I thought you guys may find this article from my website of interest ..........
BOAT VALUES, A crap shoot.
The toughest part of my job as a marine surveyor and the one that causes me more problems than anything else is putting a value on a boat.
Rub a dub dub Three Men in a Tub.
The broker, the buyer, the seller
went to sea in a leaky tub....
The surveyor was left on shore arguing with the insurance adjuster
cause' he was the only one stoopid enough to put his valuation in writing.
If you call any car dealer in the country and ask " How much for a 1994 Chevy ?". They will come back with a price within a few dollars of each other. The dealers rely on the huge wholesale auction system which very effectively controls used car prices. Its worth what its worth ! The vast majority of car models sell thousands of units per year so comparative pricing is easy. But how do you compare prices on a Tanzer 29 when only two have been sold in the last three years and there was a 50% spread between those two.
I surveyed a Tanzer 29, soldboats.com showed only one sale in the last three years at $13,094.00 (pretty low) and another Toronto broker had a pretty nice one listed at $24,900.00,. I valued this pretty good boat at $28,000.00 and got the broker ticked off because I refused to change my valuation. His client needed it valued at 33k (2k below its listing price) to get financing ....... the deal fell through. If I had upped the value and something happened to the boat, the insurance company would want to know why I over valued it. The last thing I need is a fight with an insurance company whose legal counsel has 200 names on the letterhead. Now the kind of dollars we are talking about in this instance are not likely to end up in court but you get the point.
Unfortunately there is no huge wholesale auction system to control boat prices and boats cannot be as easily shipped all around the country the way cars are so local markets can be very different. Some boat models are very desirable in the Trent but less so in Lake Erie. Lake Simcoe is a haven for wooden motor yachts with all their covered slips but you can't give them away on Lake Ontario. Although less so than in years past, location still makes a difference. When searching yachtworld.com be aware that prices in California are significantly higher than most other states and don't even look at listings in Europe as their tax structure causes shockingly high prices.
The auto market has the "blue book" and the "black book" which give wholesale and retail prices for cars. This information is derived from that huge auction market we already talked about and its pretty accurate. We have similar guides in the boat business.
BUC Value Guide You can purchase this guide to boat values or get limited access to information for free on line. This is all US information and I have found the values to be generally quite a bit lower than most of the boats in the Canadian market. Carefully read the criteria for valuations and the exceptions that can make a big difference.
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ABOS Marine Blue Book You can purchase CD's, the books or subscribe to online access. These prices are limited to the US market and don't seem to be anymore accurate than NADA or BUC.
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NADA Marine
Appraisal Guide You can get a lot of access to boat values on this site or purchase a more detailed guide but again it is US information and I find the prices on power boats to be very low and only recently have I found most sailboat values not too far off the mark in our market. Carefully read the criteria for valuations and the exceptions that can make a big difference.
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Computer Boat Values You can buy this, the only Canadian guide I know of and quite a few of the banks and insurance brokers use it although I have found it to be somewhat erratic in its valuations. Carefully read the criteria for valuations and the exceptions that can make a big difference.
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www.soldboats.com This one is on line and quite expensive but I think it's the most accurate way to go. Yachworld.com (The international MLS of boats) requires all the brokers to submit actual sales info when a boat is sold including location (crucial info), asking price, actual selling price, how long it was listed for and you can even access the original Yachtworld sales page.They then re-sell this info on soldboats.com. Some people think the brokers inflate the selling prices and I'm sure that does happen occasionally but Soldboats says they have penalties if they are caught. This is the only place to get real world information.
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Power Boat Guide
(Brokers Edition) This boat value guide has layout diagrams, a descriptive blurb and some basics specs but their valuations are right out to lunch.
And some other pricing sources……
Boat for Sale Magazine This magazine has an on line "Boat Value Guide" showing low, average and high prices for the Canadian (mostly Ontario) market. These values are asking prices not actual sale prices. These are simple averages of the prices of boats advertised in their magazine and bear little relationship to what boats actually sold for.
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Sailquest.com Prices and specs. for sailboats in the Canadian (pretty much Ontario) market. Used to be reasonable but has not kept up with the recent market crunch.
Brokers and sellers have very obvious agendas, they want the highest price they can possibly get and thats an honourable goal in a capitalist culture. The buyer wants the opposite and somewhere in the middle they generally meet up.
