Asking Price vs Selling Price - Caribbean Cats?

[Augusto]

Back from a week in Miami and one day looking at Cats and this is what I can report. Broker said that back in January they were looking for other jobs, they say it is getting better. Prices of used Cats will for sure still drop, simply because the price of NEW cats are dropping. I visited the Catamaran Co. 46 Leopard, great boat full of innovative features and a USD 80+ thousand dollar price reduction, going for USD 599 thousand. If thats so, how much should a 2002/3 St. Francis 44 go for? USD 400 thousand asked price?
I also think the design changes in the new boats are so great that it might be wise to wait for them to come to the used market in 5 years. BTW keeping the money in the stock market while thinking about these decisions has been great, the Dow just broke 10,000 and Goldman and Apple are over 190/share!!!!
OHHH that opportunity cost!!!!!!!

[Tropic Cat]

Originally Posted by Augusto

...
......I also think the design changes in the new boats are so great that it might be wise to wait for them to come to the used market in 5 years....

5 years? I could circumnavigate and have sold the boat in 5 years.

At the risk of sounding negative... Why not just wait 30 years for your boat purchase as I'm certain new innovations in boat design would justify it... right? In the mean time you could just buy a couple of sailing magazine subscriptions. You'll come out well ahead in the end.

[VERTIGO]

Originally Posted by Tropic Cat

5 years? I could circumnavigate and have sold the boat in 5 years.

I agree, but at what additional cost?? Boat prices are not coming down 3-$5000 a year, but rather 30-$50,000 a drop.(on a $500,000 boat) I hate to say but IMO boats have a very rough year ahead of them still. I do not think it can last 5 years but also do not think we have really seen the bottom yet either. However also I would think that owners will (can) only go so far.
I am one of those owners, not in the scale of what I curently am looking to buy, but I paid $43,000, give or take, boat has 42 hours on it, full 4 year warranty, 2008 model, highest offer??? $26,000 I will bring it out and sink the thing before I sell it for that, however I will use it for a year or two and will be more willing to sell for mid 20's maybe. Beyond what I owe I would have to pay someone $5,000 to take my boat. Owners have to be hurting, in which I feel bad as I am one of them. If I can pay $300,000 instead of $350,000 just by waiting a year, $50,000 is a very good savings for 1 year.
I would think that if you are not selling then who cares, I was only selling because of a PCS, but I like my boat and I will keep it in storage, however I am realistic in the fact some "have" to sell and it drives the resale price of mine down.
I think it really sucks, but I do not feel bad enough to make a purchase to only see my "investment" lose 3 times more than average in a year, it just makes sense to wait.

[Tropic Cat]

Ahhhh....I see your point.

Let me just ask.. since when has a boat purchase ever made financial sense? We own boats because we want them. None of us can argue they are a necessity.

Usually, we want them now.

The age old advice is to buy a boat for the way you'll use it today, not what you plan to do 5 years from now. Life happens and plans change but the right boat can last a lifetime.

Just my opinion.

[VERTIGO]

I agree, and if boat prices were at a "trickle" that would be one thing, but at the rate they are heading south is another. I want one NOW and I would be willing to give up depreciation, but not market adjustment, the losses are too big or in my situation the "gains" are too big. IMO the boats have one more year to go. Not to go back to the housing market but I believe the analogy is the same. I have a house, I would sell but many others "have" to sell, allot of them. Once those people thin out and the killer deals start to go away, which also might be 3-5 years, I should start to see a fair market return. The only thing is boats are going to be different in the aspect that a boat is never going to go back up, they never gain. So IMO it is going to take a very long time for boat values to even get back to normal. Normal being stabilized depreciation.

[muskoka]

Vertigo, I suppose the prospect of buying a boat puts you on the horns of a dilemma! Gratification now versus delayed gratification + financial benefits.

My two cents: If you're planning to go cruising in the next year then go out and buy your boat for that purpose with the full knowledge that it'll be depreciating and deflating thus doubly knocking your resale value down the road. Calculate it into your finances and proceed accordingly (ie buy less boat) - you only live once!

