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What Is A Boat Really Worth?

40K views 272 replies 53 participants last post by  Ajax_MD 
#1 ·
In our "continuing education" we've learned yet another valuable lesson. Owners and brokers have a very different idea of the value of a boat than lenders and surveyors. And in more cases than not, the latter has a value sometimes approaching 40% or more less than asking price.

We saw this but getting the information direct from the horse's mouth confirmed it. And with a little more hunting we've found selling prices are more in line with lender values.

If you're a cash buyer, you can pay anything you want for a boat. If you're a seller, you can ask anything you want for your boat. If you're a broker, you're hoping both the above will get together and complete the sale.

But once you get lenders and surveyors into the mix, things change and it's usually the seller who's not happy. At least that's what we're learning in conversations with lenders and surveyors we've had recently.

I suppose inflated asking prices are due in part because there is no system in place where brokers take known sale figures and advise the prospective seller what a good number would be if they want to sell their boat reasonably soon like they often do in real estate. Maybe that's why the average boat is on the market almost a year before it sells.

In a nut shell, what the lenders and surveyors have said is the value of a boat continues to decline as it ages until eventually it has no value to the lender. If a boat is valued at 25% its original asking price, the upgrades an owner does will be depreciated at pretty much the same amount. They could also have no value to the lender. So a $20K repower may only be worth $5K to the lender, even right after work is completed. On older boats it may have no value at all.

One lender said if the owner wants to pour money into improving the condition of their boat, that's fine, just don't believe it will automatically increase the value of your boat. At least not in the lender's eyes. They are only concerned with actual value in a given market, as in "If the borrower defaults, what price do we need to be at to sell the boat in a reasonable amount of time?" They don't get emotionally involved. It's strictly numbers and they know them well.

Surveyors may attach value to major upgrades but the overall value seems to be more in line with the lender's value estimates.

The more we learned, the more I realized the saying, "A boat is a hole in the water into which one throws money" is not just a saying. It's a fact. And that fact may be why so many boats fall into disrepair. The love is gone and there's no financial advantage to keeping the boat up. Just dump it as fast as you can.

When we started our search 6-8 weeks ago, I was gathering values from BoatUS and NADA for boats we were interested in. One boat was valued dramatically lower by NADA than BoatUS. I told the broker that. He said BoatUS had more realistic prices because they also do lending. It made sense so I started using BoatUS values to determine the real value of boats in the hunt.

Recent conversations with lenders proved just the opposite. All lenders we talked to said they use NADA prices to value boats. And the surveyors tended to agree with the lenders regarding boat value. Seldom did either agree with the seller value. Still, there are exceptions.

So who is right?

If you're obtaining a loan and you aren't willing or able to come up with a down payment that will bridge the gap between owner/broker perceived value and lender value, you have no other choice than to move on if the seller won't come down to lender value.

If you have the cash, you can pay whatever you want.
 
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#181 ·
A seller would be wise to choose the yard at which the boat will be hauled and have the haul and launch paid in advance. A buyer should have no problem with pre-paying this. There is no way for them to get out of the obligation and the good faith deposit will be fully retained by the brokers anyway and should not be available for this. I have this vague recollection that I was actually required to pay the yard in advance at some point, although, I believe it was the yard's requirement. I was hundreds of miles away and they probably thought they would never collect, if I balked, and they didn't know me.

On the other hand, I have a real curiosity over whether the surveyor can legally attach the boat, if they were contracted by the buyer. They didn't improve the boat, so I would find it unlikely. Still, I would be interested and may research it.

Brokers haven't been cashing these checks right away since long before the internet was around. Maybe the seller even decides to back out before they sign the contract. What is the percentage of deals that die after an offer is accepted. I will bet it's quite high and an active broker would rightfully become jaded.
 
