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Old 16-10-2012, 00:13   #1
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Sailboat pricing

So my wife and I are finishing our refit, and are looking to buy another boat, a little larger and a little more room. Problem is, the boats we like aren't valued at, or even near the asking price.
We would like to buy a well maintained boat from the mid 80's, but the loan value is nearly half of what the owner feels the boat is valued at.
Is this the experience of most people who have to finance their boat dreams?
Do most people who have larger 40-50 foot sailboats just hold out for another wealthy person (by this I merely mean that they do not have to finance several hundred thousand $$ for a boat) who wants to own a decent sailboat?

I am feeling a little let down because we really like the boat, we would even be willing to finance the asking price, but because the 'blue book' value is set, there seems to be no hope.

Comments? Ideas?

CC
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Old 16-10-2012, 00:56   #2
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Re: Sailboat pricing

Find a lender that will finance on the appraised value rather than the "book" value.
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Old 16-10-2012, 04:06   #3
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Re: Sailboat pricing

There are no hard and fast rules. Certain boats are a dime a dozen, there are desperate sellers here and there, but a surprising number of nice boats are not easy to buy and not easy to negotiate the price, and the sellers seem to be willing to sit on them for years if necessary. On top of the problem with financing, it is really hard to know whether you are overpaying or not.

I have used soldboats.com, but I have heard that the numbers are padded with a lot of false reports of brokers reporting the initial asking price rather than the real transacted price.

My only advice is to not be in a hurry, look at a whole lot of boats to get a feel for what there is in the market, don't allow yourself to fall in love with any one boat (it just means you haven't seen enough of them), and get plugging away at it until you make a deal you are entirely comfortable with.

A huge difference between book value and asking price would set off some alarms in my own mind, never mind the problem with financing. I would say it's somewhat risky buying a boat for far above book value.

If you're really sure it's a good deal and nevertheless the book value is far off the price, then you will either have to take a smaller loan (which is not a bad thing in itself) or try to find a lender who will ignore book value, as suggested above, and settle for an appraisal. But I wouldn't hope too intensely for that -- after the mortgage crisis, banks are under tremendous pressure not to have overvalued collateral, and in my experience they are extremely conservative now about valuation of collateral, much more so than previously.
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Old 16-10-2012, 13:33   #4
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Dockhead,

Thank you for that sound advice. I don't like feeling like I need to hurry, and sometimes it is nice to be reminded that there will always be another boat and not to 'fall in love' before purchase.

CC
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Old 16-10-2012, 13:45   #5
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Re: Sailboat pricing

You can always make an offer.
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Old 16-10-2012, 14:12   #6
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Re: Sailboat pricing

I have been in the market for a boat for about six months and here are some of my experiences.

First off I split buyers into two groups emotional buyers and logical buyers. The emotional buyers are the ones that fall in love with a boat or hear a boat talk to them. Logical buyers take into account things like book value, loan value, docking cost and similar things.

I have never understood how sellers set their price. I spoke to a broker on the phone yesterday about a boat listed on the internet. He told me the boat sold in less than a week for around $US65,000. The NADA value for the boat when I checked it out was $US61,000, which means a bank will probably loan 90% of that. I have seen one other similar boat for $US75,000 which I am seriously considering; but as a rule boats like this are around $US100,000 or so. Some of the ones with an asking price of $US100,000 have been on the market for well over a year.

Also looking at some bigger and more expensive boats that seem to be even more over priced from the NADA numbers. The brokers almost laugh when you mention NADA or BUC, but the banks do laugh when you mention the asking price.

Fortunately I just want a boat, I don't need a boat. I am also not sure if I would be happier with the smaller less expensive boat I would use around my home in Florida or with a larger more expensive boat I would be able to cruise out of country for months or years.

When I first started my current boat search I was looking at a completely different type of boat than I am now looking at. The reason for the change was research on the internet and looking at and sailing on different boats. There is no real right or wrong answer about the best boat, only about the best boat to fit your needs and budget. The best way to narrow down your choice is look at lots of boats once you have set something of a budget.
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Old 16-10-2012, 14:30   #7
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Re: Sailboat pricing

Quote:
Originally Posted by Z1Krider View Post
Is this the experience of most people who have to finance their boat dreams?
Do most people who have larger 40-50 foot sailboats just hold out for another wealthy person (by this I merely mean that they do not have to finance several hundred thousand $$ for a boat) who wants to own a decent sailboat?
Think about why you want to buy a boat in this age range, then think about why you would want to sell a boat in this age range, if you owned one. You wouldn't want to, because a boat in this age range is at it's prime in terms of maintenance cost and functionality.

