) then tell the seller HE or HIS MECHANIC can be present during the inspection. Doh. (I can't fathom anyone going thru with a purchase that does not have a full understanding of the airworthiness of what they are buying.)The next question was "What is a fresh overhaul worth? Is it worth as much as the overhaul costs?"
Answer: NO!
Is an airplane with a worn out engine (or one that is at TBO but "running great!" worth as much as a mid-time engine? Of course not!)
Airplanes are evaluated as if they are six months after an annual inspection, and as if the engines are at mid-life. In the case of a C-145/O-300 that would be a 800 hour engine. Engine overhauls cost about $20K (some more, but that's a good estimate of a complete engine rebuild including accys.) That's about $12.50 per hour of operation. So a fresh overhaul engine would only add half the cost of a 800 hr engine, or about $10K to the value of the airplane. Similarly, an engine at TBO ... REGARDLESS of how "great" it's running, will subtract about $10K from the average airplane's value.
Remember: Evaluate the airplane without regard to engine time, then determine how mush to add/subtract for actual engine time.
What about "top overhauls"? Fresh cylinders on an engine that is at TBO is still an engine due for overhaul. It's merely been repaired. I wouldn't give you anything more for it, as the engine still needs overhaul. The owner has spent his money on cylinders merely so it could be transported to the place of sale. He probably put the least expensive, used cylinders on it as he could (and that's probably what he did despite his claims unless he has new sales receipts for new cylinders/pistons with serial numbers that match the ones installed on the engine.) Here's where "haggling" comes to play. If I felt good about the airplane otherwise, I might give him some additional value for those new cylinders, but not more than half of what I could buy them for ...not necessarily half of what he paid for them. (Should I be penalized because he didn't know how to shop for cylinders? I"d not give him more than half because that engine still needs overhaul and those cylinders are now "used" cylinders.)
(Note: If you are the seller, do not overhaul an engine for the sale. You will not get your money back, you'll only get half of it. Take the diminished value of the old engine and let the new buyer get his engine where he wants.)
The majority of engines that are overhauled in order to sell the airplane are "overhauled" (repaired actually) on a budget. If I am buying an airplane I want it to be me who determines the quality of the overhaul, not someone else. However, having said that,.... if an airplane is sitting on the ramp for sale, and it's engine has been overhauled by a reputable shop and looks it, then I'll be satisfied with allowing value to be added at the rate of $12.50/hr up to the 800-hr mid-life point (and likewise subtract $12.50/hr for every hour past mid-life.)
The same goes for fresh paint/interior. Those items might encourage me to add value because they're well executed, but they may also be a complete loss for a seller who put a Piper paint scheme on a Cessna. And the paint is also suspect because I don't know how much hail damage it may be hiding. (I like polished airplanes, heh-heh.) You can look at the paint at an oblique angle and sometimes see hail, but another good thing to do is look inside the wing/tail and open up the cabin headliner and look at the cabin roof for the little "bumps" that indicate hail damage. Subtract LOTS of money from that airplane and be especially suspicious of all the control surfaces which may have to be completely reskinned or replaced. (Bondo is not allowed on control surfaces.)
Remember, average airplanes is where we begin the evaluation process. An average airplane has only minor squawks, no serious airworthiness issues, has a 6-month old annual, and a 800 hour engine. (It also has an 800 hr prop, but most buyers/sellers forget that.)
Hope this helps.