Surveyed .... Jeaneau 27. These boats were selling for about 17k at the time. The one I surveyed for insurance purposes was exceptional and I valued it at 21k. The owner had a fit. He had just spent 25k on racing sails ( I know, I know, its beyond me too) and wanted me to add 25k to his boat value. After being harrassed for more than a week I finally said " Lets go to your sailmaker together and ask him what these sails are worth today. Whatever he says they're worth I'll add to my valuation". Off we went and asked the sailmaker. His response .... " If you bring me a case of beer, I'll take them off your hands".
The broker knows that if he prices the boat too high there will be no buyers and he often has to contend with a seller's unrealistic expectations. If the broker is having a really good year he may encourage his clients to hold out for a higher price. if he needs money that month and he needs to unload a couple of boats as quickly as possible to make the mortage payment, maybe he'll encourage lowball offers for a quick sale. Canadian sellers have been slow to realize that boat values have crashed as the US economy has flooded the market with desperate sellers and many Canadian buyers are looking south of the border. The seller (as have we all) has often spent an ungodly amount of money on his boat and thinks he has increased its value. If a house seller spends 40k on a new roof do you think his house is worth 40k more than others on the street... Not a chance, its supposed to have a roof. If you spend 20k on a 1994 Chevy Impala, what do you have .... a really nice 1994 Chevy Impala.
A while back I surveyed a Bayfield 32'. They were selling for about 60k at the time. This one however was unique. In its 13 year life, the engine had never been commisioned, the sails had never been raised, the original wrapping was still on the head and stove. The couple had it shipped to their marina and came down every Sunday to sit in the cockpit with a glass of wine. This was a 13yr. old brand new boat ! I pulled a number out of the air and valued it at 74k. This was the first time I had ticked off the seller, the buyer and the broker at the same time. It had been sold for $94,000.00.
Occasionally, like the previously mentioned Tanzer a broker sells to a less than expert buyer for above market. I can't fault him for doing the best for his client but the surveyor is the only one who has to put a value in writing. On a few occasions I have been asked to increase value to satisfy a broker or for financing ..... it ain't gonna happen ! I am not perfect ( my grandkids would disagree) and was once convinced by a broker that I was in error and did adjust my valuation. To get me to do this again you better have a very convincing argument and substantial documentation to back it up.
A few years back I surveyed a Trojan Tri-Cabin that was sold for 38k. It was a dangerous piece of junk that I valued at 18k …….. the deal still went through, at the asking price ! At the same time I knew of another Tri-cabin listed for 28k and in exceptional condition. It would have been a serious conflict of interest to inform my client that " Hey there is a much better boat 1 mile from here for 10k less". I had to bite my tongue all the way through that deal. I felt really bad about that one but getting into that kind of conflict could cost me my SAMS ® Accreditation.
Surveyors are supposed to appraise at "Market Value" what does this mean ? it could be reasoned that the boat is worth whatever someone is willing to pay for it and that is close to the definition of "Market Value" So if a buyer is willing to pay 40% over the average does that mean I'm going to value the boat at that ? Not a chance. This is where surveyors and brokers come into conflict.
The statement below is the definition and explanation I use in my survey reports
"Current fair market value" is the price, in terms of currency or its equivalent that a willing seller will accept for property from a willing buyer, neither part being under undue pressure to act in the matter.
This valuation opinion is intended for insurance and financing purposes only and is not intended to influence the purchase or non-purchase of the subject vessel at any value. The surveyor has no interest in the vessel financial or otherwise.
Valuation is primarily determined through
www.soldboats.com but may also be derived from consultation with knowledgeable boat brokers, personal experience, current listings and available pricing sources such as Boat For Sale Value Guide, Computer Boat Values guide, N.A.D.A. Marine Appraisal Guide and /or BUC Value Guide. Boat values vary considerably due to local market demands and significant premiums may be paid for fresh water vessels in exceptional condition. Currency conversion is done on date of survey using
XE - The World's Favorite Currency and Foreign Exchange Site
I surveyed a Hunter 30. There were 11 of these listed on soldboats.com with a low selling price of $12,000.00 and a high of $40,000.00. The owner of the one I surveyed was asking $43,000.00 and bragged that he had just spent 28k on it. This boat might have been worth 40k if he had spent another 50k on it.There were a number of serious issues on this sinker (hurricane ?) covered up with bondo and new alwgrip. I valued it at 28k and I'm having second thoughts about that.
The broker, the buyer and the seller all have vested interests in the valuation but the surveyor is the only one going up on the stand to justify the value.
So what have you learned from my little rant ? Not much. I was just letting off steam after two arguments this week over valuations.
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