There are many homeowners and boat owners that will throw out a price on their home or boat, which at this age often have significant variations from the "norm", looking for that "perfect buyer" who absolutely needs a boat exactly like that one, and will pay a premium to get it. this is in comparison to the "normal" buyer who only wants half of the equipment that is installed, and does not want to pay for the unwanted equipment, and in fact will demand a discount for the responsibility of having to maintain that unwanted equipment.

Other owners see those prices, and start throwing out their own lines.

I suggest that, if you know what you want and how much you want to pay, tell that information to a broker and put him on the job of finding a motivated seller. I'm not sure how well this will work in the boat market, but I think it's a good approach in general. Alternatively, you could do it yourself, but a broker creates a more-or-less disinterested and objective party that may give an advantage in this type of negotiation.
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Old 16-10-2012, 14:37   #8
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Re: Sailboat pricing

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Originally Posted by tomfl View Post
..............
Also looking at some bigger and more expensive boats that seem to be even more over priced from the NADA numbers. The brokers almost laugh when you mention NADA or BUC, but the banks do laugh when you mention the asking price.
...............
Yes, you have to agree with the broker, that those 'book prices' are unrealistically high.

Of course, books don't write checks, and you do.

I actually get a kick out of 'book prices' for a number of reasons. First of all, unlike the car market, the used boat market is too small and too geographically diversified for any accurate measurements. Secondly, as so often mentioned, equipment and more importantly, condition is so different from boat to boat, that it really is difficult to peg a price, especially in a slow market that currently exists. At best they are a very, very rough indication of the price range.
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Old 16-10-2012, 15:18   #9
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Re: Sailboat pricing

Quote:
Originally Posted by tomfl View Post
I have been in the market for a boat for about six months and here are some of my experiences.

First off I split buyers into two groups emotional buyers and logical buyers. The emotional buyers are the ones that fall in love with a boat or hear a boat talk to them. Logical buyers take into account things like book value, loan value, docking cost and similar things.
There are two kinds of people in this world, those that lump people into two categories, and those that don't. I'm not sure which statement, yours or mine, is supposed to be the joke.

I recently bought. It took a long time, and we went through several iterations. I made lists, gave each boat we viewed the test out of Vigor's book, made budgets, basically wasted hundreds if not thousands of man-hours (mine) on boats I didn't buy for various reasons (the biggest being the sellers wanted way too much). We ended up buying a boat that the admiral and I felt "spoke to us." It was radically different from what we originally thought we wanted. It still got the full treatment, and people tell me that I got a great deal. Personally, I think we did OK on price, not great, but since we paid within $1000 of BUC it all worked out.

So which category am I in again? We bought a boat totally unlike what we thought we wanted because it "spoke to us" but only after rigorous analysis... Both? None?

Quote:
Originally Posted by tomfl View Post
I have never understood how sellers set their price. I spoke to a broker on the phone yesterday about a boat listed on the internet. He told me the boat sold in less than a week for around $US65,000. The NADA value for the boat when I checked it out was $US61,000, which means a bank will probably loan 90% of that. I have seen one other similar boat for $US75,000 which I am seriously considering; but as a rule boats like this are around $US100,000 or so. Some of the ones with an asking price of $US100,000 have been on the market for well over a year.

Also looking at some bigger and more expensive boats that seem to be even more over priced from the NADA numbers. The brokers almost laugh when you mention NADA or BUC, but the banks do laugh when you mention the asking price.
A boat is worth the intersection of what someone will pay for it, and what the seller will take for it. Nothing more, nothing less. There is no way to figure it out in advance. Things like NADA and BUC vary from gross approximation to outright fantasy. It's too bad that they are so heavily relied upon.

When I made my offers (or even talked numbers), it was with a mountain of justification. I was looking at a decent Sabre, that needed a ton of refit. I made an estimated budget of what it was going to take to put the boat right, determined what the finished product would be worth to me to pay (a totally personal number), and then subtracted. The broker about choked when I gave him my number. It's not personal, it's business. And the crazy thing is, my number wasn't a low-ball or even an overly low offer. But we didn't find that intersection between what I was willing to part with, and what they were willing to take. So we moved on. The boat is still for sale at the same price, and still rotting away.

On another, I offered the max I could borrow for it. The owner got all pissy and countered back at "nothing less than full asking price." He's absolutely free to do that, but no-one is going to purchase that boat because no-one can finance his price. Is the boat worth more? Possibly, we'll never know, because we never found the intersection between what I'm willing to spend and what he's willing to take. A bummer, because we liked that boat a lot. But it's business, and so we moved on.

