Cruisers Forum
 


Reply
 
Thread Tools Search this Thread Rate Thread Display Modes
Old 17-04-2017, 20:49   #1
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
New purchase negotiation rules of thumb

Greetings,

To begin, yes I did search the forums. No, I did not find what I need. Maybe it is the search bar, maybe it's me, but here goes...

I hope that we will soon sell a large item that will put us into the market for a new semi-custom catamaran to be built and anticipate being in the 3/4-1 million dollar range. In the past I have purchased many larger items and have some idea of what to offer and how to begin, but not on these.

Specifically, I would love to hear your experiences, especially if recent, on how you:
1. Determined your initial offer (and whether it was accepted, how much back and forth was involved). Was anything other than the asking price even considered?
2. How you would (or did) account for changes and upgrades in the build process, i.e. Pay cost plus for add-ons, difference between an allowance and cost of acquisition for upgrades, etc.
3. Handled payment schedules during the build
4. Handled exchange rate fluctuations
5. Any terms that would be important to put on paper
6. Did you use a broker?

Also of interest would be the experience itself!

While I appreciate that our budget may be more than many I would prefer not to dwell on it. Thanks for not making it an issue.
__________________
Karl Leibensperger, DO
2019 Leopard 45 "Remedy"
Sawbonz is offline   Reply With Quote
Old 17-04-2017, 21:48   #2
Senior Cruiser
 
StuM's Avatar

Cruisers Forum Supporter

Join Date: Nov 2013
Location: Port Moresby,Papua New Guinea
Boat: FP Belize Maestro 43 and OPBs
Posts: 12,888
Re: New purchase negotiation rules of thumb

If it's a "new, semi-custom" cat, I would not expect to make an "initial offer", I would expect to state my requirements and get prospective builder(s) to quote.
StuM is offline   Reply With Quote
Old 17-04-2017, 22:30   #3
Registered User

Join Date: Nov 2012
Location: Brisbane Qld Australia
Boat: Cavalier 350SL
Posts: 8
Send a message via Skype™ to Yachticus
Re: New purchase negotiation rules of thumb

G'day Sawbonz,
Upfront - you concern me with your question - if you are seeking to have somebody build you a catamaran - essentially its a time and materials process - as opposed to buying something that is already built - might have a few miles on it - but (usally) would be significantly less in cost to a new build of an identical vessel.
Lets assume you are going to build new - then standard procedures apply for any build - you will need a specification - ask a few credible (with demonstrated results) boat builders and take your chances. At the price point you have indicated you have a world of choice - so it then comes back to you - what are you looking for and how long is a piece of string.
If I was in your position (with that amount of coin) - I would find a retired boat builder of some repute to act as your project manager - might cost you 5% of build price - but he will save you so many tears.
or take a massive short cut - and chase one of these 2014 2014 /O-Yachts-Lerouge 14m Catamaran Sail New and Used Boats for Sale
Yachticus is offline   Reply With Quote
Old 18-04-2017, 04:44   #4
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
Re: New purchase negotiation rules of thumb

Quote:
Originally Posted by StuM View Post
If it's a "new, semi-custom" cat, I would not expect to make an "initial offer", I would expect to state my requirements and get prospective builder(s) to quote.


Ok, StuM, thanks for that. It does help me clarify my thinking for the post in that we have seen these boats at shows where the builder says that the boat as it sits costs $XXX. That typically includes everything except some particular equipment, i.e. Solar panels or a generator. Colors and interior layout being the primary "semi-custom" decisions. But perhaps you want a bigger anchor or lithium batteries, things that have a value that isn't as easy as a tick on a build sheet. Pricing this may require research by the builder that will take some time. As you know, different builders will price differently and if their pricing is unreasonable it may put you out of the market.

The only option besides a show is to travel to the builder, which I intend to do once a decision is made, but if they are on another continent there is the expense of traveling and the disadvantage of being on their turf. If possible I believe it better to have the purchase decision out of the way prior and use this time to make decisions about the boat.

