You are certainty. And certainty is where real money is worth it to a nervous seller. But And this is the part most people miss. Being a cash buyer isn't enough. You have to prove it. See, talk is cheap. Anyone can say that they're a cash buyer. So you put your money where your mouth is. Here's what I do. Let's say you're buying a $200,000 airplane and you're paying cash. Throw $50,000 up an escrow, right up front. And then have the escrow company give you a letter showing that the deposit is sitting there, ready to go. Now when you send your letter of intent on that airplane, you attach that escrow letter. Think about what that does to the seller. They've maybe had two deals fall through, maybe three already. They're tired, they're worried. And here comes an LOI with proof of funds, a $50,000 letter with escrow's name on it, just sitting there. That speaks volumes, guys. That tells them this person can perform. This person is serious. This is the deal that's actually going to close. And see, that gives you leverage because now you can ask for a fair number. And you can hold a line on it because the seller knows that if they let you walk, they're back to square one with the next tire kicker. But the deposit isn't just earnest money, it's a negotiating weapon. So if you take one thing from this segment, it's in a down market. Don't just be a cash buyer, be a cash buyer who proves it before you've even been asked. And let me push this one step further for you, because there is a psychology piece here that's worth gold. When a seller is nervous and they're really afraid of its uncertainty, they don't actually know if the next buyer is real. So every signal you can send that removes uncertainty makes you more valuable than the next guy, even if the next guy's offer is a little bit more money. I've seen sellers take a lower offer from a proven cash buyer over a higher offer from somebody who needs to talk to the bank. Every single time certainty wins. Certainty is what closes deals. So your whole job as a buyer in this market is to be the most certain, most boring, most possibly can't fall apart on the seller's desk. That's the deal you want to be. Be the easy S. And one more thing on cash. Even if you're financing, you can borrow some of this playbook. Get fully underwritten, not just pre-qualified. See, there's a big difference. Pre-qualified means somebody glance at your app. Fully underwritten means the money is essentially approved and waiting. Get a letter that says that the bank is committed. And now you're closer to looking like a cash buyer than the other finance buyers who you're up against. See, in a soft market, the gap between I think I can get a loan and my loan is approved and sitting here is the gap between losing the deal and winning it. Number two, down markets have a lot of inventory, and inventory is your friend. When the market's hot, you take what you can get. A plane comes up, you've got 12 hours to decide if you're lucky, and you're competing against five other buyers. You don't get to be picky. You get to be lucky, maybe. A down market flips that completely. Now there are airplanes sitting. There's selection. Selection means you get to be choosy, and being choosy is where the money is made. But here's the nuance. And I want you to really hear this. You're not looking for the best aircraft for sale. You're looking for the best aircraft for sale. With the best seller who has it for sale. Let me say that again because these are two different things. The airplane and the person selling it are two separate evaluations. You can find a beautiful airplane attached to a nightmare seller, somebody disorganized, someone who's super emotional about the price, somebody whose logbooks are a mess. Somebody who's going to fight you on every single dollar for every squawk that has to get fixed. That deal will cost you time, it'll cost you money, maybe a year of your life. What you want is the combination, the best aircraft and the best seller, the seller who's motivated but reasonable. They got their logbooks in order. They've been honest about what's wrong with the plane. They actually want to close and move on. When you find that combination, the right plane with the right person, that's when you can buy an airplane and get a fair deal. And notice I keep saying fair. I'm not telling you to go steal somebody's airplane. We're talking fair. A fair deal is one that closes clean, holds up, and that both sides can live with. In a down market, you have enough inventory to wait for fair instead of settling for painful. And use that. So don't fall in love with the first shiny airplane. You see, in this market, you've got the luxury of patience. Let the inventory work for you. Evaluate the plane and the person and only move when both line up. And here's a tactic that the extra inventory unlocks. That you simply cannot do in a hot market. Comparison shopping out loud. When there are six similar airplanes for sale, you're no longer negotiating in a vacuum. You can go to the seller and say, look, there are five other airplanes just like yours sitting on the market right now. What makes yours worth more? That's not being a jerk, guys. That's the truth of the market. And it's a truth that only exists when inventory is high. In a hot market, that line gets you laughed off the phone. Because there are no other airplanes. In this market, it's a fact, and facts move price. The other thing inventory does is it tells you how motivated a seller really is. Watch how long a plane has been listed for sale, the days on market. An airplane that's been listed for three weeks and an airplane that's been listed for 11 months are two completely different conversations. The 