Yacht Valuation

[Mike Rogers]

I recall that a few years ago, when looking to buy a house, after a few months of watching the market I had enough knowledge to have a pretty good guess at what a house would sell for at auction. That was enough time to develop the confidence to bid for myself.

Yachts, I'm discovering, are a whole different kettle of fish!

I've been researching the used boat market for many months now, trying to develop a deeper appreciation of why one boat is worth more than the next – and I'm still frequently perplexed.

Now it's true this is all desktop research and I don't necessarily know the final selling price (just the advertised price) but I'm still amazed that two boats that seem nearly identical in terms model, year of manufacture, fittings etc, can have widely divergent asking prices.

Until I get better at valuation I'm quite hesitant to become a serious bidder. Do others find this as perplexing as I do and does anybody have any advice about learning all this? Are there any rules of thumb to know or are there any good articles, books about valuation.

I'd appreciate any advice..

By the way, if it relevant I'm looking for a cruising yacht, around the 40ft mark.

Cheers, Mike

[sailorboy1]

Boat pricing makes no sense at all! People fall in love with their boat and always feel it is worth a lot more than it is. It also is not all that unsual for boats to be listed high because everyone assumes offeres will be at least 20% less. Also people tend to price based only on thier model "lowest priced X on the market" instead of looking at the market in general. Finally a lot of the current listed boats were priced or bought during the "good times" and the current market is more lower but they wouldn't/cann't lower the price to the marketthe times.

But in general you should consider searching at least 20% more than you plan on spending on the purchase. As a buyer there really isn't any plus to not work with a broker (as long as you rememeber they still are working for the seller) as the broker as better access to pricing from recently sold boat prices verser the listing price.

[skipmac]

Don has a very valid point. As a former yacht broker I can confirm that lot of owners get emotionally involved in their boats and ask much more than the actual market value. Though it seems contrary to logic, I found that boats listed through brokers were usually a better deal than those for sale by owner. The sellers that listed with a broker were serious or, if unrealistic, had been weeded out by the listing broker. Please note that this was 30 years ago and the dynamics may be different these days.

Another problem is with owners that have upgraded and installed a lot of new equipment and then price the boat based on every penny they've "invested" in the boat.

The whole situation is exacerbated by the current state of the economy. You run into some owners that are in dire straights, can't pay the dock bills, house under foreclosure and need to sell now so price accordingly.

Hard to find consistency in this market.

[Hannah on 'Rita T']

On the US East Coast, at least, the major difference between buying/selling a boat and a house is how the parties handle repairs. Typically, after you and the seller settle on a price then you survey and adjust the price accordingly, which gives you a certain amount of protection. If the buyer wants insurance, an insurance company will insist any survey issues be addressed/repaired. We had to move a thru-hull which had worked fine for the 12 years before we bought the boat because the surveyer had noted it.

[djmarchand]

Develop a relationship with a broker and ask him to run "Soldboats" the brokers version of Yachtworld that gives actual selling prices. Only look at boats sold in the last year or so.

You can normalise for equipment differences by taking the price of the equipment (A/C, windlass, etc) and add or subtract from the price. Ignore installation costs which are usually about equal to the equipment.

Then you will see the occaisional outlier, either high or low. That either means something wrong with the boat not disclosed in the listing or a situation where the seller had to sell or the buyer was infatuated with the boat.

You can sometimes buy at the outlier price, but you need the same circumstances working for you.

David

[Mike Rogers]

Some great advice here, thankyou.

David, "Soldboats" is interesting. I notice an annual subscribtion is $416. Presumably this is pitched at brokers, but do you think a subscription is a good investment for indiviuals seeking to buy or sell a boat (especially if they are not using a broker).

Cheers, Mike

[savoir]

Fashion accounts for a lot. Various brands fall in and out of fashion for no readily obvious reason. One reason that is silly but true is a boat with cabin decor that appeals to women. It adds to the price of the boat.

That's how I picked up the last savboat. I was 2nd bidder but SWMBO put the kybosh on my opponent and they bought a cutesy near new Hunter. I then stepped up and bought at 20k less than their bid.

Sometimes it helps to be a bachelor.

[CaptainBW]

I agree with the original poster...it is really hard to get a handle on value. For selling and buying I have used BUC Value, Soldboats (through a broker) and NADA. I have found that NADA is completely unrealistic, always low; BUC value is closer but not on every boat make/model, and Soldboats to be the best.

From what I have been told, BUC value used to be the "gold standard" as brokers, surveyors and dealers used to report into it and use it. You can get an estimate on a vessel from Boat US from this database. Soldboats has now become the database that the industry reports into and uses, but I have had a broker tell me that it is dependent on the honesty of people reporting the selling prices (sometimes suspect). The really bad thing is that you can't access the Soldboat database unless you are a broker (unless there is a way I don't know about).

All that being said...I am using all three sources and comparing, placing most of the emphasis on Soldboat data. I do know that the lending banks use BUC Value and will base the loan on what BUC Value reports. I was evaluating a 40' Island Packet that was listed around $240k and BUC estimated value at $160-180k. Soldboat was showing $209-220k. The banks based what they would loan on 180 max. We moved on, not because we wanted to finance, but because we were concerned about the potential impact of trying to sell down the road, and someone not being able to get financing.

[boatman61]

In Europe its often down to location... a boat in Scotland may be advertised for $50K... on the South Coast the same boat will be going for nearly 1/2 as much again... also boats in the Med are advertised for more than they're actually worth.. for pretty much the same reason... sellers price in a 'Location Factor'... and buyers fall for it.
A few years back the English Paper in Spain did an article that stated this fact and urged folks to only offer 50% of asking price...
PITA for the likes of me selling at a realistic price....
sailed her back to the UK and people were fighting to buy her at the asking price.....
Go figure.

[nautical62]

Many owners have very unrealistic opinions on what their boat is worth. For that reason, I think initial asking price is overall a poor indicator as to what boats are worth. I've seen many boats drop to half the initial asking price before they sell while others sell almost immediately at close to the asking price.

Unlike homes, boats don't have the same location issue and unlike automobiles, the volume of of any model is much less and the condition more variable. Therefore, the "market price" is much less defined. Still, there are some things you can do to get a better feel as to what boats may sell for:

1. Consult BUC and NADA used boat prices.
2. Watch listed boats over time and see what price they move at. Same with similar, but differnet competing model boats.
3. Ask on boat owner's forums. They should have a good sense.
4.. Pay a buyer's broker (though it's not what I would do)

Also realize, what a boat is worth to you, may not be perfectly reflected in what others paid for similar boats.

[GordMay]

Originally Posted by CaptainBW

... I do know that the lending banks use BUC Value and will base the loan on what BUC Value reports. I was evaluating a 40' Island Packet that was listed around $240k and BUC estimated value at $160-180k. Soldboat was showing $209-220k. The banks based what they would loan on 180 max. We moved on, not because we wanted to finance, but because we were concerned about the potential impact of trying to sell down the road, and someone not being able to get financing.

Indeed! Well worth noting and considering.