Question about bank appraisals

zAr · #1 (**permalink**) 04-03-2009

Ok, so I've been looking at two boats, both CS36T's, in different locations. I've viewed both, following most of the pre-survey steps, and they seemed in good condition.

One, a 1979, is loaded with addons, some nice modifications, lots of goodies. The second, a 1980, is very simple and plain, like it first came from the factory. The first had three sails, the second had eight (though in fair condition). Both hulls were in good condition, recently epoxied and antifouled. Owner #1 knows a lot about his boat and its history, owner #2 seemed to not know even basic stuff like rode length and engine hours. I suspect #1 is a knowledgeable cruiser who cares about his boat and #2 is a more of a racer who cares about winning - with the boat being merely a means to that end.

Ok, now before I could make an offer on either I submitted the info to the bank - HIN, license #, all the details, etc. Before any surveys could be arranged, the bank appraised #2 (plain'n'simple boat) at near the asking price and #1 (loaded with goodies boat), which is listed at $10k less than #2, at 20% less than asking!!!

What do the bank appraisers know that I don't? Do they have access to insurance/accident info? How do the banks go about these appraisals?

Now I'm spooked about #1, though I drool at all the add-ons. Should I be?

sailingdog · #2 (**permalink**) 04-03-2009

It might just be the one year difference between the two boats. One boat is 30 years old... and the 30 year mark may be significant to the bank, kind of like how prices are $X.95 instead of $X+1.

I'd would recommend you read the Boat Inspection Trip Tips thread I started, since it will help you figure out if there is a reason that Boat #1 is priced relatively low or if it is a good deal. It might just be that Boat #2 is trying to get the most for his boat. I seriously doubt it is worth $10,000 more than Boat #1 unless there is something really wrong with Boat #1.

artbyjody · #3 (**permalink**) 04-03-2009

Quote:

Originally Posted by zAr

What do the bank appraisers know that I don't? Do they have access to insurance/accident info? How do the banks go about these appraisals?

Now I'm spooked about #1, though I drool at all the add-ons. Should I be?

You can counter with a survey report on the #1 if that is the boat you want. A Survey report will have the appraised value. Their appraisal is based on several factors (and some will never make sense) and until you have a survey actually done ... if you have not made an offer, then get a survey (its a hungry market out so you do not necessarily have to have an offer on the table to do so). Resubmit the survey to the bank and ask them to reconsider.

However, should you want to make an offer (as of right now) - use the bank's current loan amount and their valuation as the offer. If you follow where I am going - then you may be able to get a good deal if the survey comes back with a clean bill of health. Again its a buyers market currently... could work in your favor and you may find the surveyor appraisal is in line with the banks. Don't be spooked though - it could be as simple as that year boat and the value guides the bank uses do show a lower price (ie its a 30 year boat - but the 80's one is only 29 or considered in the 25-30 yr bracket). You can also ask the bank how they came up with that validation...

sailingfool · #4 (**permalink**) 04-03-2009

Depending on how you plan to use your boat, you should eliminate one of the two boats as an option...one of them is not right for you and will end up costing you a lot extra if you go for it.

If you are interested in racing, only consider boat 2.

If you are interested in coastal cruising, it sounds like boat 1 would be the boat.

Most banks are clueless about boats, they have some agent who tells them the answers. Their agent probably uses a simple formula that doesn't make allowance for equipment and condition, and I bet he doesn't even see the boats.

If the issue is financing, you should find out if the bank will accept a surveyor's estimated value for financing purpose, if not, you need to accept their estimate as the basis for financing, you just may need more money down. What is more important is that they insurance company will cover the full purchase price...there the survey estimated value should carry the day.

If you PM me a link to the boat listing, I'll be glad to comment on it.

boatpoker · #5 (**permalink**) 04-03-2009

Artbyjody has it right ...

"that year boat and the value guides the bank uses do show a lower price (ie its a 30 year boat - but the 80's one is only 29 or considered in the 25-30 yr bracket). You can also ask the bank how they came up with that validation"

Most Ontario banks know little of boats and just use the "Computer Boat Value" book to look up the value based on year of mfg. Neither this price guide or any of the others (NADA, BUC) are very accurate as they have not been able to keep up with the upheaval in the market for the last year.
It is not unusual to see boats selling for 40 percent less than their listed price right now.

If you are approaching the bank based on the listing price rather than the actual price you can buy for, your numbers are probably way out of whack.

It is most definetly a buyers market right now, take advantage of it.

zAr · #6 (**permalink**) 04-04-2009

Thank you everyone, as usual you've been incredibly helpful and I think this is a case of all of you being right (so far).

I'm going to make the offer on #1 after all and follow artbyjody's advice of using the survey appraisal if necessary to find the value.

I think boatpoker is right that boats are selling for 40% below asking. It's true that works out for me as a buyer.

Sailingdog, I do use your boat inspection tips. They've been incredibly helpful and thank you!

Sailingfool, I'll be PMing you shortly with the details.

Sailormann · #7 (**permalink**) 04-08-2009

If I read the original post correctly, the bank was discounting from ASKING prices. Unless both vendors were asking the same price, comparing the two bank values is not a particularly useful exercise.

boatpoker · #8 (**permalink**) 04-08-2009

Quote:

Originally Posted by Sailormann

If I read the original post correctly, the bank was discounting from ASKING prices. Unless both vendors were asking the same price, comparing the two bank values is not a particularly useful exercise.

No discounting asking prices at the banks in Ontario. All banks in Ontario use the " Computer Boat Values " book you can buy one at Computer Boat Values

but its not worth the money.

gelsailing · #9 (**permalink**) 04-11-2009

Any advice on finding used boat actual sales prices in USA? Is it true in US also that sales prices are about 40% less than asking??

camaraderie · #10 (**permalink**) 04-11-2009

Gel...a broker has access to the actual sale prices through yachtworld. Ask for a printout if you are interested in a particular boat. You will see a WIDE variation as condition is everything.
NO...40% is WAY too much. Most sell for 10-20% off provided there are no significant survey issues that were not known at the time the price was set.