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Thoughts for those buying or selling...

11K views 69 replies 25 participants last post by  xort 
#1 ·
Hi All.

I hope everyone has been doing well. Hopefully everyone has been playing nice??? At any rate...

It seems I have spent yet another worthless weekend (and part of the week) fruitlessly shopping for boats.

I won't say the type of boat, etc that we are looking at, but it seemed we had finally found the right boat. Beautifully cared for by an anal owner. There were a few glitches, but no massive hurdles. THEN... the survey. We did what I always urge everyone else to do - get a good survey and an engine survey. They really are not expensve. It probably saved our butts this time.

It seems the boat selling market has diminished quite a bit as of late (I am sure Cam can verify this one). Now while you would think that makes for a good time to buy, it also creates a big problem: Comps. Many boats have taken such a hit that when you do find a very well kept and cared for boat, comping it out will be near impossible.

If you are going to pay cash, then you will feel you can keep looking and save 10's of thousands out of pocket. If you are going to take out a loan, the bank will traditionally only lend 80% of SURVEYED value, not agreed to value. Big difference. That means you better really like that boat or get ready to write a very larve check up front in addition to your down.

Either way, it is a lose-lose scenario. Between that, insurance, cost of fuel to ship and the cost of slipping the tub - it may be tough to find a boat. Many of you that want to finance the boat may have some real problems as all of these issues add up. For those of you that do not and wish to pay cash, you better check ALL of your costs before signing on the dotted line.

No matter what, check Sold Boats.com through a broker or your surveyor. BUC seems WAY out of whack. Look at the highest sold boat in the last two year and compare equipment/comps from there. I realize (tongue in cheeck) that the boat you are buying is a much finer vessel than ANY that has ever been sold before, but the banks and surveyors will not see it that way so it may be fruitless to proceed if you are way above the highest comp.

SO what we have found in the market are lots of boats that are total junk bringing down apparent values. Then you have nice boats that people have dumped (probably to save their house, etc) that have deflated the market - but those are gone quickly. Then you have the truely nice tub that has been well cared for... but ain't no way that owner is going to sell it for what it is worth a few years ago so you will reach an empass. Because of the beforementioned factors, its value has decreased considerably. Likely that owner will own that boat for a long time until the market turns around.

Thus, a buyers market is not always a good thing. And in the end, you may be out many thousands of dollars only for a big suprise after you write all the checks.

Buyers be informed and sellers beware: It is a frustrating market right now, no matter which side you sit on.

- CD

PS I will not list the boat type other than to say it is a heavy displacement, blue water cruiser that is well made and respected. I am concerned the owner or others will know the boat... as they very well may. SO we will speak in generalities... ok?
 
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#3 ·
Thanks CD... I'm glad to be trying to sell a boat right now... NOT!

Here's one other gotcha with regards to loans... With all of the problems in the industry right now due to sub prime lending failures, banks are being very cautious in lending money. 3-4 months ago, I could have walked into any number of banks to get my loan for the boat we're buying. Today, it took me about 12 banks before I could find one willing to write the loan.
 
#23 ·
Thanks CD... I'm glad to be trying to sell a boat right now... NOT!

Here's one other gotcha with regards to loans... With all of the problems in the industry right now due to sub prime lending failures, banks are being very cautious in lending money. 3-4 months ago, I could have walked into any number of banks to get my loan for the boat we're buying. Today, it took me about 12 banks before I could find one willing to write the loan.
Very true. Boat brokers are really hurting right now.
 
#5 ·
Apart from financing issues, what are the insurance implications? Do they prefer to insure for surveyed value or agreed value? Is there a cost difference in insuring it one way or another? Or do insurers do it either one way or the other, without option?

Very good topic, BTW. There are many implications in any market shift; and some of them are not obvious by any stretch.


FRED
 
#12 ·
Apart from financing issues, what are the insurance implications? Do they prefer to insure for surveyed value or agreed value? Is there a cost difference in insuring it one way or another? Or do insurers do it either one way or the other, without option?
Banks usually require that the boat be insured for at least what you paid for it (not the amount of the loan - the total cost of the boat) including any money you put in for refit. Insurance companies, from what I've seen, like agreed upon value. My Passport 40, for example, had a $400k survey value based upon it being in absolutely perfect shape (right off the assembly line). Its real value and what I paid for it was far lower.
 
#8 ·
CD -- a good (and for me, timely) topic.

Now while you would think that makes for a good time to buy, it also creates a big problem: Comps. Many boats have taken such a hit that when you do find a very well kept and cared for boat, comping it out will be near impossible.
Please forgive my neophyte question, but :eek: what's a comp in this context?