#182 ·
A seller would be wise to choose the yard at which the boat will be hauled and have the haul and launch paid in advance. A buyer should have no problem with pre-paying this. There is no way for them to get out of the obligation and the good faith deposit will be fully retained by the brokers anyway and should not be available for this. I have this vague recollection that I was actually required to pay the yard in advance at some point, although, I believe it was the yard's requirement. I was hundreds of miles away and they probably thought they would never collect, if I balked, and they didn't know me.
I have bought quite a few boats over the years, and not once has the seller paid for, chosen the yard or made the appointment for my survey or surveyor. Were those to be terms of the sale, I would look dimly at the deal and wonder why.

It is incumbent on the prudent buyer to arrange his own inspections, choose the yard and indeed pay for it, often ahead of time or certainly at the inspection. I actually had two inspections that the yard would not let me in to the pit without word that the haulout and such were paid in full.

Similarly, I have had my surveyor tell me that there are showstoppers on the visual in the water inspection that would render useless the haulout and I stopped the survey there. I have also had the yard notify ME, no one else, that they see an issue that needs to be addressed. Would "I" like it handled while in the sling, or if not sure about the sale - do it later. Same with bottom painting- I have asked the yard before hand, should the survey be OK, can we paint the bottom later in the afternoon or set and block the boat while it is in the sling.

Of course the risk is the seller may get something for nothing from me, but I usually have the deal locked in before work proceeds.

You are the Buyer, use your power to get what you want, and where you want the boat gone over.

YMMV
 
#185 ·
I remember the haul out/survey/purchase process to be a collaborative effort by all parties seeking to make a mutually beneficial transaction. Not much drama in my case. No smoke and mirrors, everybody did what they said they would do. I paid for the haul out before hand, the surveyor was contacted by me and we arranged a time in conjunction with the boat yard and the owners schedule. Yard selection was the closest to the marina, made by the owner. Owner and I discussed the survey findings, agreed on a course of action and finalized the deal with a handshake and beer. Maybe it was old school. I liked it.
 
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#187 ·
Julie,

You really don't need an attorney, although, I won't talk you out of one.

In the standard contract, the buyer holds ALL the cards until the acceptance date. If you don't trust they parties with the money (when necessary to pay it), just insist on an escrow agent, who gets a copy of the contract too. No escrow agent, no deal. Simple.
 
#190 ·
When my dad had his boat in Chicago, I knew that boat inside and out. Few surveyors could have provided better information about the condition of that boat than me.

James, you are absolutely right. The owner has knowledge of the condition of the boat. And they should divulge what they know up front. If they don't because they fear it will devalue their boat, aren't they offering the boat for sale fraudulently?

A real estate attorney told me if you don't divulge problems a homeowner should reasonably know, you could be liable for the cost of fixing it. Why shouldn't the same be true with boats?

Instead, the industry creates a system that creates jobs, and it's the buyer that supports it. There's little solace in the buyer being able to back out of the deal. They will never recoup the costs they incurred or the lost time. And if they walk and move on to find another boat, they will incur those costs again.
 
#192 ·
When my dad had his boat in Chicago, I knew that boat inside and out. Few surveyors could have provided better information about the condition of that boat than me.....
Yet, you must have found things in need of repair all the time. What if the survey was done on the same day you would have found your next problem? Think the buyer would believe you?

Sure, there are dishonest people. It's just nearly impossible to prove.
 
#195 ·
It's sad to see this process become so complicated with the need to engage an attorney and the further impossible requirement to have some sort of explicit guarantee on a boats condition. Glad I escaped from your world. Get out and go sailing, a few miles under your keel will fix what ails you!
 
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#194 · (Edited)
There are different ways of proving someone knew about something. Some things would have to be known by the seller or his agent, for example, a severe grounding that damaged the keel. Some things the seller may have attempted to repair and decided not to because of the cost, for example, a problem with the inboard engine that was concealed by a clean up or additive, instead of fixed. You could find information from third parties - the marina, a mechanic, posts on forums like Sailnet, where the owner sought services or advice, etc., etc.

