How Does the Offer / Survey / Purchase Process Work ?

[Sailorcanuck]

I've owned 4 used boats prior to this current one. I didn't use a survey since I knew the boats and the owners in my local marina. All 4 of them (including my currrent boat) have served me well.

Since my wife and I plan to buy the "go away" boat in the next few years, I'm curious to know how the process works. Let's say you find a suitable boat and make an offer subject to survey. The offer is accepted and the surveyor does his/her thing. The survey finds that a major item (or items) are found to be deficient and will require significant dollars to fix them.

Obviously you can walk away at this point, however let's say the boat is what you want and the problems are fixable. Does the deal usually go down such that the offer to purchase price is lowered by the estimated value of the repair remediation? I'm looking for people's actual experiences in similar cases.

[boatman61]

You can play hardball and ask for the cost to be knocked of the offer... and if he say's no... let the haggling commence....

[maytrix]

Great question. I look forward to the answer since I am in the same boat (pun intended). My wife and I are looking at buying a boat in the BVI.

I would think that having the work done would clearly be part of the negotiation process or warrant a reduction in the offer price. Say a price is agreed upon but it needs $5k in work - you drop the price to match that or maybe even a little more since you are now taking on the haslle of having it done.

What I'd really like to know is how far below the advertised price is wise to offer at?

[rebel heart]

For us, like this:

a) find boat you're *really* interested in, make an offer that they accept
b) make a refundable deposit (10%), sign a contract that upon happy sea trial, happy survey, and whatever else you'll buy the boat. super important to put any other contingencies in there. we put into ours "must find slip in point loma". it might be annoying for the broker and seller, but we didn't want to buy a boat and have no where to put it. if they don't like your offer they can refuse it.
c) sea trial
d) you pay to have it hauled / surveyed.
e) whatever you find wrong that needs to be repaired to get insured, knock that off the price you've submitted your offer on.
f) get insurance, financing, place to park your boat, and have some fun

[rebel heart]

Oh, and low ball the hell out of everyone. Don't worry about offending anyone and don't fall victim to "it was 100k, now it's 80k; really reduced". Offer 40K. You're buying a boat not donating to an orphanage. Spend as little as you can; it's business.

[NotQuiteLost]

Originally Posted by rebel heart

Oh, and low ball the hell out of everyone. Don't worry about offending anyone and don't fall victim to "it was 100k, now it's 80k; really reduced". Offer 40K. You're buying a boat not donating to an orphanage. Spend as little as you can; it's business.

This is great advice. It isn't like buying a washing machine from Sears, where there might be a little bit of play here and there. This is the same as buying a fourth-hand house in need of significant repair work to bring it up to code.

They list at $50k, you offer $25k if it's all reasonable looking. You never know what kind of problems are waiting for you, and everyone understands that.

The other part is that most people have their boats for sale if they don't have imminent plans to use them. There's a price at which we will all sell and go find something new. Carving big chunks off that number serves to indicate how serious they are about selling.

[maytrix]

Originally Posted by rebel heart

Oh, and low ball the hell out of everyone. Don't worry about offending anyone and don't fall victim to "it was 100k, now it's 80k; really reduced". Offer 40K. You're buying a boat not donating to an orphanage. Spend as little as you can; it's business.

So if a boat was $120k, what would you start at? $80k? And in my case, we're talking about a boat that is a 2007. I would think this would be a bit too low to start no?

[rgscpat]

Well yes, it's perfectly understandable that there would be a more predictable price and less leeway in most newer boats, just as with cars or houses. But the boat market is more emotional than those markets and the market prices are more emotionally driven. Some sellers will shut the door in your face at a really lowball offer and assume that you are bottom-feeding slime and refuse to ever negotiate. And others will accept your offer if you catch them at the right moment and be glad to get the boat off their hands. Maybe if you're really lucky you'll learn something of a seller's circumstances and motivation and be able to make your offer in a way that respects what the seller wants out of the deal.

To speculate, I'm guessing there is a bigger difference between boat and house asking and selling prices but wonder how big. Do most houses sell at around 90 to 95% of ask versus boats at more like 70 or 80%? I wouldn't know. What do people think?

[Capt Phil]

Ditto Rebel Hearts advice... having bought and sold probably 15 boats in my life, I tried to inform myself of the market for that particular boat, went in with what I could afford, including the contingencies and if it was too low, I walked. As a seller, I was always ready to deal based on survey results, and either completed recommended repairs or knocked off an agreed amount to cover the repair costs. I think the secret is never to be in a hurry to sell or buy... set a fair price and stick to it. Conversely, offer a fair price and don't be pushed by either the seller or broker to up the offer. It is worth to you what you think it is (remember, you've done your research). Try and get as much info as you can on the reasons for the sale... once in a very long while a broker may just shade the truth a bit (like always!). The last 4 boats I sold, I broke even or made a profit after what I put into them but they were all in better shape when I sold than when I bought... good Luck... Capt Phil

[denverd0n]

It's all a negotiation and sellers know (or should) that you are going to use the survey results to try to negotiate further. You start at the very least you think you can get away with. They start at the very most they think you might go for. Somewhere in between you settle on a price. Or you don't. That's how a negotiation works.