Sitting quietly in the corner,
PF
 
#9 ·
A comp is a price comparison - against other similar boats that have sold in the past few years. There are databases that list all of the reported boats sold and the prices they reportedly sold for so you can figure out 1) How to price your boat, or 2) What to offer on a boat.
 
#13 ·
CD
Do you happen to know if there are rules about disclosing info from boatsold.com? Whenever I've asked someone with access to that database I seem to get less than what I know is there.

The pricing has become quite distorted. I'm seeing boats that have sat since 2005 listed for 35% above actual selling prices of quality boats. And the boat that has sat for 2+ years is no longer 'quality'. It will be interesting to see if there is a sudden dump of these boats that missed the oportunity to sell when the market was good.
 
#27 ·
CD
Do you happen to know if there are rules about disclosing info from boatsold.com? Whenever I've asked someone with access to that database I seem to get less than what I know is there.

The pricing has become quite distorted. I'm seeing boats that have sat since 2005 listed for 35% above actual selling prices of quality boats. And the boat that has sat for 2+ years is no longer 'quality'. It will be interesting to see if there is a sudden dump of these boats that missed the oportunity to sell when the market was good.
The info in Soldboat.com is only as good as the integrity of the broker that put it there. That being said, it is still probably the best indicator. BUC seems way off. They are only tools - but the only tools that really seem to be available to surveyors. They surveyor will price up/down depending on those numbers.

Yes, what a boat might have sold for a few years ago and what it will sell for today may be very different. What was interesting is that the price difference on the boats we were looking at going back several more years were... 60-70% higher. It is a symptom of the market. Yes, they missed the oppotunity.

However, not to toot the Catalina horn, but I am not convinced it is all boats. For example, the Catalina healer here is doing VERY well. They move boats quickly - new and used. There still seems to be a good market for these boats - at least here. I cannot pretend to know the whole market everywhere and only give my opinions on what I am told and what I see.

- CD
 
#14 ·
I used those data bases when buying my Tayana and found them of limited use. There are just too many variables that go into a selling price. In addition, if you're not buying a production boat the population is limited and you need to be looking at recent sales, not ones from a few years ago. But it is better than nothing.
 
#15 ·
Thanks this is a good topic, I've been looking and hadn't considered the ramaifications this could have on my getting the loan. BUC seems in line with the PSC 34s I've looked at, once you consider the asking price and offer price difference, but I haven't subscribed to BUC and I'm only looking at the first freebie listing they give you.

Considering this thread do you recomend someone in the market subscribes to BUC? Is BUC the system the banks will use to get their comps?
 
#28 ·
Thanks this is a good topic, I've been looking and hadn't considered the ramaifications this could have on my getting the loan. BUC seems in line with the PSC 34s I've looked at, once you consider the asking price and offer price difference, but I haven't subscribed to BUC and I'm only looking at the first freebie listing they give you.

Considering this thread do you recomend someone in the market subscribes to BUC? Is BUC the system the banks will use to get their comps?
Most banks that do REAL boat loans go off of the surveyed amount. I don't see any point subscribing to Buc or any of them - even if you could. Your broker will have that info. If not, your surveyor will. Any good surveyor/broker will give you all of that info (assuming you are going to use them and look at their boat).

However, if you go through a credit union or use a non-traditional large boat loan (which I would not suggest), many use NADA.

- CD
 
#18 ·
Sounds like a "best of times, worst of times" situation.

Three questions:

1) Given the current circumstances, would it make sense to possibly wait 12-24 months on a major boat purchase, in case we're just at the start of a serious slide (meaning there will be decreasing prices/harder conditions to sell in the near future)?

2) In a weak market, are "desireable brand names and designs" even more important? I cringe when I look on Yacht World and I see 10 or more of the same production boat for sale in the same geographic area, making me wonder how one would distinguish the boat enough to sell it before the others.

3) If one can buy with cash, does that open a wider choice in insurance options (since they won't be dictated by a bank loan)?

Thanks!

Jim H
 
#31 ·
Sounds like a "best of times, worst of times" situation.

Three questions:

1) Given the current circumstances, would it make sense to possibly wait 12-24 months on a major boat purchase, in case we're just at the start of a serious slide (meaning there will be decreasing prices/harder conditions to sell in the near future)?

2) In a weak market, are "desireable brand names and designs" even more important? I cringe when I look on Yacht World and I see 10 or more of the same production boat for sale in the same geographic area, making me wonder how one would distinguish the boat enough to sell it before the others.

3) If one can buy with cash, does that open a wider choice in insurance options (since they won't be dictated by a bank loan)?

Thanks!

Jim H
Jim,

I will give you my opinions. They are only my opinions and should be taken as such.

