newbie/boat purchase question

[salty_dog_68]

hello,

i have owned several small boats that i paid cash for but now i am about to buy my first "big" boat (using a broker and all). i have narrowed my choices down to a few boats and have my finances in order. what do i do next? do i have the boat surveyed and then make an offer or v/v? when, exactly, do i need to get insurance? finally, does anyone have an opinion to share about the endeavor 40?

thanks,

salty

[Talbot]

definitely dont put down a deposit until you really need to, as most brokers seem to believe that it is non-returnable! Normal survey will not check state of the engine, this can be done by taking a sample of the oil and sending that off for analysis.

Ask around your area for recommends for a surveyor, and one you have chosen one make sure he knows that the survey is for purchase and to find and list all faults, and if posible accompany him. The survey is essential before you purchase, as it may reveal necessity for expensive repairs. You will then have to decide whether to try to reduce the price accordingly, or walk away.

Boat must be out of the water for the survey (and clean of weeds and given at least a couple of days to dry), but (especially for a mobo) you also need to try her in the water. The craneage will cost money as will keeping her on the hard standing. Make sure you have negotiated the financial side of this.

[GordMay]

1. Perform a “Self-Survey” & inspection.
2.Take a sea-trial.
? An engine oil analysis might be desirable, especially if you’re not mechanically savvy
3. Make an offer to purchase - conditional on financing, available berthing, and satisfactory survey.
4. Hire a professional surveyor. Surveyor will perform in-water, then out-of-water inspections (see Talbot, above).
5. Re-negotiate you offering price, based upon any survey deficiencies.

Endeavour 40/41's are a decent value boat, if you like a centre-cockpit.
I wouldn’t spend much time looking at anything priced over $100K, no matter how fine the condition & extensive the equipage.

Good luck !!!

[Jeff H]

As has been suggested buying a boat is a step-by-step process, but I somewhat disagree with the sequence of buying a boat when a broker is involved. Sequentially I would suggest that the following sequence is far more typical and is more likely to result in a successful purchase at a lower price.

1. I start with a quick inspection of the boat. In a search for a new boat I carry a notebook and a camera, recording the plusses and minuses. I try to get aboard a number of sister ships to help decide what is a problem specific to a model vs. an individual boat. It also helps provide a sense of what these boats are worth relative to each other. (For example if you looked at three sister-ships priced identical, the equipment and condition of each would vary making one the best deal and one the worst. Of course that ignores the unknown that the individual owners of these boats might more willing to negotiate higher or lower prices than each other which are not necessarily related to the relative value of the boats.)

2. Once I have locked in one or two specific boats I do a “Self-Survey”. I literally spend hours crawling through a boat and looking at all of the key components. I have a checklist that I bring with me and I work my way through the list one item at a time and record my notes.

3. At this point, in my case I make sure that my ducks are in a row. I make sure that I have everything lined up that it takes to buy the boat. I check out financing, insurance, slip and surveyor availability and costs prior to making an offer. This will give me a lot of information about what that boat will really cost to buy and own, as well as, the hoops that I will need to jump through getting there.

4. Then I make my offer. I don't know what the paranoia about placing a deposit with an offer, but I have literally had dozens of deposits returned over the years and have never had a broker try to ding me for any of them. That said, you need to read your contract with the broker carefully. Some "Buyer Broker" type agreements do include a fee to the broker even if the deal goes flat. Negotiate that out of the contract. As a seller, I do not consider an offer without a deposit to be a serious offer and would turn it down. That is the norm in the industry. I also consider an offer with a small deposit to be less than perfectly serious and less likely to go to closing without some kind of penny-anti strangeness occurring. Therefore I would hold the line at a significantly higher price than an offer that had a reasonable deposit and a 'normal' contract.

The contract should be contingent on an ‘acceptable to the buyer’ survey, sail trial, engine survey, sail inspection, being able to locate a slip in some areas, and financing if applicable. (‘Acceptable to the Buyer’ should not be defined in any way.) It should establish a percentage of the sales price that the Seller is obligated to correct should defects be discovered during the survey, and the percentage of the cost of correcting the defect that the owner will have to assume. (In other words, if defects are discovered the cost of correcting these defects should be distributed between the seller and the buyer. Typically this is a 50/50 split with the Seller being obligated to correct up to 5% of the sales price before saying that is all that that the seller is willing to spend and canceling the deal. If the defects are more than 5% then you are basically at the point of re-negotiating the deal.)