11-month airplane, that seller has lived with disappointment. They've had the dream of a quick sale die a slow death. That's a motivated seller, and motivated sellers make fair deals. So when you're scanning all that inventory, don't just look at the airplanes, look at how long they've been sitting on the market. Time on the market is a tell, and a down market hands you a whole field of tells to read. All right, let's flip it a little bit. Let's talk about segment three. This is where things get interesting and probably a little spicier. Down markets don't just give you a nice clean airplane from nice clean sellers. They also shake loose a whole different category of opportunity. See, there are auctions, there are distress sales, there are assets floating around that have been sitting on the market for years, planes that nobody touched when times are good. Now suddenly they're motivated to move. And if you're willing to take on some risk, those aircraft can provide serious upside. I mean real upside, especially, and this is the key, if you're a mechanic yourself, or you know how to do some of this work. And you've got a trusted shop and you understand what you're getting into. Because here's the trade. Those distressed and auction airplanes are cheap for a reason. You're not walking into a clean situation. Maybe the logs have gaps. Maybe there's damage. Maybe it's been sitting outside for three years and needs top-to-bottom refurbishing. Maybe the engine's been run out and it needs an overhaul. See the discount is real, but the flip side is so is the work. So go in with your eyes wide open. You got a budget for the unknowns. You got to pad all of your numbers, assume you're going to find things because you're going to. And see the mistake people make is they see the cheap price and they fall in love with that number. And they forget that that price is just the entry. It's just the ticket. The real cost is entry plus everything you're going to put into it. But if you know what you're doing, if you can do some of the work yourself, or you know exactly who can and what it'll cost, these can be the deals that make you the most money in the whole market. Because almost nobody's willing to go there. The competition thins up fast when there's serious risk involved. And less competition means better buying. Now, this isn't for everybody. If you're a first-time buyer who doesn't know a magneto from a manifold, this probably isn't your lane yet. But if you've got the knowledge or the team and you've been through this a few times, a down market is exactly when these plays open up. Pay attention to them. Now, I have to say something here because I'd be doing you a disservice if I didn't. Everything I just told you about distressed deals and upside, none of it works if you skip the pre buy. None of it. When you're getting a deal, when the price is soft and the seller's motivated and you're feeling good about the number, there is a temptation to move fast and skip steps to lock it in. Don't do it. The pre buy inspection, no matter what it is, a logbook review, full blown annual, It is the single most important thing you do in this entire process. And a down market does not change that. If anything, it raises the stakes. Because the cheap airplanes are cheap for a reason. And that reason lives in the airplane. And here's the beautiful thing. In a down market, you have the leverage to do the pre-buy right and do it on your terms. If it's an auction, obviously you're going to be limited to what you can do, but that doesn't mean you don't do your due diligence. And you got to pick your own shop. Don't use the seller's buddy down the field. You want a neutral, qualified shop that owes nobody any favors or money. Have them go through it properly. Pull the panels, look at the logbooks, run the numbers on what it's going to take to make it airworthy, more importantly, to keep it that way. Then take whatever they find and bring it back to the negotiating table. See every squawk is a line item. Every line item is a number. And in this market, the seller doesn't have ten other buyers waiting. Trust me, it's true. So those numbers stick, they're real. The pre-buy isn't just protection, it's a second opportunity to negotiate. You negotiate the price. Then the pre-buy gives you a whole new set of facts to renegotiate it again. That's the buyer's market working for you. Now, I gotta be straight with you about what a pre-buy actually is, because a lot of people get this wrong. A pre-buy is not belt and suspenders for everything that could ever go wrong with that airplane. See, it's a slippery slope. When you start treating it that way, a pre-buy is an audit. It's a snapshot of where things stand on that airplane on that day in that month. That is it. You could pass a perfect pre-buy, start the airplane up tomorrow, and something breaks. That's not the inspector failing you. That's called aircraft ownership. That's the risk you accept the day you decide to own one. And here's the part that matters in a down market. When you're chasing a smoking deal. Now, don't get me wrong, living in the scope of a pre-buy is not the same thing as skipping it. You're still doing the inspection. You're just deciding going in exactly how much risk you're willing to carry because you have to be willing, ready, and able to give up on some things. The seller does not want to be exposed to every single item under the sun. And if you're getting a screaming price, you may have to limit the scope of that pre buy to get the deal done. That's a real trade-off. And only you can decide where your line is. Just go in clear eyed. The bigger the discount, the more risk you are agreeing to carry. So