Asking Price vs Selling Price - Caribbean Cats?

[asb]

Last few weeks I have been talking to some distributors of Cat companies. Here are my conclusions:

The Cat companies and their distributors are ready to discuss discounts on the new boat purchases. They told me that they have special prices before I asked. This wasn't the case when I bought my last boat few years ago. This is good news for us buyers.

I have the impression that new boat orders are sharply declining and the companies will be pushed for deeper discounts when the summer is over, for 2010 deliveries.

I haven't concluded the purchase yet, because it is summer here and in winter (October-November) it is ideal time to start hard bargaining. I know from experience that best prices you can get when it is snowing!! Not forgetting the markets will also slip further then.

So don't be shy to ask for discounts. This is more so for the used boats. The chances are high that you get the price you want.

[asb]

I did a quick search in Yachtworld. The numbers are the totals for sale at the moment. And only in Yachworld. The numbers must be higher when we consider the other websites.

It is definitely a "buyers market" at the moment. Good time for buying, I guess.

Lagoon - 270

Fountaine Pajot - 247

Leopard - 63

Catana - 90

Privilege - 122

[Palarran]

The number of boats available on Yachtworld by manufacturer has gone up but not significantly. I've been following the FP Bahia's for almost two years now and they tend to have about 40 for sale with 10 of them being double listings of the same boat. But, I'd say that of the 30 different boats, twenty of them have been there for over a year. The charter boat asking price has come down from $280k to $250k.

It would be nice to have a forum member post there sale data sometime. I've yet to see someone say "Listed at $380k, offered $300, settled at $340k"

If your going after a charter cat in the caribbean, it's my opinion that next April is the time to get really serious. As most know, charter bookings are down 30% this year and the companies are discounting the rates from 20 to 30%. It never really was a great deal to own a charter boat anyway so with this drop, many owners are going to unload. Supply = high, Demand = Low, Add monthly costs and depreciation and you get serious discounts. For the FP Bahia, I'm convinced that next year you will be able to buy a 7 or 8 year old charter version for under $200k. Which, when I look at that boat, is what it should be.

[jkd]

Originally Posted by rigamarole

It would be nice to have a forum member post there sale data sometime. I've yet to see someone say "Listed at $380k, offered $300, settled at $340k"

Ahh, this is the problem with human nature..... no one wants to be thought of as a schmuck when someone says later.. 'oh, I could have bought that boat for (fill in the blank (less))'.
But here is a sample; A friend made an offer (sight unseen) on this boat...2000 Robertson and Caine Leopard 38 Sail Boat For Sale - www.yachtworld.com
Made an offer of 138k with a new rib and outboard, the engines rebuilt (offer accepted) but backed out as a 2 boat owner and financing issues.
It's tough to get a real feel for what's going on unless you know the secret handshake I guess.

John

[asb]

Originally Posted by jkd

A friend made an offer (sight unseen) on this boat...2000 Robertson and Caine Leopard 38 Sail Boat For Sale - www.yachtworld.com
Made an offer of 138k with a new rib and outboard, the engines rebuilt (offer accepted) but backed out as a 2 boat owner and financing issues.
It's tough to get a real feel for what's going on unless you know the secret handshake I guess.
John

I guess he could have asked for more. He offered less than %10 discount on the asked price.

Here in East Med you can normally get %15-20 discount on asked prices for used boats. Ok, sometimes the owners put some bargaining margin on top of their desired prices, but this only increases the discount percentage.

Otherwise their boats stays "for sale" many months (or years) to come.

At the end of the day, the market conditions and the financial health of the buyers dictate the end price.

And as crisis deepens, it is definitely a "buyers market". Good for the buyers, bad for the sellers.

[katja&david]

Looking for a Cat (38-41 / Lagoon or FP) we had been told to cut the offers in half. We tried by 30% off, but are still on-shore.

[Dockhead]

There's no hard and fast rule. Some boats are grossly overpriced, and the owners know it, and will bargain like crazy. Some boats are grossly overpriced, and the owners don't know it, and won't budge. Some boats are already cut-price, and the prices are more or less firm. In all my shopping this year I have run across all of these scenarios. The boat we finally settled on could be bargained down only 12% from the asking price, but it was priced aggressively to begin with. The boat we almost bought but didn't ended up at 35% off, and was still no bargain.

Another issue just to complicate things is what turns up in the survey.

There's really no way to know what the right price is, without doing a lot of research, and actually getting out there and bargaining. You should think twice if your first offer is accepted. You should make a few offers that get rejected before you start to think you have a feel of what is possible.

In this market another big thing is to find a really motivated seller. There are a few of them out there. Most boats -- not all! -- are selling slower than they otherwise would, and here are a few buyers -- not all! -- who need to unload their boats and will make you a particularly good bargain. Unfortunately, such seller aren't usually the ones who are selling the most desirable boats.