[Tayzach]

Some good advice here. I just bought my "go Away" boat. A Beneteau 473. Did alot of reseach. I got a broker friend of mine to get the the list of actual selling prices of 473's in the last 6 months and used that as a point to begin thinking about an offer based on the asking price of the boat I was interested in. Of course taking into account extras on the boat and all contingent on survey to "My Satisfaction" not just a "Successful" survey. You never know what a survey will find. It may be "OK" to some but not something you want to deal with. If you are not specific as to the survey must be "Satisfactory" to you then you may be stuck.

[Capt Phil]

Not sure what a 'successful' survey is... except maybe to the surveyor!

[denverd0n]

Good point, Capt. Phil. A better term would be an "acceptable" survey.

[Tayzach]

Yes. I agree, I should have said "Acceptable"

[capt_douglas]

It's sort of like dancing.

The survey, done by an independent contractor with no association to the seller, buyer, or brokers renders an objective, professional, experienced evaluation of the boat. Many will cover all systems and indicate the "condition". In some cases, the surveyor will find items that either need attention or need repair before being considered seaworthy. The surveyor will provide what they consider fair marker replacement value. You can go to the seller and brokers with the surveyors comments and obtain some consideration on the price. This is not uncommon or so I've been told.

The sea trial generally follows. Sometimes the surveyor comes along so they can do evaluations of systems in running mode, rather than static in the sling. The surveyors sea trial findings are generally included in the report. Some surveyors include the sea trial in their fee, others have it as an additional item/cost.

I'm working on getting a Tayana 37. Here's where I stand.

- Rigging survey reported good rigging but questionable/replace a turnbuckle and lower rigging. They also want a better look at the starboard mid-ships chain plate. Riggers also recommended replacing all running rigging as well as the sheaves at the top of the mast. Negotiations are underway but it looks like the turnbuckles and lower are on the seller and the running gear 60% on the seller (rigger said the lines work but chafe should have been addressed before taking boat out).
- Engine/mechanical survey showed a bit of concern in the oil analysis, no zincs, a defective raw water impeller, and the aft two motor mounts are broken. Otherwise the engine and transmission look good. Negotiations re the motor mounts, impeller, and zincs are underway. Oil change at sellers expense then after the sea trial, oil analysis at my cost. Negotiations on the results.
- Sails have been checked and aside from a bit of chafe protection and the suggestion to go with 3 reef points and full battens, came out fine. That'll be on my dime.
- The leak in the dorade in the head needs to be addressed. The seller knew this and the surveyor wants the ceiling down before he can give a recommendation, but at the least it'll be a 50/50 cost break, depending on the extent of damage and repair cost.
- Zincs are shot. Since they're about gone (90%) the cost is 90% on the seller, 100% for the engine zincs.
- Radar is obsolete but works.
- Garmin 120 is discontinued and charts for it ended in 2004. However the GPS portion still works so replacement is on me.
- Raymarine C80 is discontinued but I should support Navionics Gold charts after the software upgrade. Charts are on my dime unless the software update prevents it. If it does then I've got to figure out what to do.
- Yamaha 9hp looks good but the aluminum prop's a bit chewed up. Surveyor recommends replacement. On my dime.
- VHF is OEM but sorta works. Doesn't support Canadian or International channels but works on US freqs. Replacement on my dime although I could say the radio is obsolete and a safety concern. You gotta give some things up to get something later.
- The next item is the cutless bearing. The surveyor reports that play is excessive and recommends replacement. It could be the engine mounts so we're still discussing it. I'm hoping for the seller picking up the bill on this if I pay for the added yard time. I want the shaft checked (after all, it's out) for alignment, scoring, and pitting (remember those missing zincs?) so that'll be on me. Regardless of who pays, a new cutless bearing is going in.
- Other things, some niggling, some I know are on my dime (like figuring out the rats nest of wiring). Others, like the repair kit and inflater for the tender are the sellers responsibility to find or replace. Spares and tools are also negotiable although I'm more willing to pay something for spares (but not full market value) than tools unless they're specific, new, or at great price.

So that's where I am. We're negotiating alterations based on a best guess in the future. I won't pay for all of them and neither will the seller. So we negotiate, although I think I have a better shot at getting the need replacement/repair items paid for by the seller.

Once we agree on a price and who's paying for what, the final sales price will be modified. Up or down, but I don't think it's going up

Insurance is on my dime and while I can transfer the policy, I'm shopping around. Casual discussions with insurance agents/brokers seem to indicate that most underwriters want the deficient items repaired to the surveyors satisfaction before coverage will be issued. I'll need liability for the yard stay and want some kind of coverage for at least the first 6 months in case anything catastrophic happens to the boat.

The drama continues.