fall in love with the deal all you want, but understand exactly what you're verifying and what you're choosing not to before you wire the money. Now, I want to tie this all together with the most important principle I know in this entire business. And somebody taught me this a long time ago, and it's never let me down. Buying an aircraft at the right number is what gives you your freedom. Here's what I mean. When you buy it the right number, a fair, smart, disciplined number, you give yourself the ability to resell. You're not forced to hold the thing for years and years and years while you wait and pray for the market to climb back up to what you paid. You bought it right. So you can move it whenever you want in almost any market and not take a beating. When you overpay, you lose that freedom, you're stuck. The airplane owns you instead of you owning the airplane. You can't sell without eating a loss. So you just sit there. Hoping the market bails you out. And as we just live through the perfect example of this, look at the premium market right after COVID. Prices were absolutely vertical. People were paying numbers that made no sense because they were scared the prices would keep climbing and they'd get left behind. And what happened? A lot of those folks who bought at the top at those crazy premium numbers, they are now unfortunately never going to recover their purchase price. They are stuck. They overpaid in a frenzy, and the market normalized. And now they're underwater and they can't get out. That's the trap. That's what overpaying does to you. And I'm not telling you this to dance on anybody's grave. Those are real people who got hurt. And a lot of them got hurt because the whole market told them prices only go up. They don't. They never have. Anyone who tells you a market only goes one direction is selling you something. But in a down market, the flip side is of that exact coin. It's the inverse, right? Now you today you are positioned to be the buyer who gets in at the right number. That's the deal. And if you do that, if you're disciplined, if you use cash, if you pick the right plane and the right seller, if you hold the line on a fair price, then in five years, seven years, ten years, you should be sitting pretty. You bought low in a soft market, and time is on your side instead of against you. That's the whole game. The people crying about the down down market. Are the people who bought at the top? The people who win in the long run are the ones buying right now, while everybody else is scared. And speaking of the right number, that's exactly what we do at VREF Before you make an offer, know what the airplane is actually worth, get a real value at VREF VREF it at VREF.com, ⁓ go make your deal. All right. I promised you we would get into a playbook, so let's do it because I want to give you some real insight into what to do, not just what to think about. This is hands-on stuff. Okay. So, first, how do you force somebody to negotiate when they don't want to? This is a big problem and people get stuck on it. The honest answer is you usually can't. Probably not what you wanted to hear. A lot of times you go to buy something from somebody and the personalities just clash. They're standoffish, they don't want to engage. They're not really looking to negotiate, whatever it is. And here's what I do, even in my personal life. I move on. Life is too short to get stuck wrestling with somebody who doesn't want to dance. And honestly, when that happens, I take it as the universe looking out for me. Maybe I was too close to the situation. Maybe I wasn't seeing it clearly. So I sleep on it. And nine times out of ten, the next morning, I've got more clarity. And I'm glad I didn't force it. In a down market, With all the inventory, you do not need to win a fight with a difficult seller. There's another airplane out there. Move on. Second, if you've got mechanical know-how, this is your market, but be honest about your skill set. If you are a veteran, if you've been doing this for years and years, this is the market you've been waiting for. When you find something undervalued that you know will be worth more in a few months or a few years, pounce. Both feed in. Because you know that whatever turns up, you can correct it. But here's the trap, and I see it all the time. People chase things that are delusional. They've got the skill set to handle problem A, and all of a sudden they're buying problem K, problem L, they're skipping ten steps down the alphabet and taking on way more than they can handle. So recognize what your skill sets are, your mechanical skills, your piloting skills, your financial skills. See that one's just as important. Don't get in over your head. Which brings me to budget. If you've got two hundred thousand dollars to spend And you throw all 200k at the purchase, you've left to yourself nothing. Nothing for maintenance, nothing for surprises. I'd set aside about 25% of your budget for that stuff, especially in the first six to nine months of ownership, because that's when things surface. Buy the airplane with part of your money, not all of it. Third, make a smart opening offer. It takes two to tango. Down market or hot market, it still takes two people to make a deal. The difference is in a hot market a seller will just ignore you if they don't like your offer, because they've got five other buyers. In a down market, your job is to come in serious and reasonable right off the bat, and that means don't lead with an insulting offer. If the airplane is truly worth $150,000, don't make a fool of yourself and offer $85. They'll throw it straight in the garbage, and I would too. And you've positioned the whole conversation