Asking a seller to represent that his or her vessel is in "normal operating condition for a vessel of its age.." is not asking too much. These representations are basically flushing out the seller who is attempting to get rid of a problem boat by making it someone else's problem.
 
#197 ·
On the last number of yachting world there is an article that is interesting to tis discussion. A guy bought a 1997 Halberg Rassy 46 for 180 000 euros. The boat needed a refit to come to its normal sailing and safety potential. Te refit costed 320 000 euros. Total cost 520 000 euros.

The guy is very pleased because a new HR 48 with a similar kind of equipment costs 950 000 euros.

I would say that there are advantages and disadvantages. Obviously the new design is a better performer in all aspects but more than that (that is just a smaller point) he is never going to recover all that money that he spent in refitting the older boat, that probably has a market value under the price of the refit while the new boat will have a much higher used value in proportion to its cost as new.

As a deal, it is a bad deal. If he does not have the money for a new one or a more recent used boat not in need of a refit and he is sure that he is not going to sell that boat for a long time and that's the boat he really wants, it could be a good solution for that sailor, but never in what regards value of the boat on the market.
 
#204 · (Edited)
A lot of great ideas have been expressed and their is a lot to learn from probably hundreds of years and hundreds of boat deals the posters have collectively brought to this thread.

I think that to a very large extent a 35' or larger boat is practically unknowable. The owner doesn't know everything, the surveyor can't find out everything and the buyer knows the least.
The reason we have had so many posts is that their are so many issues involved along with a significant amount of money.

1. Every boat has surprises (see above)
2. Every surprise costs a lot of money.
3. Every seller has different moral values. One seller would disclose a hard grounding that was properly repaired. Another seller may feel that since the repair was made professionally the boat is a good as new and mentioning it would just worry a jittery buyer. Another seller self inspected and figured their was no damage and keeps his mouth shut. He is right or maybe wrong. How hard was hard? Is it a lead or iron keel? Does the bilge leak?

I'm not defending hiding a defect to sell a boat but so often the defect is opinion. How soft is a soft deck? How much water is the bilge is allowed? How much smoke of what color is the engine allowed to make for how long after starting?

I'm going to make a controversial statement that even I don't necessarily believe.
It might however spark some new thoughts.

I would guess that if every seller and broker and surveyor told every new boat buyer everything that they knew, thought of and were worried about for a given boat that no boats would ever be sold as all buyers would be scared off.

It is almost as if ignorance is a necessary part of the buying process. No matter how much experience you have even if you have 50 years surveying experience when you buy your own boat the ignorance will kick in an you will convince yourself that the boat only needs x when if you were not emotionally involved you would estimate 3x.

There is so much judgement and opinion as to what is suitable and what has to be replaced that the current process whereby the seller mostly keeps his own counsel and the surveyor does the best he can and the buyer foots the bill is not likely to change anytime soon.

What could be useful is for someone to create an on-line repository of surveys for boats for sale.
If you paid $600 for a survey and rejected the boat and I was interested in the boat I would be willing to pay $100 to see your survey even if it was a couple months old.

I would probably want to buy my own survey but for $100 bucks it would be interesting to see why you rejected it.

I doubt if a website like this could survive as the market is so small and people are so emotional and a lot of people if they liked the boat would want to sit on it until the boat price came down.
 
#212 ·
A boats worth can be measured in many ways.
When it comes down to a strictly cash transaction, the value is measured in how little you had to pay to get it.
When it comes down to ones mental well being, time on the boat is priceless.

Pull the trigger JM, just Pull the trigger...
 
#216 · (Edited)
If a buyer asks to see all surveys done in the past three years, is the broker or seller entitled to lie and say that none were done? Is he entitled to cherry pick the ones he shows?
 
#217 ·
That is a common question.

