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Go Back   SailNet Community > On Board > Boat Review and Purchase Forum > Buyer broker and Initial Bidding Strategy
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Thread: Buyer broker and Initial Bidding Strategy Reply to Thread
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Topic Review (Newest First)
03-26-2008 11:40 PM
artbyjody Thanks again everyone - I utilized a majority of the advice here today. Placed a reasonable bid on what I believe is a suitable boat for me. I did a thorough inspection, asked lots of questions in terms of the boat, the owner, history etc... as well as in general got to know the broker. And instead of quibbling over things - I made a very reasonable offer with very few contingencies based on my observations and the discussions, and what needed to be done (it is a slight project boat).


I had explained my findings as I was examining the boat the issues as I saw them, and we discussed the already known issues, and I let the broker know what my straight up thoughts and strategy was. I also let the broker understand how I approach a deal and had the contract reflect that (Which meant instead of earnest money - the contract dates reflect 2 weeks to sign, seal, and deliver if the contingencies are met. I'll write more in detail later as I do not want to jinx but based on the invaluable advice here - I was much more informed on what to expect, as well as how to handle the first stage of negotiations and tailored my conversations with the broker in a manner that would / will curtail a long winded process....

Again thanks everyone - as usual, awesome discussion and advice....I'll update at a later date - keep your fingers crossed for me
03-25-2008 11:08 PM
Sailormann
Quote:
35% seems low... would anyone actually accept that price? Like, I'm looking at a boat that is listed at 18k, which is over my budget. 35% of that price is $6300, does anyone have any experience getting a boat at such a price from a broker under normal circumstances?
Some might, some might not. Each situation is unique. If someone owes money on a boat, then they are usually going to have to sell it for enough to cover the outstanding balance of the loan, or very nearly so.

If the boat is owned outright, and if it has been on the market for a while, the owner may just be willing to sell cheap in order to avoid having to invest the time and money to insure it, maintain it, launch and dock it, etc.

You never know until you try. And you if you are polite about the process, you may get lucky. If you see that a boat has been on the market for a while, contact the owner and explain to them that you don't want to insult them, but you only have X amount of money, and if they ever decide to consider a price like that, you'd be very interested in their boat. (It helps if you butter them up a bit - tell them how well they have maintained the boat, how smart they were for selecting it in the first place, you'll give the boat the best home possible, etc., etc.) They might not end up selling you the boat, but you never know until you try...

But still NEVER buy one without surveying it first.
03-25-2008 10:58 AM
sailingfool
Quote:
Originally Posted by 121Guy View Post
Jody,

You may want to consider contacting Boat US Valuation Services as they will provide no charge current value estimates of the boats you are looking at. They use their most recent survey and insurance data as part of the source. I was very suprised at the large difference (much lower) between their market value and a few seller asking prices.

Good Luck!

121Guy
Jody,

Establishing the value of the boat, at least to you, is key. Any purchase price less than or up to that value is good, after all you are looking to buy what should be a treasured personal possession, not to make $$ by flipping a one-time steal.

To establish value you need to know what 3-4 examples of the same boat sold for and be able to adjust their prices for condition and equipment. this can take time and until you have established this knowledge you need to be comfiortable with other people buying a boat out from under you - that's OK you learn something from it and can get ready for the next one.

If you want to enjoy your boat ownership, release any expectations that it'll be a good financial opportunity. Boats are called "holes in the water in which you pour money" for a reason.

I offer these guidelines:
1. the best you can hope for in buying a boat is at least get what you pay for.
2. the cheaper the boat is, relative to others, the more expensive or less satisfying it will turn out to be to own.
3. remember the seller has perfect knowledge of the boat, its strengths and problems. You will at best have less or much less knowledge, only good surveyors (hull/engine/rig) get you close.
4. when you see the boat you really want to own, be willing to make a fair offer, negotiate up to your determined value as needed, then enjoy your new pride and joy.
5. If someone makes a killing in a boat sale, its far more likely to be the seller.
03-25-2008 10:10 AM
121Guy Jody,

You may want to consider contacting Boat US Valuation Services as they will provide no charge current value estimates of the boats you are looking at. They use their most recent survey and insurance data as part of the source. I was very suprised at the large difference (much lower) between their market value and a few seller asking prices.

Good Luck!

121Guy
03-25-2008 09:50 AM
southernsmoke
Quote:
Originally Posted by Sailormann View Post
If your vendor is selling the boat through a broker, ask the broker to provide you with a 12 month sales history of like and similar boats in your region. If they won't give you that, they are probably trying to get more than market value for it. I think that it's a good idea to open with as low a figure as you can without feeling embarassed. Do your research - look at what smilar boats are listed for on Yachtworld, etc. and then offer about 50 to 60% of that. In this market - you might even be able to offer 35% of asking...you never know until you try.

Don't ever buy a boat without a survey, and make sure that your sales contracts include the right to renegotiate your purchase price based on surveyor's report. If the broker won't co-operate - walk away.

Note: I have heard about honest brokers but have never encountered one.
Good advice. I'm in the market for a boat and I'm wary of getting ripped off. Is the boating market anything like the housing market?

35% seems low... would anyone actually accept that price? Like, I'm looking at a boat that is listed at 18k, which is over my budget. 35% of that price is $6300, does anyone have any experience getting a boat at such a price from a broker under normal circumstances?
03-25-2008 07:53 AM
cardiacpaul jody, not to beat a dead horse, but.... put down the slide rule, throw away the graphs, quit plugging formulas into excel .... and read these.

http://www.sailnet.com/forums/buying...iberglass.html

http://www.sailnet.com/forums/buying...ing-price.html
03-25-2008 04:00 AM
PBzeer When making an offer on a boat, it should be based on what you're willing to pay for that boat. Irregardless of the asking price. That doesn't mean you can't or shouldn't start with a lower offer, but you should go into it with a top price in mind.
03-25-2008 02:45 AM
artbyjody Thanks for all the insight. I have always bought boats for sale by owner, in which case NADA values were usually the guide (for both parties). However, now that I am infinitely more knowledgeable about the systems, problems, and relative costs to to fix or add-on options that should be onboard the range of boats...I can understand why boat values reflect more of a 'open market' approach.