too. Start at maybe a hundred. And 35,000, right? Give yourself room to negotiate, but understand that they're not going to give the thing away. Respect the number and they'll deal with you. Fourth, distress is a double-edged sword. Approach it as worst-case scenario. A lot of people look at distress situations and think, great, the guy's getting forced into liquidation. I'm ready to pounce. But with distress comes a whole pile of stuff you will not have clarity on. Take an auction. You may not get any real understanding of what's going on mechanically with the airplane. So you have to approach distress, assuming the worst case scenario. And here's why. By the time the bank is repossessing an airplane, things have been going south for a long, long time. Banks do not want this equipment back. They will do everything, workouts, extensions, you name it, before they take it back. So if it got to repossession, that means they've already exhausted every option. Which usually means you're looking at an airplane that is not going to return to service quickly or cheaply. Maybe it's a good deal, maybe it isn't. It depends entirely on the specific situation and more importantly, the aircraft type. But there is no free launch. If you're getting a 40 or 50% discount on any aircraft, take that safe cash, set it aside for the budgetary issues that are probably coming in the first 12 months. And not all distressed aircraft are the same. Here's what I'd actually do. If you've got a relationship with a financial institution you've been doing business with for years, call them. Say, put me in touch with the loan officers who handle aircraft loans. Because if a plane's coming back and you're going to repossess it, I might be a buyer. Go straight to those lenders, the ones you know, the ones that are local to you, the ones you've already dealt with that you have relationships with. Sidestep the auction circus entirely. Get on a list so you know when it's going to be available. Okay, now this next part's for the brokers. I promised you guys something, and the more aggressive players listening, because down markets are where dealers and brokers can make a real killing if they're intimate with the market. And I don't just mean the economic side, I mean the aircraft itself. Every market is cyclical, every single one. Timing, it is almost impossible. By the time you've recognized what's happened, you're already coming into it or going out of it. That's just part of the game. But Let's say you're a broker or a dealer and you play in a specific market. And let's just say a King Air B200 world. Odds are in the next week or the next couple of months, one of your customers falls on hard times and can't keep their airplane. That, my friend, is an opportunity in disguise. So for all the brokers out there that are screaming how slow it is, flip it. Here's the bigger idea. If you go into a down market without debt, it lets you build a whole new kind of business. You can go from broker To inventory dealer. These are the exact markets where if you've got cash, banking relationships, and credit facilities, you can flip the script and become the guy who buys airplanes and resells them. Not brokering. This is the perfect time to do it. Think about the timing. By the time you buy it, do your refurbishment, get it out of maintenance, the summer's probably over. It's September or October, and guess what? The market's likely back on fire. You can only hold a market down for so long. Things are terrible right now, but they're not going to stay that way. So, this could be the biggest blessing in disguise for a hungry, aggressive broker who wants to become a dealer and has the relationships and the discipline to do it. And I'll tell you, as a former dealer myself, there is no better way to control your own destiny than to take the buyer and the seller out of the equation and own the airplane yourself. Control exactly who you sell it to and for how much. So look. Everybody else sees a down market and they see fear, falling prices, nervous sellers, uncertainty. I want you to see what's actually there. Cash that finally matters. Inventory that finally gives you choice. Distress deals with real upside. And the chance to buy at a number that sets you free instead of trapping you. A down market is a gift, but it's a gift with a clock on it. If you've been sitting on the sidelines waiting for it to feel safe, I'm telling you, by the time it feels safe, this window is gone. This is your moment. Get your cash ready. Know your skill set. Set aside your reserve. Get disciplined on your number and go make a deal. That's the show for today. If this helped you, please do me a favor. Share it with somebody who's thinking about buying an airplane. Because this is exactly the conversation they need to hear right now. And next time. I'm going deeper into why the market feels the way it does right now. I am going to make the case that this isn't a price crash, it's a confidence recession. I'll show you why volume tells the story long before price ever does, and why a lot of the brokers you met back in 2021 are not going to be here in 2027. You won't want to miss it. Until next time. Buy right, fly safe. I'll see you on the next one. And this podcast exists for one reason. To analyze aircraft as capital assets without brokerage, spin, without manufacture, or narrative. And remember, when you need accurate, defensible, and data-driven aircraft values, there's only one name in the industry to trust. That's VREF Visit VREF.com to get started today. The market is moving. It's just not moving where they're looking. I'm Jason Zilberbrand, and this is the truth about the market. Until next time, fly safe and stay smart.