Remember that the survey does not belong to the seller or the broker even if they have a copy of it. It belongs to the person who paid for it. Most likely that person would want to sell it at a discount to recover some of his expense. Beware of giving it away without permission.

Surveys are not absolute and often the report is a combination of fact, opinion, bias and CYA.

Example:
"The boat is 40 years old and all systems are subject to failure at any time. All systems should be constantly monitored at all times. The boat may be suitable for its intended purpose if the above is adhered to". Pay me please.

A question for the lawyers; Survey reveals some bottom blisters that are classified as cosmetic but the buyer walks. Seller orders the broker not to disclose them to future prospects. What can a sellers agent legally disclose?
 
#223 ·
"However, unlike all the other information, the survey comes from a neutral, licensed third party,"
Really now ?!

In what state are marine surveyors licensed by what government entity?

Maybe privately credentialed by some independent organization of debateable standards, but never licensed in the US, in my limited knowledge.

And as to being independent, every written article on surveying for at least the last 50 years will tell you, don't ask the yard or the broker for a surveyor, because they have to work and play and live together, and it isn't impossible for one hand to scratch the other, as happens in almost every trade and every community.

A survey beats nothing. But surveyors, like cops and Congressmen, are still sometimes only human. And they're not licensed either, are they?
 
#224 ·
I never said they aren't human. Everyone has biases. Let's put it this way - the surveyor is the one guy in the transaction who has "no skin in the game" if you are careful to pick one who is not in cahoots with the broker or other interested parties.

When I said "licensed" I picked the wrong word. Sue me. There are independent certifications based on training, and they have to be maintained. That's no guarantee of quality, but it beats no training at all.

I've only hired a surveyor once, so I'm no expert (but I'm more of an expert than some people here who have never hired a surveyor). When I was interviewing potential surveyors four years ago, two of the candidates declined because their business had declined so much that it was no longer worth their money to keep their certifications current (their words, not mine). They had basically left the business because they refused to do surveys without their certifications. It was upon these statements that I surmised that there is at least one certification process for surveyors. Is it required? I'm sure it's not, and you can go hire any damned stooge you want, if that's what it takes to prove your point. :p
 
#225 ·
Certifications? And two of the surveyors closed up shop because they couldn't afford their dues, or business was slow?

That sure wouldn't impress me. Kinda like a guy saying he used to own a five-star restaurant, but he closed because it was such a bother keeping the kitchen clean.

What nonsense, and still a far cry from anything like "licensing". Possibly the largest organization for marine surveypors in the US is SAMS and their incredibly high admissions standard calls for one take-home exam and one "I swear I'm a surveyor, really":

1.SAMS® Application (included in Membership Packet)
2.SAMS® Admissions Exam (included in Membership Packet)
3.Submit one survey for each of last five years of active surveying
4.Resume
5.Business Card
6.Notarized affidavit attesting completion of 12 surveys per year for each of the last five years
7.$150.00 non-refundable application fee

Unless they actually go back and obtain your business records and contact past customers, that's not a terribly hard list to fill, is it? And it really doesn't prove that someone is sober, hardworking, or on the mark.

Sue you? No, but I'd like to let anyone who finds the thread know for sure that unlike engineers and architects, marine surveyors are totally unlicensed, are not subject to any review of professional standards, and are strictly a matter of luck and reputation.

Would licensing be any improvement? Probably not. Plenty of restaurants fail their health inspections year after year, and stay in business.
 
#226 · (Edited)
Dude,

I think you're too obsessed with nit-picking my statement, and you've gotten off focus from my primary point.

If a seller has a boat that has been surveyed in the recent past, I would want to see the survey(s). Period. End of story. All your allegations about lousy surveyors don't matter to me. I want to see the survey(s). I'd be happy to hear the broker's argument of why the survey was wrong - I'm a reasonable person. I'd even look the boat over myself and might come to the conclusion that the surveyor was wrong. But don't pretend (or lie) that a survey wasn't done, and make me waste money to hire a surveyor who will tell me the same thing. I should be able to decide for myself whether the issue is worth a second opinion from a different surveyor. At the very least, I need to know who did the prior survey(s) so I don't hire the same surveyor the last guy did. That's not a second opinion at all.