One of the things I am doing now is creating spreadsheets that compare stuff like:

Tiller vs Wheel Steering
Automatic pilots
Radar
Instruments
etc...
Based on year, condition, installed etc...


Depending on the age of the boat, I am calculating what the perceived value is to me. For the most part I look at a boat having changed hands a minimum of 3 times, and of those three times (33%), a cruiser boat owner would of been upgraded beyond stock at sometime in its 20 years (all pre-1990 vessels), and that becomes part of the criteria. This I use to compare to what other vessels have and the deviation in price....not truly scientific as I hate math but...looking at it on paper helps narrow down the right boat and what I need to add if I were to buy it etc...

Interestingly enough I thought I could of found a perfect fit this evening, a 40 footer for around 43K. However, the boat looked worse than what G's neighbors boat did after that young man's attempted remodel. Ie: No Electric, no batteries, no lights, cabinets just ripped out, engine never run, etc...

Since it was a friend that referred me to friend selling it... Kinda like as SD stated - the one partner wanted a little some extra over what hubby paid for not realizing that hubby thought 40K for a fixer upper was doable because he had the cash (and she made it clear she was the negotiator as she wants the boat gone )...I told my friend that I would offer 12K for it - but only to save them expense of doling out another 10K for moorage this year...I do not expect a offer back as its not worth any higher IMHO...

I am going to hold off on a Buyer broker (technically known as the co-broker (thanks for legal definition most sites call them buyer broker)...I have some time for this and since I do not have a real job I can afford drive around and look at things...

And SD I realize 10% if I make serious offer, and the 1/2 split option, held in escrow - allows me negotiating power to a certain extent to get more boat for my money.


ie: I will not be financing so having the two options drawn up - the one with the lower cash upfront will be more of appeal one would hope. I have done this process on RV purchases both ways as the contract is drawn up to reflect said agreement and if not met then seller keeps the money...I have done that with real estate as well...I would think if a seller has paid in full their note - then it is an option to get it off the market with money in hand it can be an attractive solution versus waiting for buyer financing etc...Additionally if I find a boat a bit higher in cost that meets the needs I have flexibility financially and maybe able to get more boat for the money ..but my intent is all cash buyout if and where possible... and again - nothing but time on my side.

I realized when I bought my first - I could of gotten a better boat for what I paid. This time out though I am looking for the right one and not a training / its cheap enough to buy that if I hate sailing vessel...

Again thanks - very insightful comments....and re-formulating my procedures / processes to consider as I learn more....

Its been eye opening
03-25-2008 02:37 AM
Sailormann
Quote:
And lastly - what resources do you use for finding boats for sale by owner. 99% of ads seem to be brokered....(I already use Craigslist, Yachtworld, and BoatTrader...)
I think that the best method is to go to marinas and clubs. Leave an advertisement on the bulletin boards, clearly stating what you are looking for and how much you are willing to spend. There are people out there who would sell their boats if it was easy and they didn't have to deal with brokers.

Also, identify the kinds of boats that you are interested in and log on to the owner's association websites. There are almost always boats offered for sale there. Note that the prices listed tend to be on the high side, as this is usually the first place that people will offer their boat for sale, and they are usually optimistic at the beginning of the process.

Quote:
Have any of you negotiated a deal where you paid cash and did 1/2 on initial purchase and 1/2 60 days later?
No. Have you ever received title to a house wihtout paying the entire purchase price ? That said, it is standard practise that you will put down a deposit, in escrow, arrange your survey(s), and then either complete the sale, renegotiate the price, or back out of the deal depending on the surveyor's report.
Quote:
How do you negotiate a price initially without survey on higher priced boats? Say you have one for 64K is it unreasonable to start at 45 or 50K as initial bid (Anyone with success on that?")
If your vendor is selling the boat through a broker, ask the broker to provide you with a 12 month sales history of like and similar boats in your region. If they won't give you that, they are probably trying to get more than market value for it. I think that it's a good idea to open with as low a figure as you can without feeling embarassed. Do your research - look at what smilar boats are listed for on Yachtworld, etc. and then offer about 50 to 60% of that. In this market - you might even be able to offer 35% of asking...you never know until you try.

Don't ever buy a boat without a survey, and make sure that your sales contracts include the right to renegotiate your purchase price based on surveyor's report. If the broker won't co-operate - walk away.

Note: I have heard about honest brokers but have never encountered one.
03-25-2008 12:45 AM
labatt Xort - BoatUS told me that my Passport 40 was worth $100k-$110k. The last two Passport 40's on the market sold for north of $140k and they didn't have the refit mine does. I'm not sure where BoatUS gets its "valuation" but it seems pretty far off.

With regards to "Half now, half in 60 days" are you talking about getting the boat in between? If not, you can probably work something out in today's market - especially during the Winter (so not much longer). If you want the boat after paying for the first half, I'd say it's probably an impossibility, but that's just an assumption. With regards to bids, start as low as you want and the seller will give you a counteroffer. On my Passport 40, I got it for about $15k under the asking price. Our first bid on a Hallberg-Rassy 53 we were thinking of was almost $100k under the asking price (about 15% under asking).
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