1) No, I think it is a very good time to buy boats. Why? First, rates are at an all time low. If inflation starts to build up and rates go up, boats will get more expensive. THis, in my opinion, will have more of an effect on new boat sells than used. Why? O-I-L. Oil is at an alltime high. Look how much petroleum products go into building a sailboat. Honestly, I bet 70% of a sailboat is proprietary - from the pumps to the tanks to the spar. They all have to get there and as the price of oil goes up, it has a considerable effect on sailboats. Right now, these boats are moving because people can afford them due to the low interest rates (remember, we Americans buy our stuff based upon the cost/month not the total cost! smile). When interest rates start to go up, people will now only be able to afford the used boats which will finally start to make them appreciate again (or at least slow the bleeding). Mark my words, if interest rates go up AND oil stays high, it will be the perfect storm for boat builders and many will close up shop. I have been told that profit margins are thin right now anyway.

2) Desirable brand names? Like Oyster versus Hunter? Not sure I follow you, but I will say that desirable is based upon how you intend to use the boat. Seriously, don't buy a bullet proof shoe box for coastal cruising. Also, though there are many Catalinas (using them for the sake of discussion) on the market, at least it is a brand very well known by both knowledgeable and unknowledgeable sailors. Go to the typical buyer at the boat show and mention the word Mason to him and watch as he tells you, "I ain't Mason. You got the wrong guy."

Get the picture? You have more buyers AND a less expensive boat. However, that does not mean it is the right choice for circling the world.

3) Yes. You can have NO insurance. However, can you afford to lose it all? If the answer is no, then maybe you answered your own question. However, I have found MANY cruisers sail without insurance. In some cases (like parts of the Western Carribean) you almost don't have a choice as it is very expensive if they will even cover you. I also have found many American marinas (and other marinas around the world, I woudl suspect) require minimum insurance liability and proof there of. You may have to get it no matter what.

- CD
 
#19 · (Edited)
DOESN'T ANYONE LISTEN TO ME!! Yes, I am shouting, and don't answer that. I believe I said a couple of months ago that the boat market is down 50% in volume, not prices, but the number of boats being sold. 50%!!!!! You can name your price if you find a boat that REALLY needs to be sold or is on the lower end of the market. Older Catalina 36's that were going for 50-60k, try 30-40k. Anyone that has paid cash or doesn't have a note on their boat, you can under bid if they can't afford their boat anymore. Look for foreclosures on boats to rise for those that owe and can't afford to keep it and can only sell at a loss. I am one of the ones in CD's last category. I have a great boat, but its not quite what I want. Its not going to sell, not nearly for what I paid for it, but I can afford it and don't have to sell. So I will sit on it, sail it, and treat her like I am not selling. Its going to be hard to find good boats at a decent price, like the housing market, its drying up and people will sit on the good stuff.

Jim H
1.) I would be VERY picky about what I bought. The market may get flooded with a lot of boats that need to be sold. Prices certainly are not going up anytime soon. Take your time.
2.) That is a phenomenon that i have noticed before and even more so now. I think, and I could be wrong, that boats like Beneteau appeal to lots of first time buyers and people that don't really know about the maintanence required. The wear and tear starts to show after 4 or 5 years, and they try to sell the boat instead of fixing and upgrading. Look at all the 5-6 year old Beneteaus with roller furling on the market. Its time for a new sail. Also a lot of those boats come out of some sort of charter after 3-5 years. Sorry to pick on that brand, I like a lot of their boats, just an example please, okay.
3.) I don't know.

Edit - BTW my first sentence wasn't directed at you CD, just ranting.
 
#21 ·
snip... Look for foreclosures on boats to rise for those that owe and can't afford to keep it and can only sell at a loss. I am one of the ones in CD's last category. I have a great boat, but its not quite what I want. Its not going to sell, not nearly for what I paid for it, but I can afford it and don't have to sell. So I will sit on it, sail it, and treat her like I am not selling. Its going to be hard to find good boats at a decent price, like the housing market, its drying up and people will sit on the good stuff.

snip
I don't know that that bodes well for those of us that would like to move up. Like CD I've been looking for a few months and I've already seen a several disappointing boats in the $60-80k, 36'-38' range lately. I suspect that is due to marginal owners being forced out as other expenses take precedence over their boat.

If folks feeling financial pressure decide to hold on to their currently well maintained boats to wait for the market to come back, it'll probably just result in more disappointing boats eventually comming on the market when they finally accept that the market has changed. Unfortunately, if they hold on, they may get even less if the neglect takes hold. Taking proper care of something like a boat is usually one of the first expenses to get cut when money gets tight.

I think what CD is pointing out is that current sellers have not yet adjusted their expectations to match the current reality. When folks are paying $60 for a tank of gas and being crushed by rate increases on their adjustable rate loans, the number of people in position to buy a boat goes down and prices have to follow.

