Buying and Selling a Yacht
Boaters typically own more than one vessel in their lifetime. As previously referenced, the Marinas.com Member Survey of 2015 indicates that 62 percent of the respondents have owned two or more boats. Another 28 percent have owned a single boat and it’s likely that these individuals are not close to buying the farm; consequently it’s probable they will purchase one or more additional boats in their lifetime.
Many boaters upgrade to a newer and/or larger vessel every few years, much like car owners, but land vehicles are a necessity for most people whereas recreational vessels are often toys or luxuries of a floating sort. A fair percentage of boaters choose their last vessel for a retirement home although its size is often prohibitive for family reunions.
To sum it up, everyone who owns a substantial-sized vessel (say 30 feet or larger) will someday be selling his/her craft and will consider engaging a yacht broker. Owners of small boats often attempt sale-by-owner rather than pay a broker’s commission and this is becoming the norm for small-boat sales with numerous boat sale websites emerging every year. For larger boats however, the complexity of the sale increases greatly with the need to engage marine surveyors, conduct sea trials, certified engine and fuel tests, perform haul-out inspections, etc. All of these necessities make the process of vessel sale more challenging for the owner/seller.
If you may be within a year or two selling your vessel, begin now to search for an experienced, licensed, reputable, cooperative and trustworthy yacht broker who has a proven record of selling your type of vessel. If you own a motor vessel, don’t choose a broker who mainly sells sailing yachts; and vice versa. Wise buyers often seek out individual brokers and yacht sales firms who specialize in the type of vessel they want to purchase. You want your broker to be prominent to this buyer.
If you’re buying and have a good broker representing you in that specific market, they’ll likely know many vessels that fall within the general category you favor, thereby saving you considerable time and possibly money, if you can negotiate with two separate sellers of the same type of vessel. Often with boats, it’s a buyer’s market because many boat owners need to sell for desperate reasons – sad but perfect for the buyer.
Whether you are considering selling, buying or both, a good first step is to go online and search for boats in your general category. This is helpful for sellers because you can see sale (asking) prices for comparable vessels in addition to how long they’ve been on the market. Buyers can quickly search for a specific boat manufacturer and model, check the sales inventory then determine whether prices for a specific vessel vary with geography (e.g., either between states, or East Coast versus West Coast). All of this initial research can be done before engaging your Broker.
One of the best websites in the U.S. for yacht shopping (both new and pre-owned) is Yachtworld.com. This free website is excellent for searches by prospective buyers but realize that all of these vessels can only by purchased through brokers (who paid a considerable sum to post their boat listing).
Recommendations for Sellers
- Go to Yachtworld.com and conduct an advanced search for vessels of the same general configuration/model, manufacturer and year.
- Assess vessel prices and see how they differ by the year of manufacture; make a simple graph on paper (or your PC) with sale price on the y-axis and year on the x-axis to determine a general depreciation rate (slope of the line through the most points on the graph) for your vessel type.
- Select a good sale price for your vessel using the depreciation line — higher than the line if your vessel is in excellent condition and has many additional features than the standard model; lower if your vessel isn’t in Bristol condition.
- Consult with your broker to decide on the initial sale price then have him/her post the listing.
- Recognize that it’s likely you will have to lower the listed price a few times before the sale, then again during the final negotiations.
- If there have been no interested parties or offers during the first two months the vessel has been advertised, consider dropping the price 5 percent.
- Continue to lower the price every couple months, even if only a small amount, to keep your vessel’s listing active.
Recommendations for Buyers
- Again go to Yachtworld.com and conduct an advanced search for vessels that meet your general search guidelines.
- Assess whether there is sufficient inventory of appealing vessels for sale in your geographic area or whether you should expand your search region.
- Select a group of vessels to view and have your Broker make appointments.
- Never visit a for sale vessel without your broker or he/she will not gain part of the commission on the purchase. Note that sellers’ brokers are typically unwilling to reduce their commission even when a buyer’s broker is not involved, so there is no gain for the buyer to exclude his/her own broker.
- When you have found a good vessel, have the broker speak ‘off line’ with the selling broker (without you there) in an attempt to learn about seller motivation, how long the vessel has been on the market, whether there are other interested buyers, etc.
- Trust only your (buyer’s) broker, as he/she is looking out for your best interests, typically not the role of a seller’s broker who will repeatedly tell you how wonderful the boat is.
- Make a relatively low first offer but don’t anger the seller with a ridiculous ‘low ball’ offer. Expect a few rounds of price negotiations and be respectful of the owner.
- And most important of all, never let the seller’s broker select the individuals or companies to perform the hull and engine surveys for boats they are selling. This can be a major conflict of interest, often with boat problems not being identified, at the buyer’s later demise.