The contract should specify how long the Seller has to accept the offer as well as a reasonable period to perform the survey, approve the survey, get financing and remove the boat from its current location.

5. It is only then that a sea-trial would take place. The surveyor should be aboard. While an individual owner may agree to take you out for a sail, under a standard contract a sea trial would never take place until the boat is under contract. A sea trial is far more than a simple sail. It is about checking the function of all of the systems underway. The survey needs to be there.

5. Survey the boat, Make sure that the Surveyor will perform in-water and out-of-water inspections. The sequence of these is not critical, but generally the sea trial is less expensive and so if the boat is already in the water the sea trial should go first.

5. Re-negotiate you offering price, based upon any survey deficiencies.

6. If the Seller is responsible for correcting defects the work should be performed before closing on the boat. In the worst case, if you end up negotiating that the closing will occur prior to correcting the owner repaired defects, a time frame should be established for the Seller to correct the defect and it should be negotiated that reasonable funds be held in escrow until the work is performed. The agreement should specify that should the corrective work not been performed by the deadline then the escrow goes to the seller so that the seller can get the work performed independently.

7 Close and Take your new boat home.

I also want to comment on the Endeavour 40. My mother owned both a 37 and a 40. I also helped with the fix up of a 42 and 43. As a design, I like the 40 better than the 42 or 43. The Endeavour 40 sails pretty well in 10 to 15 knots of wind but was really is a very poor boat in light air and heavy going. Endeavours offered a lot of room for the dollar and so make good live aboards, but they were really thrown together making them not all that great boats if your plans include much offshore work. Deck hardware was way undersized as they came from the factory making them strenuous boats to sail.

These are 20 plus year old boats and were lightly rigged and poorly put together. Per my usual old boat litany:

You can expect to find some ‘issues’ with any boat this age. Unless very well maintained and updated by a previous owner, you might expect to need to address some combination of the following items:

· Sails, chainplates, mast step and associated suporting structure, standing and running rigging that are beyond their useful lifespan,
· an engine that is in need of rebuild or replacement,
· worn out or out of date deck, galley, and head hardware,
· worn out upholstery,
· Non skid in need of renewing,
· Out of date safety gear,
· electronics that are non operational, or in need of updating,
· electrical and plumbing systems that need repairs, upgrades to modern standards or replacement.
· Thru hulls and seacocks in need of replacement,
· Blister, fatigue, rudder, rotten bulkheads, failed tabbing, hull deck joint or deck coring problems
· Keel bolt replacement (bolt on keel) or delamination of the hull from the ballast for a glassed in keel.
· And perhaps a whole range of aesthetic issues.

Good luck,
Jeff

[GordMay]

I defer to Jeff's for more detailed and complete description of the process, including his ammendments/corrections to mine.
Thanks Jeff!
Gord

[kirby]

I understand and agree with the recommended purchase process, but what happens when you buy a boat during the Winter when a sea-trial isn't possible? My broker suggested completing the deal and escrowing $10k for a Spring sea-trial to cover things that don't work. The engine and sails are new, so the sea-trial would just verify the operation of instruments, batteries, steering, heads, making sure the boat floats... What else am I forgetting?

One more interesting twist in my potential purchase. I've negotiated a price on this boat that is below market value (owner is done with sailing and anxious to sell), so the broker wants to limit (or eliminate) owner responsibility for fixing things found in the survey. I don't see a huge problem with this as long as the contract stipulates that I (the buyer) must find the survey satisfactory. If the survey uncovers things that I haven't already found that amount to major $$$, then I can just walk away. Right?

Kirby

[martin752]

Jeff, would you share your personal survey checklist ?

Thanks again !

[Jeff H]

I bought my last boat without a sea trial. She was a model that I was familiar with and so was not concerned with sailing ability. In my case the deal was reasonably good and she was a boat that i wanted quite badly. It is a bit of a gamble. In my deal we were able to run the engine, and we escrowed money for the electronics that could not be tested with the boat out of the water.

