NADA vs. YachtWorld - Grrrrrrr

[offline]

You just can't forget the laws of supply and demand....

Boats are not selling for anywhere near asking prices and serious buyers with cash are able to pull off some amazing deals.

For example we just purchased our boat for 20% of asking price. We had the cash for a quick and painless closing and the seller needed out of the boat quickly..

It worked out for everyone.

[TomandAnitas34]

Well, Offline, I'll tell you what. I made a similar deal. Bought a boat, on the basis of what I saw in the pictures, for 30% of the original price, knowing I'd have to do a huge amount of work to fix it up. If you are in a similar situation, cool. But it's not the same as buying a turn-key boat that is in it's prime.

[casual]

Throw all the books away,work with a Broker takes all of the personal feelings out of negoication,Offer no more than 30% of asking price.Remember every seller is building in wiggle room,you worked hard for your money,don't waste it.If you've not the Heart for negoication's work thru a buyers agent.

[barnakiel]

Originally Posted by casual

(...) Offer no more than 30% of asking price.(...)

Yes, OK, in the US?

Every country has its customs. Elsewhere you might get a dumb look and a shrug.

b.

[Pblais]

Offer no more than 30% of asking price.

It won't be easy to find a broker that will do that. They work with the idea that they will get paid. Good brokers talk you out of stupid Ideas. There may be a great many boats worth 30% of asking price but I sure wouldn't want to own one. You make the assumption that all sellers are stupid. Boats with real values that low will cost more than they could ever be worth totally fixed up.

Brokers don't negotiate a deal they convey offers. The sellers broker has no clue what the seller will agree to and the buyers broker is not you. It's not like they give the secret handshake and split the commission.

Could we offer you 30% for your Cabo Rico 38? I would go as high as 33%.

[Bash]

[QUOTE=casual;1008299]Offer no more than 30% of asking price.

Did you mean, "Offer 30% less than the asking price" ?? 30% of the asking price means that you would offer $75,000 on a boat priced at $250,000.

I suspect that most brokers would consider you a waste of time at that point.

[skipmac]

Originally Posted by Pblais

Could we offer you 30% for your Cabo Rico 38? I would go as high as 33%.

Careful. You haven't seen what kind of shape it's in. Considering his buying strategy 33% might be overpriced.

[CarinaPDX]

In "normal" times, with a more stable market, a 30% offer would be absurd. But these aren't normal times. No one can really say what a boat is worth until it sells; the value is what a willing buyer and a willing seller agree to. There are many boats that are being offered at far more than they will get in this market. It is probably the case that most of the owners won't negotiate from a 30% offer, but there are a few that have been trying to sell for years without getting an offer and will work with anyone who is serious about paying cash and getting them out from under the marina and insurance costs. If you are patient and flexible it is possible to get a good cruising boat at a great price. Just count on having to work for it. And remember, that 30% is the start of the negotiation, not what the boat will sell for. Just as the owner asking high gives him wiggle room, your offering low gives you wiggle room.

As noted before, the broker works for and is paid by the owner. His commission is increased by a higher sales price. He may not quite be an enemy, but he does not have the buyer's financial interest at heart. Just like buying a car, or a carpet in a bazaar, the buyer will have to negotiate to get the best deal. Offering a small amount less than asking guarantees there will be no great deal. Something like faint heart ne'er won fair maiden...

Greg

[Pblais]

As noted before, the broker works for and is paid by the owner. His commission is increased by a higher sales price. He may not quite be an enemy, but he does not have the buyer's financial interest at heart.

That isn't accurate The commission is paid when the deal closes. Deals that don't close - don't pay anything. Good brokers make more money closing the deal that both parties will sign quickly and not by driving the price up. It is their interest to close fast and move on to the next deal.

With almost all sales a protracted period of not closing leads to the deal never closing. Letting a buyer and seller spin their wheels is asking for a deal to go bad. Driving the deal to closing is the first thing you learn in sales school.

Sales people don't "negotiate" the deal. Only a buyer and a seller can negotiate. Sales people keep the conversation open but are always trying to get the parties to sign on the dotted line. A fast close at any price favors the salesperson. The idea that the salesperson can control a buyer or a seller is a joke.

[CarinaPDX]

The broker IS on the seller's side: the owner lists with the broker, who agrees to the commission rate. In the real estate business it is often state law that the broker is responsible for defending the seller's interests. And he earns more when the seller earns more, not when the buyer gets a better deal. He is NOT a neutral party. That doesn't make him evil, or even unhelpful, just not disinterested in the outcome.

