Tips on Buying a New Boat and/or Considering Charter

[Fluer de Mer]

Lessons Learned - As someone who recently purchased a factory-new boat and posted about my experiences on this site, I’ve received a number of private emails from potential buyers asking for advice (these have increased this past week because of the Strictly Sail Pacific Boat Show). As such, below is a list of tips/tricks/traps that we wished that we had [and probably should have] known prior to our purchase, but hope others who are contemplating setting sail with a new factory ordered boat might find of value:

1. If you are purchasing a new boat, it helps greatly to buy one from a market leader because they are invested in maintaining their brand through quality and customer satisfaction.

2. Don’t hire the first boat salesperson/sales-manager you meet (at last year’s boat show in our case). We’ve come to learn that many marine sales people are like bad car salespeople with good people skills but woefully inadequate knowledge of the product. Make sure that they have a) relevant certifications on their bios/resumes (not just sales or ‘industry’ awards), b) good communication skills, c) thorough knowledge of the overall process, d) are capable of being an advocate, e) a commitment to be responsive, f) and perhaps most importantly - deep knowledge of the boat itself (ours did not), including the available and/or desirable options available. As for us, we were unfortunately negligent here and this was, we think, our original sin (see #3 for what we would do if starting fresh).

3. Insist on having the dealership’s head of service involved upfront while you are configuring the boat [and also the owner of the company]. We’ve come to appreciate this person’s deep knowledge of the manufacturer and the boat itself and would have preferred having their counsel up front before putting the order in. Given how and where we are sailing the boat, we would have added additional 3rd party items [that the head of service would have advised us on] in our original purchase if we had had his counsel prior to ordering.

4. Make sure the dealer goes over the entire detailed process and timing of the journey you are undertaking and have them do it up-front. They should be able to clearly tell you what to expect… from configuring everything standard and optional on the boat, to ordering, to financing, to obtaining insurance, to transport, to commissioning, to delivery, to post-delivery service 5-10 years and beyond…AND make sure you understand who is responsible for what and when. Although we repeatedly told the salesperson that this was our first purchase and needed guidance and understanding of the process, we were given almost no detailed explanation of the road that we were on and where it led to. We had constant surprises that should have been foreseen and communicated by the salesperson along the way that caused us to scramble.

5. For all 3rd party options ordered (sails, biminis, dodgers, fans, electronics, water filters, inverters, isolators, solar, etc.) make sure you see the actual quotes from the 3rd party vendors and have them attached to the Purchase Agreement so that you know exactly what is included in those quotes and their price. Also, talk the 3rd party vendors directly to ensure that you hear their recommendations directly on what to order as they are going to know a great deal more than the dealer’s salesperson. In our case, we came to find that the quotes in the Purchase Agreement were merely price guestimates made by the dealer’s salesperson. After the boat was ordered, several subsequent and surprising invoices were sent to us with higher prices. To the dealership owner’s credit, they absorbed these costs but they created unnecessary stress.

6. Beware of the Purchase Agreement that the salesperson sends you. We were sent an official looking Agreement that was so heavily tilted to the dealer that it would be fair to say that it reflected a ‘Heads we win, Tails you Loose’ philosophy. This caused undo stress and eroded trust. Next time we will insist [at a minimum] on using the Yacht Brokers Association Standard Professional Purchase and Sales Agreement. Separately, check and recheck all the terms of any/all agreements…Purchase, Loan, Insurance, etc…. as we found that we had to point out several material mistakes as the documents were passed back and forth. I’m not saying that these mistakes were intentional. We all make mistakes (as this posting shows, we made plenty of them ourselves), but they did happen so given the size of the transaction, it bears noting.

7. Don’t let high pressure sales tactics force your hand. The salesperson told us that prices were going up 15% if we didn’t sign immediately. This caused stress and eroded trust greatly throughout the entire subsequent process.

8. Never pay 100% up front…always hold a meaningful amount of dollars back until satisfactory delivery. This was a huge mistake for us and we should have known better. By doing this, we took on more stress than was necessary and just as importantly, trust was eroded. We will never do this again.

9. Be excruciatingly specific in your Purchase Agreement and attach addendums that lay everything out. Also, don’t trust promises made on the phone…put everything in emails. This was helpful to us, because we were repeatedly able to point to addendums and emails to refresh memories on commitments made…which to the dealership’s credit, were honored and trust restored.

10. Be clear in the Purchase Agreement about who and where every item will be installed and by whom (OEM, dealer, or 3rd party). We had several surprises that ended out OK because of the high reputational standards of the manufacturer, the owner of the dealership, and the quality of the dealer’s head of service, but caused undue stress.

11. If you are taking out a boat loan, get your credit score early (upgrade it if you can in advance) so that you know what it is - and get loan approval before committing to buy the boat. We financed a portion of our purchase and had one finance company credit-score-scammed us by saying our score was significantly lower than it actually was. Shop around. If you do, you will see a large variance in quality, knowledge, professionalism, rates, and terms. This same advice applies to insurance vendors/brokers.

12. Join online forums like Cruisers & Sailing Forum …. The contributors to these have lots of experiences that we were able to use to our great benefit. Be factual, courteous, and grateful. I believe that the boat OEMs monitor these sites and if things turn sideways are motivated to help as it is their reputation both online and on-the-line.

13. Really understand the charter business if you are contemplating it…and shop around. Although we ultimately passed on putting the boat into charter, we seriously considered it. In our diligence we found that the price of buying a new boat can vary greatly depending on the Charter company you purchase it through. In the San Francisco Bay Area, the apples-to-apples price quote variances were as much as 30%. In fact, the largest Charter company in the area simply padded and uplifted the boat’s price such that they effectively took nearly all of the tax benefits for themselves. Also, if financing, make sure you get the correct loan type as charter mortgages carry significantly higher interest rates and restrictions…and the same goes for the insurance. If you let the charter company tell you otherwise (some tried with us) you risk your lender calling your loan prematurely or an insurance company not having to pay on a claim. Lastly, engage a CPA that can give you real/unfettered advice because some forms of Chartering, in combination with other fairly standard deductions, often triggers an IRS audit.