As it turned out there were some things that were not caught in the survey. The biggest item that could not be tested was the transmission which had some slippage at low RPM. Fortunately that went away after a transmission fluid change so we are speculating that there may have been the wrong fluid in the transmission. While I was lucky, it drove home the need to escrow enough funds for a transmission rebuild or any other systems that cannot be observed and tested with the boat out of the water. OR ELSE, buy the boat at a price that is low enough that you can assume that you will be able to simply replace everything that you cannot test.

I am not sure about going into a deal where there is not chance to adjust the price for defects unless the price of the boat is extremely below market price. You are taking a real chance here with the not all that small costs of peforming a survey.

I would be glad to share my checklist, although it is in a form that starts out quite vague but I expand it to match the specifics of the boat in question. You can email me at jhhalpern@hotmail.com and I will email you a copy.

Jeff

[Catamount]

I bought a boat this summer, and here's how it went:

I found the boat on Yachtworld.com, had a question about the listing, and e-mailed the broker. He sent back the details I was looking for.

I did research on the boat model, and decided it was a boat I was interested in. The boat was in Maryland and I was in New Hampshire, so to justify the trip down, I decided to go ahead and make an offer sight unseen, contingent on my own inspection and a satisfactory survey. I called the broker and he gave me some further information about the boat, and I offered 2/3 of the asking price. The broker faxed me their standard contract, I filled it in with dates and conditions of my offer, and mailed it back with a deposit check (10% of the offer).

A few days later the broker called me up, as he had received my check and presented my offer to the seller. The seller wanted to split the difference between my offer and his asking price, but the broker confided that he thought the seller would come down to my offer "on survey issues." He did say that my offer was as low as the seller would likely go.

My response was to stick to my offering price, and say that the survey would be a buy-it or walk-away deal rather than a point for further price negotiation. I knew that the price was already at rock bottom. The seller accepted this.

So with a signed contract in hand, I made arrangements to travel down to Maryland to see the boat, and also made appointments to see other boats while down there, just for comparison purposes. I also refined my self-survey checklist and packed up my tools.

I spent three or four hours inspecting the boat in great detail. It was obvious that the boat had been sailed hard and put away wet for much of its life, and would need a lot of work, but I knew this going into the deal. It was a "project boat," but it appeared to have good bones. I did not uncover any major flaws, and decided to proceed to the next step and hire a surveyor.

I had previously identified potential surveyors in the area, so I just had to call them up for a quick interview and make my decision who to hire. I chose one who had been highly recommended by a respected boatyard manager in the area. We set a date, and I called the broker to make arrangements -- the boat was on the hard and would need to be launched for a sea trial. One of the big unknowns following my inspection was the condition of the engine. It was reported to start every time, but I wanted confirmation before finalizing the purchase.

Since the survey was a make it or break it thing, and since I planned to be present for the survey, I felt comfortable in making my decision to purchase or not on the day of the survey without waiting for the surveyors full written report. I confirmed with the broker what the closing costs would be, and got a bank check for that amount. Then it was back to Maryland again for the survey.

The surveyor pointed out numerous issues that needed attention, but nothing I wasn't already aware of or prepared to deal with. He was able to confirm that the hull was "dry" (another concern I had). Eventually the boatyard got the boat in the water, the seller showed up, and we all went out to motor about for a bit. Indeed the engine did start, and it actually ran pretty well. We then returned to a slip at the boatyard, the surveyor went up the mast to check the rig, and completed other parts of his inspection.

Walking back to his truck, the surveyor asked me if I was going to go for it, and I replied that I was -- he hadn't uncovered anything that turned me off from it. Then he asked me what I wanted him to list as the market value in his report! He said the broker had told him how much I was paying, and it was clear from these comments that he thought I was getting a good deal. I had looked up BUC, NADA, and Boat/US values, as well as reviewed the listings for sister ships on the market, so I had a figure in mind. More than what I was paying, for sure.

Following this, I went over to the broker's office where the seller was waiting, and handed over my check, and we signed all the paperwork, and the boat was mine. I had previously made arrangements for a berth for the boat and for deliverying it from the boatyard where I purchased it to its new home, so we then carried out those plans.

