Setting an offer price

[dadio917]

Hi - we've found a boat we want and are trying to figure out an offer. The brokers say to not offer low else the seller gets insulted. Do any of you actually think this is true?

We're flexible but would like to get the boat for the best price possible as we don't have tons of money to last us the rest of our lives. The "value" of a boat would seem to be what we would pay for it. This particular boat is in great shape and maybe priced just a tad high. A boat loan person told us asking prices have eroded to where selling prices average only about 10% below asking.

One school of thought is offer what we know would be unacceptable and negotiate to mutually agreed point. The other is to offer what might be acceptable.

Any thoughts?
thanks - Pablo

PS - I tried to post on the buying forum but the site would not let me.

[JKCatalina310]

Do you have your own broker or are you using the seller's?

If you have your own broker, he/she should be able to provide you with a print out from soldboats.com. It is essentially the broker's version of yatchworld but instead of listing boats for sale, it lists boats that have been sold recently. They can sort by make and model, region and date. Our broker showed us all of the same boats that sold in the last five years.

As far as the 10%, that is basically what we found. It was more like 8-16% off of the listing price.

As for insulting the seller, this can happen. My uncle made a low ball offer on a Catalina 36 a couple of years ago and the seller got insulted. He wouldn't even respond. The worst part is that he ended up selling the boat for close to the offer 4 months later.

We made a low ball and I think the seller was a little insulted. His counter offer was a joke. Our second offer was in the middle of the two numbers. He said no, we started to look at other boats and he came back and accepted our offer. Just to give you an idea of the numbers, he wanted $70K, we offered $58K and settled on $63K. It was exactly 10% off of the listing price.

Good luck.

JK

[dadio917]

Thanks for the note!

We're using the sellers broker.

[PaulfromNWOnt]

Throw the ball back at the seller. Tell them that you're interested, but they'll have to work on the price. Let the dickering begin.

[davidpm]

Since you are a serious buyer the broker should be willing to do a soldboats printout for you. It goes both way you know. The sold boats listing may show you are getting a deal.

It would be good if he would let you look over his shoulder so the low sales are not filtered out.

[bljones]

I've never understood the concept of being insulted by somebody actually wanting to buy something that I want to sell. An offer is just that- an offer. The buyer has the option to accept, or counter-offer. If one gets insulted, one runs the risk of losing a potential sale.
If the seller is insulted by an offer presented by his broker, then the broker isn't doing his job very well in how he is presenting a low offer.
Nobody has ever died from a low offer. Nobody has ever divorced over a low offer. Sometimes, that low offer reflects current reality.
Case in point- a boat I looked at, and passed on, a few months ago was priced at $39K. I figured it was worth half that, about $20k. I would have made an offer at $20K, but it was more work then I wanted to take on.
Would the seller have been insulted? maybe. I'm sure the broker would have, if he was counting his commission before the boat was sold- he's getting half of what he thinks he should!
The boat is still for sale, and has seen a recent price reduction, to $23K. Something tells me my offer would have been accepted.... but it wouldn't have made the boat any better.
If a boat doesn't sell at it's asking price, then it's not worth it's asking price.

[kgruskin]

You should be able to get a pretty good feel for what the value of the boat is by looking at what similar boat asking prices are online. A lot will depends on the year of the boat l as the asking price, availability of the make and model, etc. The more expensive the boat the more room you have in general to negotiate with. As a very general rule and there are many reasons why this would not hold true, but for the sake of some guidance that I use is if the boat is 50K-80K+ you can safely assume a sale price 10-15% off the asking price, at 30-50K 10% from asking and under 20K-30K 5-10%, under 20K most likely 5% as the gear alone on the boat might be worth the price they are asking.

I would treat buying a boat more like real estate and just make an offer and see what happens. You might be able to talk to the owner directly and feel them out or just ask the broker about them to see what is important to the buyer. Some buyers will sell at a much lower rate if they love their boat and know the next person will take great care of it. You can also reduce the price buy asking the seller to pay for the haul out, surveys and other fees.

Unless you make a really ridiculous offer in this market I don't think you will offend a seller to the point they wont be reasonable in dealing with you. Be very weary of advice you take from a lender or sales person. I have no factual evidence and I'm sure there are some very good lenders with good intentions out there, but 9 out of 10 times they just want to close the deal and will tell you anything to do such. They are trying to sell you a product and there is no upside for the lender to lending you less money.

Whenever taking advice on a large transaction I'd suggest thinking to yourself "what are this persons motivations." From there you can start thinking if the advice you are getting is credible or biased.

Even those with good intentions let emotions, financial gains or losses bias them when dispensing advice independent of them realizing it is good or bad advice.

[rockDAWG]

Originally Posted by bljones

I've never understood the concept of being insulted by somebody actually wanting to buy something that I want to sell. An offer is just that- an offer. The buyer has the option to accept, or counter-offer. If one gets insulted, one runs the risk of losing a potential sale.
If the seller is insulted by an offer presented by his broker, then the broker isn't doing his job very well in how he is presenting a low offer.
Nobody has ever died from a low offer. Nobody has ever divorced over a low offer. Sometimes, that low offer reflects current reality.
Case in point- a boat I looked at, and passed on, a few months ago was priced at $39K. I figured it was worth half that, about $20k. I would have made an offer at $20K, but it was more work then I wanted to take on.
Would the seller have been insulted? maybe. I'm sure the broker would have, if he was counting his commission before the boat was sold- he's getting half of what he thinks he should!
The boat is still for sale, and has seen a recent price reduction, to $23K. Something tells me my offer would have been accepted.... but it wouldn't have made the boat any better.
If a boat doesn't sell at it's asking price, then it's not worth it's asking price.

X100.

That is why sometime it is better to buy through a broker, keep the emotion out of the equation.

It is a buyer's market, bargain hard.

The sad part of being a seller is that the boat continues to depreciate while sitting at the dock or on hard. Every month they need to put money in just to maintain boat. The electronic equipment depreciates much faster. It is better to take a hit and grab the money and move on.

I am glad that I am a buy. May be better yet, don't a boat.

[sailpower]

Originally Posted by kgruskin

You can also reduce the price buy asking the seller to pay for the haul out, surveys and other fees.

You probably don't want the seller paying for the survey. You want the surveyor working for you not him. No point in muddying the waters.

RE; offer as a % of asking price. I don’t see the correlation. If the asking price is high vs the market then a larger discount would be reasonable. If the asking price is low vs the market then a lesser discount would be appropriate.

It’s pretty difficult to make generalizations about boat prices when the products and the sellers are so different.

Sold boat data over the last five years is very useful although I would focus on 2010 and 2011 sales over earlier ones. If the boat that you are looking at is popular there should be enough sales for you to spot a trend. Again, keep in mind that prices are just raw data and without knowing the circumstances of the sale or the condition of the boat they are just one tool.

Good luck.

[kgruskin]

Originally Posted by sailpower

You probably don't want the seller paying for the survey. You want the surveyor working for you not him. No point in muddying the waters.

Having the seller pay does not mean that they chose the surveyor or interact with them, the buyer would still be in complete control. The seller is just picking up the bill. Some people get fixated on selling price alone and not the overall cost. There are too many negotiation tactics you could use to reduce your out of pocket cost. I've seen free slip usage for 1 year negotiated, haul outs & surveys paid by the seller (not conducted), replacement of electronics or work the buyer knows he will do right after buying that the seller completes, etc.. My point was that there is more than one way to skin a cat and there are other costs that some owners don't mind being flexible on and others they are not. Each owner is different.