Why would broker ask me not to disclose price paid to surveyor?

[valhalla360]

Originally Posted by Cadence

You will have to explain the insurance implication? If no money has changed hands.

With an "agreed value" insurance policy, the insurance company agrees to pay you $X in the event the boat is totaled. They often require you to provide evidence that $X is a reasonable value.

As the value of a boat has no fixed or "true" number. If you paid $100k for the boat, reasonable surveyors may be able to come back with values ranging from $90-110k and feel perfectly comfortable and can easily justify any of those as there is no "true" value.

If I don't tell my surveyor what I paid and what my goals are, he might report the low end of the range thinking he's helping me negotiate a lower price (or simply prefers to be conservative in case a bank or insurance company questions his value, he thinks it looks bad in front of the buyer) when in fact he just messed up my insurance application as now the insurance company will only insure the boat for $90k.

While not a hugely damaging issue, why wouldn't I want him to report the end of the range that favors my position?

A more serious one would if you were financing said $100k boat. Let's say you need to finance $100k and he comes back with the $90k number. While I disagree with taking out that high of a loan, others may feel differently and I can guarantee the bank will hold up the loan if the value is less than the loan amount.

The surveyor has a responsibility to meet your needs as best he can while remaining ethical. There is nothing to gain by hiding information from the surveyor.

[boatpoker]

Originally Posted by valhalla360

With an "agreed value" insurance policy, the insurance company agrees to pay you $X in the event the boat is totaled. They often require you to provide evidence that $X is a reasonable value.

As the value of a boat has no fixed or "true" number. If you paid $100k for the boat, reasonable surveyors may be able to come back with values ranging from $90-110k and feel perfectly comfortable and can easily justify any of those as there is no "true" value.

If I don't tell my surveyor what I paid and what my goals are, he might report the low end of the range thinking he's helping me negotiate a lower price (or simply prefers to be conservative in case a bank or insurance company questions his value, he thinks it looks bad in front of the buyer) when in fact he just messed up my insurance application as now the insurance company will only insure the boat for $90k.

While not a hugely damaging issue, why wouldn't I want him to report the end of the range that favors my position?

A more serious one would if you were financing said $100k boat. Let's say you need to finance $100k and he comes back with the $90k number. While I disagree with taking out that high of a loan, others may feel differently and I can guarantee the bank will hold up the loan if the value is less than the loan amount.

The surveyor has a responsibility to meet your needs as best he can while remaining ethical. There is nothing to gain by hiding information from the surveyor.

"Agreed Value" policy - the insururer will pay out on the value stated in the policy.

"Actual Value" policy - the insurance company will pay out what they consider the fair market value at the time of the claim. This gives them a lot of wiggle room and you will often get much less than you think. That is why these policies are usually much cheaper.

The surveyors responsibility is to objectively state, as accurately as he can, the condition and value of the vessel without favouring any particular party.

[valhalla360]

Originally Posted by boatpoker

"Agreed Value" policy - the insururer will pay out on the value stated in the policy.

"Actual Value" policy - the insurance company will pay out what they consider the fair market value at the time of the claim. This gives them a lot of wiggle room and you will often get much less than you think. That is why these policies are usually much cheaper.

The surveyors responsibility is to objectively state, as accurately as he can, the condition and value of the vessel without favouring any particular party.

Insurance companies won't issue an "Agreed Value" policy without documentation supporting the value stated (unless it's drastically less than they think the boat is worth and that sends up red flags anyway), so your explaination doesn't change anything.

Even for an "Actual Value" policy, it can still be benefitial to have them use the upper end of the reasonable range. If the marina drops your boat and the insurance decides to total it, the higher value would support you when arguing with the insurance company.

Surveyor's responsiblity is to meet the clients needs. Now if he gets stupid and assigns a value of $200k to a boat that has a value in the vicinity of $100k, he will likely get called out on it by the bank or insurance company but within a reasonable and justifiable range, he has every fidutiary responsibility to meet the clients needs.

So let's give you a moral dilema: Unknown to you a buyer does two surveys. Your's comes back at $90k and the other comes back at $100k. Neither of you had any information from the buyer or seller. Just do the survey and to the best of your knowledge, the other surveyor takes the same approach you do and is otherwise competent.

Are you going to say he failed to accurately value the boat?
Are you going to say he shouldn't use the other value when setting up an agreed value insurance plan?

[sailorboy1]

I bet a boat's value is more interest to the owner. The insurance company is more interested in the boats condition to assign the risk. The value you want the boat to be insured for is accounted by the amount you insure it against for an agreed amount. For an actual value policy they are going to use the survey to establish the premium and I bet you would still battle about it if a total loss issue. If financed I don't see the bank accepting an actual value that they don't know is going to cover the loan.

[boatpoker]

Originally Posted by valhalla360

Insurance companies won't issue an "Agreed Value" policy without documentation supporting the value stated (unless it's drastically less than they think the boat is worth and that sends up red flags anyway), so your explaination doesn't change anything.

Even for an "Actual Value" policy, it can still be benefitial to have them use the upper end of the reasonable range. If the marina drops your boat and the insurance decides to total it, the higher value would support you when arguing with the insurance company.

