buying new vs used

[Factor]

That is a hell of a boat you have there Silverback, enjoy life in the fast lane.

[schoonerdog]

Brad, couldn't agree more. I think most people used equity in their homes to buy their boats and now with the housing values decreasing that market has just disappeared. A friend sold his 58 ft 1978 hatteras power boat around 6 months ago, now he has a girlfriends similar boat which simply isn't moving. On the other hand he is looking at moving up a size in boat and large power boats that were selling for 1.2 million last year have dropped by half. People are now going bankrupt trying to keep afloat properties that they were planning on flipping and their boats are being sold for whatever they can get. It will be very interesting seeing who makes it and who doesn't for multihull manufacturers.

On the other hand, new boat Broker friends I have who sell very expensive boats (manufacturers whose boats start at 1.5 million) are saying that business is better than ever. For the very wealthy top .1% who really couldn't care less what their home sells for, they are doing better than ever.

Originally Posted by Southern Star

Make no mistake, for different reasons the used boat market is very soft at present in North America. Ask virtually any broker and he/she will tell you the same. In the United States, the economic downturn has been a significant factor. And in Canada, the huge rise in the value of the Canadian dollar relative to the US dollar has meant that many Canadians are now buying used boats in the US.

There is also a rather large surplus of supply relative to demand - for monohulls, frp boats last longer than the wood vessels that proceeded them and the total number of used/new boats available has increased well beyond the number of boaters. The result of all of this - there are some very good deals to be had in used boats, especially monos.

The same cannot be said, however, about new boats. The cost of manufacturing a boat has increased beyond the rate of inflation because the cost of so many of the required materials have also increased at a rate in excess of inflation: polyester resin is a petrochemical based product, and materials like aluminum require huge amounts of electricity to produce. Some of this has been offset by improvements in production efficiencies, but only some.

Further, I tend to disagree that the market for relatively large cruising cats is inelastic. PDQ, who produced some well designed/constructed products and who had a well-deserved, likely industry-leading reputation for standing behind their products, have recently gone out of business in Canada. Their products were at the high-end of the price range for 44 foot catamarans and the meteoric rise of the Canadian dollar in the last year ate up much more than just profit. I strongly suspect that many more boatbuilders will follow suit, so be careful. I can recall the impact on customers who had boats on order with C&C yachts when they went into receivership for the first time in the early 1980's - customers who had paid 25% to 75% of the cost of their boats were left with nothing, as they were 'unsecured' creditors.

Yes, there are many reasons to buy new versus used. This is especially true for someone who is not 'handy' and who has the resources to pay more in order to get exactly what he or she wants, and to make the sailing experience as trouble free as possible. But make no mistake, you will be paying more, especially in this economic climate. For the first time this is also true in the case of catamarans, since the supply of used boats is finally meeting or exceeding the demand (the flood of used charter boats is having an impact). Check it out - used cats are not holding their value as well as they were even a couple of years ago and consequently, one cannot rely upon historical numbers in assessing depreciation. In that regard, things can and will only get worse and not better.

Brad

[Adaero]

I am thinking of making an offer on a second hand cat in the States but from what I have read you seem to do things a little differently over there than we do in Europe.
In Europe you find a boat in the ad's phone the broker and make an offer subject to survey. From what I have read in the US it seems like you appoint a buying broker who makes the offer for you and then deals with the paperwork etc but his commission comes from the seller?
Could someone please explain the best and safest way to complete a transaction such as this.
I can't say what the boat is at the moment as it hasn't yet been advertised but I will post how it is going later.
Thanks in advance.
Adaero

[Pblais]

Adaero,

You don't need your own broker. Unless you have special requirements I would not use a broker of my own to buy a boat. You might need one if you felt reading and speaking English was a problem. In that case a foreign buyer might be advised to find a bilingual broker not just a translator. You have to be able to understand the contracts and the conditions.

You (or your broker) make the offer through the listing broker. You can use your own broker if you like and then the two brokers fight over the commission. Since they split the work it's not unfair.

When working with the sellers broker yourself they will put together the contract with you as an "offer to the seller". You put in what ever you want and typically a check for 10% of your offer. Most use standard contracts these days and you make the offer with a down payment held in escrow, subject to seller acceptance, subject to the survey you hire. The seller may accept the offer or not or counter with a alternative. You work out any details you need then if accepted arrange to survey the boat.

With a broker that is licensed the escrow account the brokerage keeps protects your money and holds all the sale proceeds from the seller until the terms of the contract are completed. It is in the brokers interest to bring the parties together and work out problems. Most good brokers will help you as well as the buyer quite a bit and can be a good agent between the parties. They don't tell you how much to offer nor do they force the seller or you to do anything. They just manage the contract agreement knowing when you both are happy they get paid. They are paid from the money in the sale price. The seller never touches that money until after the very last items in the contract are completed and you "accept the boat" in a written document you sign.

You can see a lot of threads on the forum about how the survey process works. You can also find a lot of threads on importing boats between different countries and dealing with taxes and duties. Both these topics can become complicated.

[Ex-Calif]

Caveat sailor!

Don't forget the seller's broker is focused on "making the deal" at the "highest price" you can stand - he works for the seller and himself, really. His commission is based on sale price. Note that a buyer's broker may have the same motivation if he is splitting the commission with the selling broker.

Ideally you would like a buyer's broker working for you, that you pay a fixed amount to. This takes out the conflict of interest aspect.