This is a repeating theme. And after everything, the only thing I can tell you is that it's impossible to know what a boat is worth, because it's worth different amounts to different people. The owner has a number, the brokers have a number, the bank has a number (if financing), the insurance companies have a number, and all prospective buyers have different numbers. Good luck on getting any two of those to agree, much less three or more.

Quote:
Originally Posted by tomfl View Post
When I first started my current boat search I was looking at a completely different type of boat than I am now looking at. The reason for the change was research on the internet and looking at and sailing on different boats. There is no real right or wrong answer about the best boat, only about the best boat to fit your needs and budget. The best way to narrow down your choice is look at lots of boats once you have set something of a budget.
I would suggest that you start by making a set of lists. Things your prospective boat must have, things you want it to have, and things that would be nice to have. Then make a second set of things it must not have, things you don't want, and things you're not overly fond of. Then evaluate a prospective boat based on those lists. As you see more and more boats, you'll adjust your lists. There might be a slick feature you see that goes on the "want it" list. Or maybe you see a head layout that is terrible, and thus finds its way onto the "can't have" list.

As you evaluate boats against your lists, you'll begin to narrow things down. Also, look at everything you can, even if at first thought it doesn't seem like a good match. Put it through the "lists test" and see. Might surprise yourself. We did.

In the end, you have to decide what any particular boat is worth *to you.* The only good deal is one you are happy with. Even if everyone else tells you that you got a steal, if you think you overpaid, then you overpaid. Conversely, don't let some armchair oversight on the Internet stop you from paying what *you think* a boat is worth. They aren't cutting the check. Go with what makes you happy. Or, in some of our cases, what makes the wife happy... Either way, you end up with a boat you like, and isn't that the goal anyway?

JRM
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Old 16-10-2012, 15:45   #10
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Re: Sailboat pricing

If you buy a boat within a few years old (less than 5) NADA and BUC don't list a value so appraised value is all the banks can use.
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Old 16-10-2012, 16:03   #11
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Re: Sailboat pricing

Quote:
Originally Posted by Z1Krider View Post
Problem is, the boats we like aren't valued at, or even near the asking price.
We would like to buy a well maintained boat from the mid 80's, but the loan value is nearly half of what the owner feels the boat is valued at.

Comments? Ideas?

CC
Comments? I would imagine that no loan company is going to lend such a substantial percentage of a boats value that there becomes a real risk of the owner throwing the keys at them and walking away. This was after all the pernicious behaviour that inverted the home loan market just a few years ago. Therefore for a boat they will probably want some substantial headroom between what they will lend and the price it will fetch in some short terming selling endeavour.

This loan value vs asking price doesn't reflect badly on the seller, it really says more about the gap that the buyer needs to fill with real (cash) money.

Ideas? Look for a boat with a value in monetry terms is the point where the seller is willing to sell, the loan company is willing to lend and that the buyer is willing to make up the difference in cash.
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Old 16-10-2012, 16:14   #12
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Re: Sailboat pricing

After seeing the other comments, and thinking back on past experiences, I do think the best approach is to choose the amount of money you are able to spend, and attempt to find the best boat that can be obtained at that price.

If you cannot find a boat that meets your needs at that price, either change your needs or raise your price.
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Old 16-10-2012, 16:25   #13
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Re: Sailboat pricing

I've just never understood the whole idea of getting into debt over a depreciating liability.

What's the point?

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Old 16-10-2012, 16:32   #14
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Re: Sailboat pricing

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I've just never understood the whole idea of getting into debt over a depreciating liability.

What's the point?

Life is a depreciating liability. When you die, your assets go to your heirs, but your debts go back to your debtors!

Have you been reading Rich Dad/Poor Dad? If so, you can PM me and I'll get into some details about the internal flaws with his overall philosophy (though he does have many excellent ideas)
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Old 16-10-2012, 16:37   #15
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Re: Sailboat pricing

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Life is a depreciating liability. When you die, your assets go to your heirs, but your debts go back to your debtors!

Have you been reading Rich Dad/Poor Dad? If so, you can PM me and I'll get into some details about the internal flaws with his overall philosophy (though he does have many excellent ideas)
I read it years ago, and saw quite a few flaws too.

I just have never saw any good reason to get into debt over something like a car, motorcycle or boat that loses it's value so rapidly.

I'll just stick to paying cash.

(And yes, my house, motorcycles, cars and boat are all debt free.)
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