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Old 30-06-2016, 12:25   #1
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Financing question. Is this true???

Okay, we're looking at buying our first boat. We really like this 1986 42' Chris-craft. We have not had a survey done on it but we did run it by BoatUS's finance department and they advised it had a BUC value between $48,000 and $52,000. A broker told us banks will only loan 80%... sometimes 85 or 90%... of BUC value and it's the responsibility of the buyer to come up with the rest. Is this normal? That is SO different than buying a house or a car. In this case, the seller is asking 100k. And 80% of the mid-range of the BUC value would be $40,000. Apparently, it's standard procedure that we would come up with the 50-60k difference???? Is this the normal process?
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Old 30-06-2016, 13:06   #2
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Re: Financing question. Is this true???

80% is pretty good! the last time I financed a boat, the bank would not finance any more than 50% of the purchase price of the vessel (excluding taxes)
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Old 30-06-2016, 13:21   #3
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Re: Financing question. Is this true???

When it comes to loans, banks don't care about asking price. Of course they are not going to give you a loan for 80K on boat they believe is only worth 50K. (As determined by BUC)

You may value the boat at twice BUC value, but if you default on your payments, it's not your valuation that matters to the bank, it's the market price that matters to them.

In my experience, this is not so different than home loans as you suggest. Every home loan I applied for cared about the actual market valuation of the home and wouldn't dream of basing their loan on a price twice their assessed market value.
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Old 30-06-2016, 13:42   #4
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Re: Financing question. Is this true???

As far as the bank is concerned they are lending money on an asset with a value of whatever BUC says. Why should they lend anyone far more than that asset is worth?

As for the 80%, thats typically the maximum on most loans. Because the bank doesn't want to get stuck with an asset with no equity in it. Even on home mortgages if you borrow over 80% banks will typically require you to pay mortgage insurance for the amount in excess of 80%. Where the bank doesn't carry the risk of default, they sell that risk to someone else.

But no istatution if going to lend you double what the fmv of the asset is. At least not without you putting something else up as collateral like a house or investment account.
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Old 30-06-2016, 13:47   #5
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Re: Financing question. Is this true???

Check out the Soldboat report below. These are 1986 CC 42's that sold between 2013 and now. Your broker, if you have one and you should, should be telling you that the owner is dreaming about $100K. Unless the boat is pristine with new engines, he's not getting anywhere near $100K. Surprisingly, the BUC value is pretty close here. That's not usually the case. Hope this helps and never fall in love with an overpriced boat!



74,900 (08/13) 66,000 (10/13) FL, USA Tom George Y...
* 42' Chris Craft ... 1986 74,999 (02/14) 65,000 (04/14) TX, USA Little Yacht...
* 42' Chris Craft ... 1986 79,900 (06/14) 70,000 (05/15) MI, USA Reed Yacht S...
* 42' Chris Craft ... 1986 79,500 (10/12) 70,000 (09/14) KY, USA Paradigm Yac...
* 42' Chris Craft ... 1986 68,000 (07/11) 33,500 (06/14) OH, USA SIMA MARINE
* 42' Chris Craft ... 1986 54,900 (02/14) 50,000 (07/14) CA, USA Hallmark Yac...
* 42' Chris Craft ... 1986 49,900 (01/13) 44,000 (09/14) USA Castaway Yac...
* 42' Chris Craft ... 1986 37,900 (03/14) 30,000 (06/14) MD, USA Bayport Yachts
* 42' Chris Craft ... 1986 59,600 (03/14) 53,000 (04/14) CA, USA Denison Yach...
* 42' Chris Craft ... 1986 59,900 (09/13) 55,000 (10/14) MA, USA Norwood Yach...
* 42' Chris-Craft ... 1986 45,000 (11/15) 36,000 (03/16) FL, USA Easy Sale
* 42' Chris-Craft ... 1986 99,000 (08/11) 85,000 (10/15) MI, USA The Mariner ...
* 42' Chris-Craft ... 1986 89,900 (07/14) 70,000 (01/15) MI, USA TOWER MARINE...
* 42' Chris-Craft ... 1986 74,900 (07/14) 66,500 (09/14) MI, USA TOWER MARINE...
* 42' Chris-Craft ... 1986 69,900 (08/12) 63,000 (11/14) MD, USA Knot 10 Yach...
* 42' Chris-Craft ... 1986 59,990 (03/14) 54,000 (06/14) FL, USA American Marine
* 42' Chris-Craft ... 1986 49,900 (08/04) 42,000 (06/14) NY, USA Boscola Yach...
* 42' Chris-Craft ... 1986 61,900 (12/10) 55,500 (06/13
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Old 30-06-2016, 13:49   #6
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Re: Financing question. Is this true???