Surveyor's responsiblity is to meet the clients needs. Now if he gets stupid and assigns a value of $200k to a boat that has a value in the vicinity of $100k, he will likely get called out on it by the bank or insurance company but within a reasonable and justifiable range, he has every fidutiary responsibility to meet the clients needs.

So let's give you a moral dilema: Unknown to you a buyer does two surveys. Your's comes back at $90k and the other comes back at $100k. Neither of you had any information from the buyer or seller. Just do the survey and to the best of your knowledge, the other surveyor takes the same approach you do and is otherwise competent.

Are you going to say he failed to accurately value the boat?
Are you going to say he shouldn't use the other value when setting up an agreed value insurance plan?

All I am saying is that the surveyor must be objective and not influenced by any other party.

[boatpoker]

Originally Posted by sailorboy1

I bet a boat's value is more interest to the owner. The insurance company is more interested in the boats condition to assign the risk. The value you want the boat to be insured for is accounted by the amount you insure it against for an agreed amount. For an actual value policy they are going to use the survey to establish the premium and I bet you would still battle about it if a total loss issue. If financed I don't see the bank accepting an actual value that they don't know is going to cover the loan.

I have seen many, many arguments against an underwriters payout on an "actual cash value" including several that went to court.

I have never seen an underwriter fail to pay out the full policy on an "agreed value" policy. That agreed value number is almost invariably the one supplied by the surveyor.

No surveyor wants to go up against an insurance companies lawyer to exlain why he inflated a value to suit the demands of the boat owner. I expect, SAMS expects, the banks expect and the underwriter expects a completely objective valuation from the surveyor. If you have ever influenced a surveyor's valuation then you have chosen to deal with an unethical fly-by-nighter.

If the banks or underwriters cannot trust the the valuation is objective, how can they trust that the surveyor was not influenced in other areas ?

[Cadence]

Originally Posted by valhalla360

With an "agreed value" insurance policy, the insurance company agrees to pay you $X in the event the boat is totaled. They often require you to provide evidence that $X is a reasonable value.

As the value of a boat has no fixed or "true" number. If you paid $100k for the boat, reasonable surveyors may be able to come back with values ranging from $90-110k and feel perfectly comfortable and can easily justify any of those as there is no "true" value.

If I don't tell my surveyor what I paid and what my goals are, he might report the low end of the range thinking he's helping me negotiate a lower price (or simply prefers to be conservative in case a bank or insurance company questions his value, he thinks it looks bad in front of the buyer) when in fact he just messed up my insurance application as now the insurance company will only insure the boat for $90k.

While not a hugely damaging issue, why wouldn't I want him to report the end of the range that favors my position?

A more serious one would if you were financing said $100k boat. Let's say you need to finance $100k and he comes back with the $90k number. While I disagree with taking out that high of a loan, others may feel differently and I can guarantee the bank will hold up the loan if the value is less than the loan amount.

The surveyor has a responsibility to meet your needs as best he can while remaining ethical. There is nothing to gain by hiding information from the surveyor.

I got that. I would still would wish to have the real value such that I didn't over pay unless I was buying planning on a catastrophic insurance claim. To use your figs. Pay $90 insure for a $100. I am just ragging you.


I don't think letting a reputable surveyor know the offered amount is a problem either.

My earlier point was possibly the broker was looking out for the buyer in a way. It was, a satisfied customer tells 3 a dissatisfied customer tells eight. In todays world who knows. Although the seller is technically a customer so is the buyer. A survey may kind of get the broker out of the loop, if he feels the buyer is getting screwed.

[valhalla360]

Originally Posted by boatpoker

All I am saying is that the surveyor must be objective and not influenced by any other party.

If there was one TRUE answer, I would agree but this is a little more complicated than 2+2=4.

I noticed you avoided answering my dilemma question. If a qualified surveyor using your methods comes up with a different answer from yours, which one is correct? Which one should be used?

[valhalla360]

Originally Posted by Cadence

I got that. I would still would wish to have the real value such that I didn't over pay unless I was buying planning on a catastrophic insurance claim. To use your figs. Pay $90 insure for a $100. I am just ragging you.

I don't think letting a reputable surveyor know the offered amount is a problem either.

This gets back to an earlier comment I made: What do you gain from paying for a value if you already have an offer in?

Let's say the surveyor finds no new issues (unlikely but lets say it happens) but values the boat at $90k when you have an offer of $100k with a $10k deposit. With no new issues, you don't have any justification to ask for a lower price and the seller would be completely within their rights to keep the deposit if you walk away as you broke the contract without justification.

Surveys are almost exclusively used for one of three things (or a combination):
- Find additional flaws and negotiate the price down (or walk away if it's bad enough) after an offer has been made
- Qualify or a loan
- Qualify for insurance

I've never heard of someone paying hundreds of dollars for a survey...out of curiosity if they got a good deal.

In this context, since I'm paying the bill, I want a surveyor who looks out for my best interest. If he isn't smart enough to keep the value in a reasonable range, he probably won't be around for long in the business.