Purchasing Tips – A Yacht broker’s perspective

Many thanks to Nick Cox of Sunshinecoast Yacht Sales for sharing these tips on purchasing a used boat.

There is a lot more to buying and selling boats than initially meets the eye, and after 27 years in the business, I have learnt a bit and hopefully this experience should put me into a position where I can actually be of assistance to potential boat buyers even if I don’t have the perfect boat on any given day.
It is fair to say that no two boats are the same, even if they start life out of the same mould, and the same can certainly be said for buyers and sellers. Having said that, there are still a number of fundamental truths or facts that basically don’t change. I thought it might be of some interest to pass a few of these on!

(1) “I need a boat with good resale, so I am looking for a bargain/ desperate vendor, and it must be a production yacht”. Perfectly reasonable request, but it is worth thinking outside the square as well. Firstly, the owner of a good quality production yacht will know its real value – he bought it for the very same reason! So, even if he is in a real hurry to sell, he should always end up within 5% of the boats real value – in other words there is not likely to be a huge drop because he is “desperate”. There are some exceptionally good boats that are not “production” boats – check out some of the beautifully built NZ built boats – and these boats can represent exceptional value as well. If you are worried about resale, I always say this to buyers :” If you remember why you bought it, you will always be able to resell it” Usually the motivation to buy is the fact that the boat is what you are looking for AND it’s a really good deal – remember the next guy’s motivation is exactly the same! If it is not a good deal, the buyer will keep looking.

(2) Don’t insult the Vendor. When you find the boat you think is right for you, part of the decision is going to be financial , what is it worth, what will he take, what’s his bottom line etc etc. One problem for buyers is they do not know who put the price on the boat – did the Vendor take his Agent’s advice or did he ignore it? There is no built in negotiating margin, some boats are correctly priced and will sell for their asking price or very close, others are unrealistically priced and will not sell without some serious negotiating. I am often told by buyers about other boats and “the broker said I could get it for $x” – the broker should be able to give you some information but he doesn’t actually KNOW – circumstances do change! So I suggest that you gather all the information you can, establish what you really think it is worth of YOUR money, how much it is worth to you, and submit an offer that will confuse the Vendor. If you make an offer that is so far away from the real value of the boat he will be insulted and you will not get him to come to the table, and if he won’t come to the table you cannot negotiate. So – don’t insult him – confuse him!

(3) Leave some goodwill in the deal. This is so important, in my opinion. If you are negotiating to buy a boat, you are a willing buyer and he is a willing seller, you will quickly get to within 5% of a deal, and very quickly it will get very close. So often we get to the stage when all of the negotiating arguments have been used up and we are still a few dollars apart. This is when you have to consider the goodwill factor – by all means be a tough negotiator, but you still need the goodwill to be there when it is all over. You may win the argument, but if you lose the goodwill, anything not mentioned on the inventory will disappear off the boat, all the stuff the owner keeps off the boat in his garage that you didn’t know about will stay there, and when you want to ask him a question down the track he will not be available to you. So try and ensure everyone is doing the deal with goodwill – you may not be able to put and exact dollar value on it, but it can be worth a hell of a lot.

(4) One final “rule of thumb”. We are often asked to value a boat for resale – “what is my boat worth?” We will endeavour to give an honest answer and come up with a figure we believe is realistic and achievable. So often the owner will say “but it owes me so much” which is considerably more than its potential resale. There are obviously numerous exceptions to the rule, but a boat is usually worth what you paid for it, not what you spent on it! The additional age on boat from the time you bought it to the time you sell it is amortised by inflation and by the fact you have maintained it and kept it up to date. That is what maintenance means – maintaining the value of your boat!

Just a few hints to help you in your search for that elusive perfect boat – I hope it is of some interest and assistance!