If you're just buying it for casual recreation then it makes absolute sense to wait. Or, if you want something now then compromise and put the smallest amount possible into the boat knowing it'll get hammered at resale.

Tropic made the point that you should buy what you need now, not in 5 years. I think that's pretty sound advice under any circumstance. And doubly so considering the dire market prospects for used boats in the foreseeable future.

PS - I selected Option 1: We're heading off cruising in about 4 weeks with an unlimited agenda. Our compromise: We bought less boat than we might have otherwise knowing that we'll basically have to write down the value at resale time beyond simple depreciation. I doubt it'll have any negative impact upon our enjoyment of the coming adventure.

[VERTIGO]

Muskoka, I completely agree, but to have full disclosure, not only did I buy a $43,000 boat that took a dive, I also purchased a H2 (used $32,000 now maybe $24,000) to pull it, both pre $4 a gal gas and economy crash. If I make another decision like those my wife will have my balls. My situation is unique, to each their own.
I do try to justify in my own mind to just wait it out, my thing is I am OK with depreciation but not market adjustment.

[smj]

Vertigo, we have owned 5 cats over the past 17 years and have always sold for more than what we payed. The one we have for sale now may be the exception. Cats are steady gaining popularity and as long as this occurs I believe they are a good buy. If you look at the price of a cat in say 2003 the asking price for the same cat now is usually quite a bit higher. Just my take on things.

[Intentional Drifter]

Just for another point of view, you might find the following of interest:

THE MULTIHULL COMPANY Newsletter

ID

[Palarran]

ID,
I like Phil. He is one knowledgable broker who's been at it a long time and you really can't disregard his opinion and observations. But, he really isn't into selling x charter boats. This isn't an opinion, it's fact, right from Phil. It is to much work and after sale headaches. So, Phil's slant on it - now this is my opinion - is skewed to help current owners. He, and all brokers, are going to do whatever they can to keep the market price of cats high. His speciality, good condition owner cat's, are a rarer breed then caribbean charter cats so they may be holding somewhat well. But, maybe not as well as he indicates.

Anybody who has studied Yachtworld for the last two years and watched the prices of charter cats, has to have seen the price's drop. Some from $300k to $250k, but others from $500k to $350k. Earlier this year my stratagy was going to be find the best condition, lowest price boat in the model I want, and lowball it 20 to 30%. Now, I'm thinking I'll look more at the mid-tier boats and make offers on them. They are dropping more then the cheaper ones, in my observations and opinion.

[Intentional Drifter]

Indeed. We all know that the actual "value" is what someone will pay for it. But, like you, I find Phil's observations interesting, since he does tend to view things from a world market perspective rather than only a US market.

Personally, I think the boat market is not unlike what going on in the stock market. Some indications of life, with brief periods of excitement tempered by some practical realities. But, I wouldn't expect to see any long-lasting trends one way or another until the broader economy gets going again.

One of the things that does concern me in the mid-size cat market is the need for the larger production builders to cut costs in order to keep a factory going yet produce boats at a price point that people will buy. I've been seeing some pretty shoddy practices in that market that are covered up by the gloss of "new". Quality and strength are expensive things to get in a boat. A builder can only cut so much before safety and durability becomes compromised.

ID

[VERTIGO]

ID,
Very good article, but I find it to go all over the place. Really did not give me any clarity. Almost like a political speech, it seems to appease everyone. On one hand it said the boats priced as Euro are on the rise as the dollar sinks, but in the next statement he is advising they lower the price to compensate.
I am keeping a good eye on the market as well and really do not see boats flying off the market, even the drastically reduced ones. I have seen about 3 now show up as sale pending only to see the "sale pending" disappear.
The day one of these articles can point to actual stats and not be based on opinion, I will be a bit more convinced. I would think if the actual numbers were in their favor they would make headlines in all these articles and lean away from the "in my opinion" statement made by all these "the Market has hit bottom and is on the rise" articles.