A "fair and honest description of the vessel" should include that disclosure.
 
#228 ·
I'm not obsessed with your statement. I just was pointing out that you don't know what a surveyor really is. He's just a guy, he's not a licensed professional of some kind.

Now, one your larger point of wanting to see any surveys that might have been done in the last few years, and whether a broker or seller is entitled to lie? By law, that kind of lie would be called "fraud" and if that state had a "duty to inform" regarding material defects, the lie could be actionable. But since there's little to no chance you'd ever know about it, and horse traders have been known to lie...Good luck with that. I don't think you know the playing field. The broker is a pro, he's not your friend and he's going to keep his moth shut and say "I don't know" about anything that might hurt his sale, unless it can be proven that he does know.

With rare exception.
 
#231 ·
david, i don't think there is a "standard" contract, certainly not for private sales. Standard from broker's organizations, sure, but that's not this.

And your response to sell "as is where is" could get you in trouble in a number of US venues, where that's illegal for any type of motor vehicle sale. Ah, yes, there are warranty laws (or merchantability, of suitability for use, etc.) that crop up in all sorts of pesky places. Not to mention, federal versus state laws.

And with 61 venues (50 states plus the 11 insular possessions, and maybe DC makes 52) when someone says "show me a statute" I have to ask, what color paper would you like to see it on? Sixty one or two venues, sixty three if you count federal overrides....There's plenty of rules to go around.

And you know, if I believe half of what I read in the papers? They're passing more of them every year, because would you believe, there are people out there who keep getting arrested for ignoring all those rules? Tsk, what has the world come to?! Businessmen ignoring laws! Oh my goodness, so shocking. So so shocking.
 
#233 ·
1.6 The Broker in his/her advertising will be especially careful to present a true picture of the vessel and/or its condition and will not advertise without disclosing his/her name, nor permit his/her sales people to use the individual's name or telephone numbers, unless the sales person's connection with the Broker is obvious in the advertisement.
You mean the photos that I constantly see that were obviously taken back in 1979 of the boats listed on various sales sites are not really how a broker should represent a vessel?

That seems to be something some of them have not been good at doing. I want to see photos of the boat that show its current condition, not how it looked back when the original owner still had hair. I want to see something that helps me understand how the boat looks now. Oh, and once again, sellers please clean up your boat, make it look like you were actually trying to impress someone you like, not like you are selling the boat because you are disgusted with it and too exhausted from trying to keep it from sinking to clean it up before you take the photos.
 
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#234 ·
I just found a stanchion had loosened and was leaking pretty badly last weekend. I pulled it out, cleaned out all the cruddy goop that the OEM used to bed it and re-bed it properly.

Would anyone expect me to inform a buyer that this had happened? No core damage.

I'm just thinking that yesterday's survey is meaningless.
 
#235 ·
Totally agree.
Also you "think" their is no core damage. But what is damage, is is wet, if wet how wet and how far.
No one knows.

Every seller has to make a judgement call as to what is relevant and needs to be disclosed and what is not relevant.

Every seller will draw the line someplace else.
 
#240 ·
Julie,

So how is the boat search comming.

Dave
Been having problems logging in...

To answer your question Dave, we sure have learned a lot but we won't be going home with a boat. It's more the two person decision making process than the boats. One boat I seriously considered making an offer, we had to pass on so my SO could get a better idea of the other boats. A couple days after we saw it, it was listed as "Sale Pending." But I'm okay with that. As we looked at more boats we both agreed Tartan deserved a closer look. I had never been on a Tartan before this trip.