I don't think I have ever implied that a salesperson controls anything. But they sure as shooting have an influence on the conversation. They usually influence the asking price. And they have an influence on the negotiations.

That said, agreed that no commissions are paid if no sale happens. In a good market with reasonable activity it is usually more important to make a deal and move on than get a little higher price. In this slow market, where supply well exceeds demand and actual sales prices can vary substantially for the same boat there is more reason to get the negotiated prices up off the bottom, and frankly more room to make that happen.

BTW when the day comes that brokers say a boat is overpriced as often as they say it is a bargain I'll reconsider their neutrality.

Greg

[belizesailor]

Take a look at "bucnet" (Yachts for Sale, Boats for Sale - New/Used/Pre-owned - BUCNET.com). Used by many brokers and based upon actual sale prices. Gives values based upon categories of boat condition. They have a "guest" login where you can get more limited information than the pro version, but still good.

[skipmac]

Originally Posted by CarinaPDX

The broker IS on the seller's side: the owner lists with the broker, who agrees to the commission rate. In the real estate business it is often state law that the broker is responsible for defending the seller's interests. And he earns more when the seller earns more, not when the buyer gets a better deal. He is NOT a neutral party. That doesn't make him evil, or even unhelpful, just not disinterested in the outcome.

Actually that is not correct. I was a yacht broker and it depended on the deal who I represented. In a sale (boat or real estate) there are two commissions, one for the broker that listed the boat for sale and one for the broker that sells the boat. One broker might get both if he or she both listed and sold the boat but the great majority of the time that was not the case.

If I listed a boat for sale and another broker was buying the boat then I was representing the seller, protected their interests and tried to get them the best price for the boat.

If I was representing the buyer I would try to get them the best boat for the price and insure they got a thorough survey so they knew what they were getting.

Of course, as pointed out, no one, brokers, buyers or sellers, gets anything if the deal doesn't go through so both brokers have an interest in making the deal happen.

Originally Posted by CarinaPDX

I don't think I have ever implied that a salesperson controls anything. But they sure as shooting have an influence on the conversation. They usually influence the asking price. And they have an influence on the negotiations.

Correct to some degree. A good broker will give the seller information on the market, selling price for similar boats and very often work with the seller in setting a price. At the end of the day the seller does make that decision and I saw many sellers go way outside reasonable prices. Too high because they really didn't want to sell, were emotionally attached to the boat or just thought theirs was worth more. Too low because they wanted to sell fast and time was more important that more money.

Originally Posted by CarinaPDX

BTW when the day comes that brokers say a boat is overpriced as often as they say it is a bargain I'll reconsider their neutrality.

Actually happens a lot. If a boat is overpriced it won't sell and the broker would be wasting his or her time even showing the boat. Also trying to sell overpriced boats is a good way to lose credibility with a client and lose them. But this would not necessarily indicate the broker's neutrality, just the desire to sell the boat.

[CarinaPDX]

What I can say is that in Oregon the law requires that in the real estate business both the broker/agent who listed the house and the broker/agent bringing the buyer to the table are required to work on the seller's behalf, because the seller is held to be paying the commission. A "buyer's broker" is a different matter, and he is paid by the buyer and is working for him. While I doubt that law extends to yacht brokers, it seems to me at some level a similar ethic should apply. Apparently not everywhere, as you say.

Around here at least some of the local yacht brokers don't share commissions, and buyers pretty much have to do their own legwork. And one of those brokers is known for dropping the ball once the money changes hands, leaving buyers gnashing teeth. But I don't mean to be picking on brokers here: there are ethical, and ethically challenged, folks in many fields. The other nearby broker is a paragon of virtue (and sees a lot of return business as a result).

When I was saying about being told a boat was overpriced, I meant being told to the prospective buyer. I completely agree that brokers work very hard to get sellers and buyers to accept reasonable prices. The problem/opportunity today is that there are so few buyers that cash is king, and if a seller needs to sell then a lowball offer may be the only game in town. And trying to get the lowballers to be "reasonable" is a lost cause. I personally know of two boats that sold for much less than half what most brokers would have valued them. It happens. And if finding such deals is important, it is possible to do so with persistence. Personally I wouldn't be operating that way as I dislike playing hardball, particularly at a time many folks are giving up on their dreams. But that is capitalism, red in tooth and claw.