[capt lar]

kirby - the answer is yes if you so stipulate in the agreement. standard proceedure is you risk the cost of survey and any associated yard bill. you don't want the owner fixing stuff anyway, since they have no interest in doing more than they have to.
a few questions - is she on the hard ? is the mast out ? is she already winterized ? is all the gear on board ? is personal gear off ? are batteries still on board ?
if the answers are yes, you and a surveyor can cover the biggies. if the boat is in new england - with all the rain going on, the next few days are a great time to go look again - deck leaks

capt. lar

[kirby]

Capt Lar, The boat is on the hard in RI, batteries are still in, mast is still up. The broker mentioned that the boat would have to be "recommisioned" in order to do a sea trial. I'm not sure what that entails. Ha! Funny you should mention deck leaks - this boat has several. I believe that they are mostly at the chainplates and stanchion bases (a $2500 repair). But, there is the possibility that the toerail is also letting water leak through the hull/deck joint bolt holes (a $17,000 repair), but there's no way to know until the deck hardware is rebedded.

Jeff, you've scared me a bit with the transmission story. The engine in this boat is new, but the xmission is original '86. I'm not sure that $10k would cover all that could possibly not work(autopilot, hot water heater,misc pumps) plus the xmission. Another issue is that if any one of these items doesn't work, I'd like to fix/replace it over the winter and not have to wait for spring.

Maybe I should pay to have the boat "recommissioned" so that we can do the sea trial before Winter? If I buy this boat, I plan to leave it in the same boatyard over the winter and have them do a little work. Perhaps the boatyard will cut me a deal on getting her ready for a quick sea trial...

- Kirby

[jim lee]

I'm looking at the same kinda' deal right now as catamount. The boat's been sailed hard and put away wet for a long time. I know its a project boat, I just spent a week chartering it in the San Juans. At the time I got the impression that someone wanted to get the last penny out of the 'ol girl and then dump it. Sure enough it came on the market I think the next week.

My first boat was a cheapy. Hand over a little cash and hey presto! I'm a boat owner.

The second (current) boat was factory fresh.

Buying a used boat from a broker is a totally alien experience for me. And your right, they sure talk a lot of silyness!

We're looking at the machine basically 'cause its 4 bedroom 2 bath. The entire familly fits and every kid gets his or her own room. The idea is to live on it/play about the San Juans while we're house hunting up there. Once we find a house, I can bring up our (normal) boat and put the big one back into a charter fleet.

But what a pain! The "deal" is 1,000 miles away. Being that I'm not all familler with the boat, Beneteau 445/Oceannis 440 I'm goin' nuts tryin' to figure out what the boat is worth on the market. And then there's the new experience of buying a slip up there. And what's the going price on those? Where to locate a surveyer? How does one do a "used boat with broker" deal etc etc..

I liked your go/no go on the survey plan. I certanly don't want any soon to be x-owner or broker working on something I'm going to have to keep alive in the future.

Do you really send a deposit with the bid? This is normal? I was figurin' it was like buyin' a used car. I guess its more like buyin' a house.

I have a lot to learn in a hurry about doin' boat deals. So please, keep this thread going, I'm lappin' up every word!

Thanks millions!

-jim lee

[capt lar]

jim lee - i suggest you take your time. you have a lot going here and i got that "this guy is gonna lose money" feeling. you are thinking of buying a big unknown for short term purpose. if this is a temp deal with resale already in mind, i would lease. one thing i know to be true - there is always another boat. you seem to be one who really needs that "first class broker" discussed in another thread. i don't know your area so i cannot advise, but i think you need to get some honest older dogs on your team.

kirby - no big deal to splash the boat ($250?) and run the engine, but i would deal with that part thru the legal end. remember any buyer will have these same issues and this boat seems to have real issues so you should have time. if you really like the boat, all you risk is survey $ and if you can't spend $800.- you don't want to buy any boat. if you want, send me info on where to find listing and i will respond.

capt. lar

[Catamount]

jim lee --

Indeed I found the process to be much more like buying a house than buying a car. Of course, the amount of money involved with many yachts is usually a lot more like buying a house than buying a car, too (although not in the case of my project boat -- it was equivalent to a used car).