As Paul says, if you are confident in your abilities to arrange the surveryor, negotiate the deal, understand the contracts, and understand the fair market value of the boat you can do it yourself.

I would not kid myself in any way shape or form that the seller's broker is there to make me happy at all.

I've just put on my nomex underwear so now all the "good" brokers out there can flame me.

[waterworldly]

Is there some sort of "title insurance" for boats to protect against undisclosed leins? Or do you get a title such as is issued for a motor vehicle upon the completion of the sale?

[Pblais]

Is there some sort of "title insurance" for boats to protect against undisclosed leins?

All USCG documented boats are safe. You can get a title check for about $25 before you cloase the deal to make sure there are no liens (I would do so). That would include loans too.

As far as state registered boats go most states do such a poor job on registration of boats it's a crap shoot. Leins do have to be filed so once you own the boat no one can file a lien from a previous owners unpaid bill and stick you with it. Unpaid marina bills are not uncommon so it is something to be clear about. Your contract will include provision that the seller must provide a clear title or be in violation. Brokers genrally want that information when they will list the boat. If ther boat is already in a marina asking the marina is also a good idea.

[S/V Elusive]

ummm.. Paul - that isn't quite true - most contractor liens do NOT have to be filed, and they are against the BOAT .. not the person. There were some recent articles in THE LOG by a Maritime Lawyer on just this subject. I could not find the articles online, or I would have posted the link. His bottom line was - there really is NO way to know until you receive notice (if the PO doesn't tell you).


Update: California boating guide-news & classifieds

That is the link to the two articles: Of specific interest ... quoted from the above: "A claim against a vessel is handled differently. If a contractor or other service provider completes a project on a boat, and that project was authorized by the owner of the boat, the service provider has a maritime lien against the boat until the claim is satisfied. Period.
No recording of anything is required, and the lien remains in place even if the boat is sold to a new owner without notice of the lien"

[Pblais]

Of course you can't file a lien on a person but you can't transfer title if there is an outstanding lien. It's how the person that is owed money gets what is owed.

On a US documented boat the lien is filed with USCG. That is who registers the title. If it's not registered with the USCG there can be no lien on the title. A lien is a block on title transfer. They will show up on the title history as that is how the USCG transfers title to you from the PO.

With state registered boats it is not done the same way in each state but is similar to cars (but a different department). With your house it's done with the registrar of deeds (also varies depending on the state).

There is a process to recover the debt by seizure but that isn't about the lien itself. It's a process after a lien has been filed. That would be like you didn't pay the yard bill, they file a lien, and the boat is still there and abandoned or just not paid for a long time. That takes a legal process where the lien does not have more than a filing fee.

Should a lien ever show up at any time during the sale process the seller is in violation of the purchase contract since they have warranted clear title. I would not say any of this is common, just possible.

[S/V Elusive]

Updated my previous post - but realized that no one would know it ... so please scroll up!

[Topazken]

Never buy a new boat unless in is an inflatable dinghy. Most bosts, even 10 years old have very few miles on them. Why pay twice as much for an empty hull without sails? It is pure foolishness.

[smj]

Beware of the statement "all uscg documented vessels are safe". It is not the coast guards responsibility to track stolen vessels. We have personal experience unknowingly buying a stolen vessel. We called the CG many times about the boat and they never volunteered that the boat was stolen even though it was listed in their files as stolen. We had to ask them directly if it had been reported as stolen. They said yes but that they were not in the buisness of tracking stolen vessels. A lesson well learned for us.

[MarkJ]

Originally Posted by Topazken

Never buy a new boat....... It is pure foolishness.

Ahhhhh, I remember my first brand new car when I was 19. Saved up for it, got a bank loan, spent hours on the glossy new car brochures, selected the optional extras.... Then the car arrived and I told the dealership no one else was allowed to drive it, just me and the guy who gets it off the truck.
That pristine smell - ok, plastic smell but it was pristine plastic - that new car smell, the seats no one has ever sat in, the ask tray that would never be ashed in, the rear boot carpet that would never be roughed up by junk and rubbish.
And the drinving of the car too: New engine starts every time, purrs the quietest purr with no rattles, hums, ckicks, ticks or knocks. People look too because they see its new, shiny wheels, no scuffs, no dirt, mirror surfaces....
A new car loses thousands of dollars as you drive it out the showroom. But that new car feel is worth it.

Sometime when I grow up I wanna have a brand new boat, I'm going to camp in that factory and watch as its born....... Thats worth 5%, or whatever, of the value

[Factor]

Off thread - but Topaz ken - had a look at your site - interesting and I think I will buy your books, just a small point there is no Police station on Wednesday Island. (spent a bit of time as a police officer in FNQ and including Torres Strait. Last station on the mainland is Bamaga and then there is Horn Island and Thursday Island in the Torres Strait

[Strygaldwir]

I bought a used cat, and replaced all the core systems! Electrical, instruments, engines, sails, anchors etc. It let me get all the features I wanted with a resonable assurance that everything was going to work! (Okay, there was the problem with one of the Frigoboat compressors)

What I concidered was the cost of a new Privilege (I don't care what you say, 500k for a 39 foot boat is TOO MUCH!!!), the time it would take to get one, the time and $$$$ spent to REALLY commision it for extended cruising, and the fact that new stuff breaks too! Made the decision fairly easy.