[Intentional Drifter]

Originally Posted by VERTIGO

ID,
The day one of these articles can point to actual stats and not be based on opinion, I will be a bit more convinced.

You and me, both!

ID

[talus]

I think Phil is making a serious mistake by confusing the stock market with the economy. His comment: "I was pleased to see that our economy appears to be bouncing back. How well I recall preparing for Annapolis last October as the stock market was plunging, wondering if anyone would show up at all." clearly indicates this.

I could go on for a while about this but there are enough advisers and economists that say otherwise: "The theory that the stock market is a reliable leading indicator [of economic growth] is a myth easily shattered by simple observation of the facts."

Mish's Global Economic Trend Analysis: Is the Stock Market a Leading Indicator?

I concur with rigamarole. Brokers jobs are to sell boats. As many as possible. As quickly as possible. They also get to say whatever they want in order to keep the market rolling and their clients (buyers and sellers) happy.

I don't fully agree with brokers wanting to retain "high prices". While brokers make more commission on higher priced boats, selling lots of boats (quantity) will do the trick as well. However, when the stock market tanks and people get worried about the future, ALL sales tend to stagnate, especially luxury items like boats. This puts a serious dent in a brokers income.

That said, and I think we discussed it already, brokers NEED listings. Broker don't want you and your neighbor making a private deal -- they loose commission. As well, Broker "A" doesn't really want to spend time with you on the dock looking at boats --- that is a waste of HIS time. Broker "A" would rather have a bunch of nice clean listings and have Broker "B" do all the leg work and client hand holding. Then as "A" has to do is collect his part of the commission. How do you get the nice clean listings? By being a salesman (aka broker) and marketing the "strong up-tick" in sales and the "recent flurry of buying activity". This is psychological warfare designed to keep the sellers happy and motivate the buyer to buy "before it's too late". And of course, lightly used owner boats are nice clean listings help move sales along.

Also, since the Catamaran Group doesn't sell many new boats they might as well take a shot at them "Unless you have at least $500,000 to spend". Even though they have 35 listings for boats more that $500K.

And I really don't buy his statement: "because a catamaran, as I have long counseled, is very much a floating Euro." That may hold true for French cats (slightly) but definitely not for South African boats. SA boats have been market leaders recently. Partly due to the strong US dollar vs weak SA rand, partly due to cheap SA labor, partly due to much improved SA quality and design.... and LARGELY due to the US consumer. America is the largest consumer in the world... and America consumes in US dollars. Like it or not, French boats need to compete with SA boats. Floating Euro, my fanny!

I believe Phil is wrong about inflation as well - inflation is an increase in money supply. The economy will remain deflationary as long as banks are not lending. This is choking money supply - regardless of what the Fed prints. And when inflation finally rears it's ugly head, interest rates will rise and choke the money supply off again. Yes we will eventually see inflation --- in about 10 years.

I agree that foreign buyers are increasing. As a Canadian, in the last 3 months I have saved 10% on any potential purchase in the US -- and our dollar has strengthened the most of the major currencies. Are we looking at buying in the US? You bet. Is that forcing Canadian boat prices down? You bet it is! All good for the consumer. Bad for the owners.

I agree that charter boats are dropping in price quickly and there are deals out there. Charter boats that sit idle are money losers and the operators know it. Better to sell them now and get them off the books. Better to run and live to fight another day.

Whether or not they "are not strongly sought after by personal voyagers", is a matter of opinion. I'm sure we would all love buy an immaculate owners version at charter boat prices. But the truth is when the perceived VALUE reaches the tipping point (which I think it has), many will suck it up and refit the charter boat for their needs/wants. This alone will drive the price of the owners versions down. BTW - If someone could come up with a conversion kit for making a charter cat into an owners boat, I think they could do well. Kind of like the BVI hard top for the Leopards, but head/berth conversion for the one of the hulls instead.


Do I believe we have hit bottom? No chance.

[Intentional Drifter]

All this talk about money, the economy, "can I get it cheaper?", "will I lose my shirt?"!

I say, "screw it, November's right around the corner, let's get on the boat and get outta here!"

ID