Real Estate APPRECIATES, so it can frequently be sold at a price higher than the payoff of the loan. This is not the case with a boat. The bank is forcing you to take the hit on the front-end so they don't take the hit on the backend. If you default on the loan, the bank WILL loose money otherwise.

You also can't drive real estate off into the sunset like you can a boat.
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Old 30-06-2016, 13:52   #7
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Re: Financing question. Is this true???

Quote:
Originally Posted by Sid at SailAway View Post
..... Unless the boat is pristine with new engines....
Bah!!! A 50K boat with 30K in engines doesn't make it an 80K boat. It makes a 50K boat sell more quickly and hopefully for 55K - 60K.
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Old 30-06-2016, 14:04   #8
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Re: Financing question. Is this true???

Quote:
Originally Posted by Sid at SailAway View Post
Check out the Soldboat report below. These are 1986 CC 42's that sold between 2013 and now. Your broker, if you have one and you should, should be telling you that the owner is dreaming about $100K. Unless the boat is pristine with new engines, he's not getting anywhere near $100K. Surprisingly, the BUC value is pretty close here. That's not usually the case. Hope this helps and never fall in love with an overpriced boat!



74,900 (08/13) 66,000 (10/13) FL, USA Tom George Y...
* 42' Chris Craft ... 1986 74,999 (02/14) 65,000 (04/14) TX, USA Little Yacht...
* 42' Chris Craft ... 1986 79,900 (06/14) 70,000 (05/15) MI, USA Reed Yacht S...
* 42' Chris Craft ... 1986 79,500 (10/12) 70,000 (09/14) KY, USA Paradigm Yac...
* 42' Chris Craft ... 1986 68,000 (07/11) 33,500 (06/14) OH, USA SIMA MARINE
* 42' Chris Craft ... 1986 54,900 (02/14) 50,000 (07/14) CA, USA Hallmark Yac...
* 42' Chris Craft ... 1986 49,900 (01/13) 44,000 (09/14) USA Castaway Yac...
* 42' Chris Craft ... 1986 37,900 (03/14) 30,000 (06/14) MD, USA Bayport Yachts
* 42' Chris Craft ... 1986 59,600 (03/14) 53,000 (04/14) CA, USA Denison Yach...
* 42' Chris Craft ... 1986 59,900 (09/13) 55,000 (10/14) MA, USA Norwood Yach...
* 42' Chris-Craft ... 1986 45,000 (11/15) 36,000 (03/16) FL, USA Easy Sale
* 42' Chris-Craft ... 1986 99,000 (08/11) 85,000 (10/15) MI, USA The Mariner ...
* 42' Chris-Craft ... 1986 89,900 (07/14) 70,000 (01/15) MI, USA TOWER MARINE...
* 42' Chris-Craft ... 1986 74,900 (07/14) 66,500 (09/14) MI, USA TOWER MARINE...
* 42' Chris-Craft ... 1986 69,900 (08/12) 63,000 (11/14) MD, USA Knot 10 Yach...
* 42' Chris-Craft ... 1986 59,990 (03/14) 54,000 (06/14) FL, USA American Marine
* 42' Chris-Craft ... 1986 49,900 (08/04) 42,000 (06/14) NY, USA Boscola Yach...
* 42' Chris-Craft ... 1986 61,900 (12/10) 55,500 (06/13
Very interesting information, Sid. Never heard of that site before. What do those columns represent? Year, then asking price, then a date, then actual sell price and the sale date?
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Old 30-06-2016, 14:11   #9
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Re: Financing question. Is this true???