The deposit with the offer is earnest money that shows you are a serious buyer and not just kicking tires. If you really are serious about buying the boat, and you are comfortable with the language in the offer contract about how the deposit is handled, what's the issue?

And the survey comes after you have a contract, because surveying a boat usually involves hauling it out (or splashing it if on the hard), and you generally can't do that with somebody else's boat unless you have a contract in hand. You could certainly hire a surveyor to look over a boat for you, without a contract in hand, but he wouldn't be able to have the boat hauled or do a sea trial. I think JeffH has hired surveyors to do a quick look on remotely located boats before, in order to determine whether its worth making the trip himself. But that gets to the issue of finding a surveyor.

I used the membership lists of NAMS and SAMS, and recommendations from sites like this (and the old sailnet), but ultimately I relied on the recommendation of a respected boatyard manager who had no interest in the sale. I would contact a yacht club or sailing club in the area of the boat, talk to to some boat owners about the boatyards they use for repairs, and then get a recommendation for surveyors from the boatyards...

Jim, I also want to ask you about the website you had for your refit of NoTomorrows on the Banderlog site -- it seems to be gone. I was hoping to be able to refer to it as I get into the overhaul of my new project boat. I've got to repaint my mast, fair my keel, etc... (as I remember you did with NoTomorrows). If you still have those pages backed up somewhere I would be interested in taking a look at them again, and would otherwise be interested in corresponding with you about your experiences with your boat. Mine isn't a J35, rather a Peterson 34, but it has a replacement mast that was taken from a J35...

Regards,

Tim
catamount@nh.acadia.net

[jim lee]

Capt. Lar - Your right, jumping into this as it sits does seem like a recipt for finacial disaster.

I'm not all that in love with the boat, why do this?

Hmm.. On the plus side..

I spent a week on the boat, so I have a good feel for its condition. Or at least the condition of the systems.

It comes with a slip. These seem to be in high demand in the PNW, waiting lists and all that nonsense. If we're going to move up there, we're going to need a slip.

Oh, brand spaking new engine. I think I'm the only one that's ever run it, its that new.

And the real kicker? The entire familly agreed to become live-aboards if we bought "The big four bedroom boat". I'm looking at the chance of dumping the house for more than its worth and sailing off into the sunset up in the PNW for a season. This may be the only chance I'm going to get for doing this. The oldest kid is 11, pretty soon she's going to hit 13 and life will be over as we know it.

In that light, I don't mind picking up a boat that's not in primo shape. 'Cause I can do most of the work myself. At least the systems etc. As long as the Hull's in good enough shape with no surprises and I can set it up with some real sails. (Slab reefing main with battens, a usable genoa)

But this brings us to the detractors..

It would be cheaper to buy a house up there. We could live in that 'till we find the house we really want. Then use the first house as a down payment or as a rental. Better investment, simpler etc etc.

The broker goes on about how this boat is one of the best maintained boats he's ever seen. Bla bla bla.. Is the owner thinking along these same lines? Are they living in a fantisy world? If this is the case, I don't think we're ever going to see eye to eye on the value of this poor thing.

If I -do- buy it because of these special circumstanses, am I now stuck with boat that I'll never be able to get rid of? I ended up giving my first boat away. It was cheap, no one was interested and we were in a hurry to leave on the new boat for a Pacific cruise.

So, maybe I'll just wait a month or so and see what happens. Either I'm right and the price will drop, or I'm wrong and some one else will snap up this great deal I'm too dumb to jump on. The're still making boats and marina slips do show up from time to time..

Whaa whaa whaa.. Thousands die in Pakistan and here I'm whining in public about whether I should by a yacht or not. Sorry, I'll shut up about it now.

Catamount - Banderlog, I sold the company. Hence I pulled all the personal stuff off the site before handing it over.

Most of its over here : http://www.garlic.com/~jimlee/NoTomo...rowsRefit.html

Some of the links are broken, things like the forums and some images. But its still readable. I've not yet put the time into re-assembling the site. After Banderlog, I was kinda' burnt out on the internet and took a bit of a break from it.

Now about No Tomorrows and the entire J/35 as a cruiser thing.. I can go on for hours on that! What would you like to know? :-)

-jim lee