[muskoka]

Ours was listed at $346K and we bought her for $285K in a healthy market (2007). That's 18% off the asking price. The boat had originally been listed at $370K about 10 months prior.

My experience has been that you can get quite remarkable discounts in good and bad markets. We managed to similarly discount the price when buying our first boat. Obviously a lousy economic climate gives the buyer more negotiating power.

Our basic strategy is:
1. Tons of research & spreadsheets so we know the new & used cost of the boat and every major option;
2. Be willing to put in an offer based upon what you think the boat is worth (not what the Owner or Broker think its worth). Don't budge and don't spend any time chatting about why it may be worth more as this tends to legitimize the asking price in the eyes of the vendor. Be polite but firm!
3. Cash in hand is a must.
4. Keep the validity of the offer very short - we usually insist on an agreement by midnight the same day. If accepted the survey is completed within a few days and everything finalized.

[jdoe71]

I recently saw a listing of boats like ours that had sold on Yachtworld in the last few years. Very interesting. Junk boats were being discounted heavily. OK boats with maybe some warts or needing equipment were being discounted 20%. But good boats, with good equipment and maintenance, were selling for damn near what they were listed at. There was the odd exception where a real good boat sold below what it should have, estate sales, owner lost job, etc., but in general there were no fire sales for good boats, well equipped and well maintained.

[muskoka]

I forgot to add:

Our catamaran was just 2 years old when purchased and she had 50 hours on the primary engines and 65 hours on the genset. She was barely used and in mint condition with a load of rather pricey options (genset / aircon / owners version / engine upgrades / extra sails).

[Palarran]

Originally Posted by muskoka

I forgot to add:

Our catamaran was just 2 years old when purchased and she had 50 hours on the primary engines and 65 hours on the genset. She was barely used and in mint condition with a load of rather pricey options (genset / aircon / owners version / engine upgrades / extra sails).

I liked the Lavezzi we chartered a few years ago. Sailed great. Was the boat being set up for the charter market then pulled out?

[Palarran]

Another factor in the catamaran market that hasn't been addressed is the huge increase in supply coming out of the charter market. If you think back 10 years ago, there where few cats being chartered in the Caribbean. Then in a very short time the companies put a lot of cat's into their fleet. These "first generation" cats, say from 2002 to 2005, are coming on the market an a high rate. The absorbsion rate may not match the supply rate.

[Mark424]

Not sure how the purchase cycle works on the east coast, or Caribbean, but last time I bought a boat in California, it went like this.

1. Make an Offer
2. Negotiate Price
3. Settle on Price
4. Make refundable Deposit
5. Sea Trial (no sea trial before deposit, they don't want joy riders)
6. Survey
7. Go back to seller with items found during the survey and negotiate adjustments. If you didn't like the sea trial or couldn't agree on survey compensation, you could walk away with your deposit repaid in full.
8. Make Binding commitment.

So my question is, do you do your hard bargaining upfront, or bargain a bit and plan to play hardball after the survey. My feeling is if you bargain hard upfront, you are basically in an "as-is" scenario as they are less likely to make adjustments for items found in the survey. You are basically treating the survey as a decision whether to walk. If you don't bargain hard upfront, you could be in a position where the survey doesn't find that much and have a hard time justifying a significant adjustment.

Would appreciate your thoughts and what has worked for you.

Mark

[muskoka]

Mark,

I bargain hard up-front. The sea trial, survey etc all cost money so I want a price established before I spend a dime on any due diligence.

If a significant defect shows up during the DD I'll adjust my offer accordingly. If it's something that is normal wear & tear, or something that can be fixed for under $500., then I'm inclined to simply proceed per the agreed price.

Cheers, Cameron

[muskoka]

Originally Posted by rigamarole

I liked the Lavezzi we chartered a few years ago. Sailed great. Was the boat being set up for the charter market then pulled out?

It was set up for use by the Owner and his family only.

The gist of it was that his family didn't take to sailing despite having a rather nice boat at their disposal. The boat was financed so between servicing his mortgage and running costs he was spending a bomb every month on something that was depreciating. I know for a fact that he lost upwards of $125K during the 2 years he owned the boat - ouch!

A lot of builders now have boats in production from which the Owners have walked away from their deposits. In my club alone I know one fellow who decided to lose his deposit rather than proceed with a charter company purchase. Another fellow has just got a pretty good deal on a Lagoon which another Owner had walked away from.

I think in the past, used cats held their value fairly well due to relatively tight supply. I suspect with their increasing prevalence in Charter fleets and private ownership there will be a lot of supply and not much demand during this economic downturn.