Our first boat was a Sabre 38 that was advertised as "turnkey" and in "perfect condition." Once we actually saw it, "storm damaged" and "neglected" described it better. The broker seemed unfazed about the discrepancy in advertising.

The majority of brokers were good though, and when asked the hard questions didn't try to skirt the obvious answer in an attempt to sell us on the boat.

We dealt directly with two owners and both were very upfront and honest about their boats. One even went so far as to take us on his inflatable and show us each and every scratch on the hull. Had he not pointed them out, I would have never seen them. The brokers pretty much let us find the flaws and address the ones we felt might be an issue.

The East coast is like a boat mall. That's what drew us here. That, and the fact we have a good friend in CT we haven't seen in a couple of years. We're heading home tomorrow. No regrets.
 
#238 ·
I had the pleasure of looking at a couple boats with Julie last weekend. I can assure you guys that whatever boat Julie gets will be the the best for the money. She is methodical, observant and has made herself very knowledgeable.

I know we all worry about new people but Julie can take care of herself.

That is unless she falls in love with a boat and turns off her brain and buys the boat she loves. Which I suspect is what happens eventually to all of us.
 
#241 ·
I had the pleasure of looking at a couple boats with Julie last weekend. I can assure you guys that whatever boat Julie gets will be the the best for the money. She is methodical, observant and has made herself very knowledgeable.

I know we all worry about new people but Julie can take care of herself.

That is unless she falls in love with a boat and turns off her brain and buys the boat she loves. Which I suspect is what happens eventually to all of us.
Thanks David. We had a great time meeting you and your wife. You provided us with a lot of helpful information and gave me a lot to think about.

BTW - Great pick on the lunch restaurant! :)
 
#244 ·
Julie
I'm sure you thought of this already but just in case you may want to check on that early boat on deposit you liked.
It is not uncommon for a boat to go on deposit and then something happen so the closing doesn't happen.

Just a thought.
 
#246 ·
It was our third boat and the one I really wanted to see. The listing did the boat justice. It sold a day or two after we saw it. There was another similarly priced E38-200 in Severna Park that has been removed from the listings. PM me if you want to know the details.

The next best E38-200 was the 1990 one in Jersey City. Great condition, well cared for, well equipped. Listed at $69K. The best overall condition (by a small margin) was the PSC built '91 E38-200 in Noank, CT but it's listed at $99,495. We heard many times the PSC built Ericsons are not Pacific Seacraft build quality, but the same build quality as Ericson with a little better electrical & plumbing installations. They even sold for about the same as earlier Ericsons but owners think they are worth much more.

For older boats in great condition we both thought the '83 Tartan 37C in Noank was tops. The owner gave us a tour and you could tell he loves this boat. He's moving up to a Hylas or similar.
 
#247 ·
Yes.. I'm a Newbie here..
I totally agree anything everything comes down to
"it's worth what someone will pay you for it!"
don't care what it is it's yours till u sell it..

what I would really like .. and maybe wishful thinking..
(Hopefully with any/all having basic common sense knowledge of brokers, private sales, importance of a survey and reputation of said surveyor/s)
is a forum, thread ?? Dedicated to Sailnet members who wish to share their own purchasing/price paid, experience selling price offered at/sold for..
Per; 1. Boat; maker/manufacturers, designers.
2. Broken down in sub columns/sections per boat length.

More of a community working together as a whole.. and in the current market, trend/s etc.. I'm sure location specifics will vary..
But, it would be great to know a lot of this information from fellow Sailnet members personal experience.

Is that a totally unrealistic idea? Please anyone with experience exceeding lol, especially mine.. with the forums/boards.. buying/selling.. suggest.. and or Create a place where something like this.. where compilation of actual pertinent data relative to buying specifically used sailboats.. (only bc I think there is enough info available always one new sailboats) could be easily found, read, added to.. just a thought..
Hopefully you and or you.. maybe even you..?? :D will share yours too!
Thank you for a place to ask!
All my best, always, dawnssong4u
 
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