Quote:
Originally Posted by Stumble View Post
As far as the bank is concerned they are lending money on an asset with a value of whatever BUC says. Why should they lend anyone far more than that asset is worth?
That makes sense, of course. Is BUC considered to normally be pretty close to the actual value? Is it normal for buyers to borrow 80% of BUC and then pay such a large difference, as in the case above... borrowing $40,000 and coming up with, say, a $50,000 difference? A broker (not the broker on this potential sale) is telling us that's normal in the boat industry. Curious about your experiences and observations in that regard. 'cause, honestly, we're a little shocked.
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Old 30-06-2016, 15:04   #10
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Re: Financing question. Is this true???

Quote:
Originally Posted by JohnEasley View Post
Very interesting information, Sid. Never heard of that site before. What do those columns represent? Year, then asking price, then a date, then actual sell price and the sale date?
Yes, that's what the columns represent. The web site, Sold boats is not available to the public. As a broker I have access. It's a great tool to keep a client from overpaying and also a guide line for sellers..
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Old 30-06-2016, 15:20   #11
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Re: Financing question. Is this true???

Quote:
Originally Posted by Sid at SailAway View Post
Yes, that's what the columns represent. The web site, Sold boats is not available to the public. As a broker I have access. It's a great tool to keep a client from overpaying and also a guide line for sellers..
Good to know. Having a conversation with the broker and owner tomorrow Won't mention where the information came from.
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Old 30-06-2016, 15:37   #12
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Re: Financing question. Is this true???

I signed up for my 3 free reports on bucvalue.com and it appears that the median prices shown for given models are fairly close to the asking prices I have seen on some brokerage web sites. My question is, how do the BUC values shown line up with the actual sales prices shown on the Sold Boats reports? Are they within a few percentage points either way?
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Old 30-06-2016, 16:11   #13
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Re: Financing question. Is this true???

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Originally Posted by JohnEasley View Post
Good to know. Having a conversation with the broker and owner tomorrow Won't mention where the information came from.
Your broker should have access to Soldboats and so should the listing broker. Those selling prices are your (big) hammer in the negotiations. Especially in this case where the asking price is not realistic.

Sometimes the BUC prices represent the market, but in my experience BUC places a lower market value then does the true market sales.
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Old 01-07-2016, 10:26   #14
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Re: Financing question. Is this true???

1.The boat you are looking at probably worth around $40k at most in this market. Not a well made boat to say the least.
2. For a 30 year old boat, surprised a bank would loan you money.
3. Doubt if you will be able to insure it for anything close to asking price, assuming you can find insurance.
4. Old, big power boats are not a favorite of any lender. Which is why most of them take decades to sell; and if sold, at a fraction of original asking price.
5. That boat is a very standard design so shop around, especially for one that has been on the market for at least 5 years. Submit an offer around $38k with survey, with test run, with free title guarantee. And always from a boat broker so you have someone whom you can sue if it turns out to be a worthless piece of plastic.
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Old 01-07-2016, 10:54   #15
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Re: Financing question. Is this true???

There are a lot of very nice boats for sale that are a decade newer and better built than a 1986 Chris Craft. Here are a few examples:

I don’t know what kind of power boat you really want, nor where you live, but here are a few US Yachtworld choices 40’ to 44’ $90,000 to $105,000:

$100,000
1995 44’ SeaRay Miami
1990 42’ Carver Maryland
1999 40’ SeaRay Maryland
1987 40’ Ponderosa, Washington State
1990 42’ Bayliner, Washington State
1989 43’ Betram Convertible (Sale pending)
2000 41’ Maxum, Ft Myers
1989 40’ Tollycraft Portland, Oregon

$95,000
1998 40’ SeaRay 40, Lake Ozark
1999 40’ Bayliner, South Carolina
1987 44’ Symbol, St. Augstine
1996 43’ Carver, Washington DC

$90,000
1986 43’ Hatteras, Jacksonville
1998 40’ Silverton, New Jersey

If you are a first time boat buyer - it is easy to fall into LUST with a cutie/beauty while overlooking warts and problems. Have you compared your prospective boat with all the others in your market>
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