Time will tell.
 
#22 ·
No, it doesn't bode well for us. So rather than dump what I have now at a loss, I will upgrade her to a condition that I am satisfied with. I am just going to be happy with what I have for now, and put off the trade-up for 3 or5 more years. I don't expect to make money or anything, even after upgrading, but I will be satisfied getting good use out of her, having her in great condition, and having a more sale-able boat in the future.
 
#30 · (Edited)
If you are thinking of buying a boat - hold off, because the prices are going to be much, much lower in the fairly near future. Hate to be a harbinger of doom and gloom, but it's going to be another three months before it becomes apparent how deflated the US economy has gotten, and once business moves into survival mode, there will be some incredible deals to be had.

Thats going to work on both the buy and sell sides so, you'll still be able to upgrade if you like, you'll be selling cheaper and buying cheaper, but the transaction will still work.

If you have a substantial loan on a boat right now ... well ... hmmm ... get rid of the loan somehow. A lot of financial institutions are going to be calling in a lot of loans that they feel (rightly or wrongly) are not 100% gold-plated, tangible asset-backed, sure things. There will be a certain amount of overreaction on their parts, so be prepared.

Insurance will be the major boondoggle. They are going to get hit as well, so it's going to be hard to get them to write an agreed-value policy that inflates as the economy clears up and boats regain their value. In the case of the older boats, that may never happen regardless of how great their condition is. So - don't borrow money to buy an old boat.

Probably best to stick with one of the more "nautically-minded" insurance companies out there. They'll have at least a superficial understanding of what they are insuring, and it's market value.

The lucky people, as always, will be those who have cash in times of difficulty. There are certainly going to be some good prices next summer :)
 
#33 ·
Interesting, our two opinions. Not so much opposites, but looking at things from different viewpoints. I would have to agree with you about buying sooner rather than later for a new boat. Just like the auto industry, they are hurting and you could haggle some good deals with rates and such. But, I think the older the boat gets, and the less taken care of it is, the more you can name your price. Its pretty much always that way anyway, but I think it will get much more pronounced. If boats were like houses, and you had capital right now, you could just buy another one and hold on to them both. But alas, boats are far from houses. If you let your boat sit too long un-cared for, it becomes one with the sea.:D

Just for reference, most of the info I am spewing out about this is coming form two dealers, one is a big time company and the other is very small. The bigger one, this time last year, was turning over boats on a weekly basis, some of them sold before they got listed. Now, the new ones and the old ones are just sitting.

I just looked at the 400 prices, they seem to have gone up 10-20k? Is that what you see too? Catalina is an exception to me, and we can talk about that in PM's. I think we agree there.
 
#35 ·
I'm seeing euro boats going up in price. For example, the Hallberg-Rassy 53 I'm buying has actually appreciated since 2000. Why? The Euro has gotten stronger against the dollar and the price of a new HR is going up, dragging the used market up with it. European buyers are finding it cheaper to fly to the US, buy a boat here and ship it back or sail it back. Talk to brokers in Annapolis - they are seeing more and more European buyers these days. Broker tactics haven't changed however - push push push people are looking at the boat you have to go to contract immediately or you will lose the opportunity to buy the boat push push push.
 
#36 ·
Labatt brings up a good point. In a volatile world economy, the ever changing dollar plays a big role in prices. Different countries see different opportunities to buy and sell, and those different countries are stocked with different brands of boats.

Jim H. You mention variations between brand prices according to quality. That variation also exists within brands too. Take Beneteau again. The 456 is a very desirable, well made, older boat that holds its value very well. There are about six of them on YW. There are pages and pages of the 473 or any oceanis, with all types of varying prices. The models that will be dropping in price in order to sell is easy to see.
 
#39 ·
Yeah, that thought has come up as well. I probably pulled the ad too soon, because we've been focused on having a boat ready for sailing next spring.

However, if the fellow still looking does buy the boat, we probably will not make a move ourselves until at least next spring or maybe later. We are tied in to the racing set at a nearby yacht club so we can always get out on OPB's if we don't have a boat next spring. Still, while racing has its rewards, it doesn't compare with dropping anchor of your own boat in one of the gazillion scenic coves on the Chesapeake and watching the sunset.
 
#42 ·
Labatt-

I'll be sure to tell my friends to keep an eye out for your boat... ;) They'll be more than happy to help lighten your load.. :) and they'll be on the boat with the Jolly Roger flying. :D
 
#46 ·
Actually, I know at least one broker who is going to be selling over 50 boats this year, and most of them fairly decent in size. :D So, I wouldn't say that all brokers are hurting...the good ones are probably still doing quite well...and the mediocre and bad ones are probably getting hammered.
 
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