[capta]

Some good brokers will act as a buyer's agent and get their fee from the seller's broker. No cost to you. Lots of advice & help to you at no cost, how can you go wrong. Even better, they can become friends & help more as you get bigger boats.
I paid 60% of the asking price on a 53' boat already under valued (we're on our second Caribbean voyage aboard her, right now). Plainly put the owner can pay dockage, insurance & maintenance until the boat sells in a lousy market, or get out from under right now for x-amount.
Most PO's do not become your best friend; offer what you think the boat is worth to you less 25% or so & work from there. Any money you save on purchase price will most likely go right back into the boat in the form of upgraded equipment, anyway.
Good luck; be bold it is a buyer's market!

[skipmac]

Originally Posted by CarinaPDX

What I can say is that in Oregon the law requires that in the real estate business both the broker/agent who listed the house and the broker/agent bringing the buyer to the table are required to work on the seller's behalf, because the seller is held to be paying the commission. A "buyer's broker" is a different matter, and he is paid by the buyer and is working for him. While I doubt that law extends to yacht brokers, it seems to me at some level a similar ethic should apply. Apparently not everywhere, as you say.

My in-laws are in real estate in FL and I am not familiar with a similar law here. True the commissions to all brokers and realtors involved in the transaction are technically paid by the seller since the commissions are deducted from the selling price but from my experience real estate sales if a buyer contacts a realtor to buy a house, that realtor works for the interests of the buyer.

Not that it doesn't happen but I never encountered a buyer's broker that was paid out of the buyer's pocket over and above the normal commissions that come out of the selling price. Process as I experienced it, someone wants to buy a boat, they call a yacht broker, broker finds a boat for the customer and gets his or her share of the commission from the selling price when the deal closes.

Originally Posted by CarinaPDX

Around here at least some of the local yacht brokers don't share commissions, and buyers pretty much have to do their own legwork.

This I do not understand. If you called a broker to buy a boat and that broker finds a boat for sale that was listed by another broker, the listing broker would get all the commission and the broker representing the buyer would get nothing or the listing broker would not sell the boat? That makes no sense at all and perhaps there is some misunderstanding of how the local business works.

Originally Posted by CarinaPDX

buyers pretty much have to do their own legwork. And one of those brokers is known for dropping the ball once the money changes hands, leaving buyers gnashing teeth. But I don't mean to be picking on brokers here: there are ethical, and ethically challenged, folks in many fields. The other nearby broker is a paragon of virtue (and sees a lot of return business as a result).

If I had to do all my own legwork I would get a new broker. And I'm the first one to admit there are lots of scoundrels and low lifes selling boats; I was there and saw them from inside the business. I even had one boss tell me I was in the wrong business because he heard me tell a client that a boat he liked was not appropriate for his plans. Boss told me my job was to tell a customer anything necessary to get him to buy a boat. He didn't actually use the words "lie to the customer to get the sale" but the meaning was crystal clear. I flat out told him I would never do that and went on about my business. Guess he didn't fire me because I was selling a lot of boats.

Originally Posted by CarinaPDX

When I was saying about being told a boat was overpriced, I meant being told to the prospective buyer.

I meant the same thing. Even a dishonest, lazy bum of a yacht broker doesn't make a commission if there is no sale, so if a boat is overpriced it is in the broker's own, self interest to tell the buyer a boat is overpriced. Unless the buyer is lazy or completely clueless he would figure out which boats are over priced and the broker would lose the sale and possibly the client who realized he was being conned.

Originally Posted by CarinaPDX

The problem/opportunity today is that there are so few buyers that cash is king, and if a seller needs to sell then a lowball offer may be the only game in town. And trying to get the lowballers to be "reasonable" is a lost cause. I personally know of two boats that sold for much less than half what most brokers would have valued them. It happens. And if finding such deals is important, it is possible to do so with persistence. Personally I wouldn't be operating that way as I dislike playing hardball, particularly at a time many folks are giving up on their dreams. But that is capitalism, red in tooth and claw.

No denying deals are out there but I looked for two years and found no boats that met my criteria for half price, unless you count boats I saw that were listed for double the true value or were major project boats. What I most often see in these super deals is a boat that is listed for way more than it's true value. Are you buying a boat for half it's advertised price or half of what it's worth compared to other boats of similar quality and condition. I would bet in most cases it's the former. Lot's of boats for sales are grossly overpriced and, if the owner really wants to sell, eventually has to accept reality and drop the price to a realistic level.

Also, most of the super deals I have seen are smaller boats. If you are looking for a well built, cruising sailboat, in decent condition, in the +/- 40' range I think it unlikely you will find one selling for 30-50% of it's true value. If anyone on the forum find's a deal like this do let me know. I'll buy the boat and split the profit with you when I resell it.