Hence the reason I wonder if there is a typical offer of $XXX - 10% or $yyy with an upgrade cost = allowance + (difference in retail/wholesale cost of the item)... Or perhaps these builders do not negotiate at all, which would also be good to know.
__________________
Karl Leibensperger, DO
2019 Leopard 45 "Remedy"
Sawbonz is offline   Reply With Quote
Old 18-04-2017, 10:37   #5
Marine Service Provider

Join Date: May 2012
Location: New Orleans
Boat: We have a problem... A serious addiction issue.
Posts: 3,974
Re: New purchase negotiation rules of thumb

I am a little confused, is this a custom design, or taking an existing design and marketing it out for a build? If the second how many sisterships have been built?
__________________
Greg

- If animals weren't meant to be eaten then they wouldn't be made of food.
Stumble is offline   Reply With Quote
Old 18-04-2017, 12:13   #6
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
Re: New purchase negotiation rules of thumb

Quote:
Originally Posted by Stumble View Post
I am a little confused, is this a custom design, or taking an existing design and marketing it out for a build? If the second how many sisterships have been built?
Good question. It's a common hull and generic layout. Semi custom refers to being able to move cabinets and other equipment and choose colors. Minor changes can be made to the hull, I.e. You could add bow thrusters if you wanted but the hull shape and size remains the same.
Sawbonz is offline   Reply With Quote
Old 18-04-2017, 15:00   #7
Marine Service Provider

Join Date: May 2012
Location: New Orleans
Boat: We have a problem... A serious addiction issue.
Posts: 3,974
Re: New purchase negotiation rules of thumb

In that case...

Quote:
Originally Posted by Sawbonz View Post
1. Determined your initial offer (and whether it was accepted, how much back and forth was involved). Was anything other than the asking price even considered?The builder should give you a flat price for the hull and major equipment as specced. If you change anything, well that's a change order. There may be some wiggle room depending on how the contract I should written, but it should be pretty firm. Presumptively the builder knows what he isdoing is knows what his costs will be.
2. How you would (or did) account for changes and upgrades in the build process, i.e. Pay cost plus for add-ons, difference between an allowance and cost of acquisition for upgrades, etc.It really depends. Pricing can be complicated depending on the build. If for instance you want to change the color of the gell coat that shouldn't be much if any price difference, if you want to change the color and have a mirror finish on the new color... well that's a different issue.
3. Handled payment schedules during the buildYou need an attorney. This is not an area for Internet forum advice. You get title transfer issues, liability issues, insurance issues... I would really recommend speaking with an attorney that has some expertise I need this field.
4. Handled exchange rate fluctuationsIt should be spelled out in the contracts what to price is denominated in. There are a lot of ways to leverage this for better prices vs more risk. It just depends. Is this a Canadian builder or someone in a third world country?
5. Any terms that would be important to put on paperYes, everything. You need to speak with an attorney
6. Did you use a broker?You probably want a buyers agent on site, a broker is completely unnecessary. In much the same way you don't need a real estate agent when building a new home.

Unless you are buying a spec boat, with no money down until delivery, you are going into business with the builder. This is a million dollar business deal that will span a year or more. Going into it without doing your due diligence would be foolish.
__________________
Greg

- If animals weren't meant to be eaten then they wouldn't be made of food.
Stumble is offline   Reply With Quote
Old 18-04-2017, 17:33   #8
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
Re: New purchase negotiation rules of thumb

Agreed, and hence the due diligence on a free forum to begin! By no means do I take what I find here as the final word, just a place to get started.

As to price negotiation as I understand your point there is none. If that is the consensus (or there is ANY consensus) I will have learned something valuable.
__________________
Karl Leibensperger, DO
2019 Leopard 45 "Remedy"
Sawbonz is offline   Reply With Quote
Old 18-04-2017, 18:42   #9
Marine Service Provider

Join Date: May 2012
Location: New Orleans
Boat: We have a problem... A serious addiction issue.
Posts: 3,974
Re: New purchase negotiation rules of thumb

Here is the issue as I see it. A spec manufacturer like Beneteau or Hunter... they are building boats even if you don't put down a deposit, they buy masts and booms by the container load, and have keels delivered by full load trucks. The winches come a hundred at a time and are inventoried until they are needed. One builder I worked with had probably $50,000 just in fasteners (nuts, bolts, etc) in the shop parts room. They built 50 boats a year exactly the same, and the customer spec were just bolt on stuff they generally had anyway.

Things like air conditioning and a generator in a Beneteau are generally built into the boat. They run the wiring and place the supports even if your boat won't have them installed. It's just easier to build them all the same and hold off on the big stuff until later.

A semi-custom builder is maybe making two or three boats, each of them different, likely with long lead times between them. If they have done a few they can probably spec out the price I find they order everything today, before prices change. They can look at the last one they built, pull the specs for x amount of glass, Y amount of goop, z amount of gel coat, price it for 30 days and give you a very close number on the final build.

However, there ar every good reasons NOT to do this from a buyers standpoint. If you do you will pay for all of those materials upfront, now what happens if the builder goes out of business? They are corporate assets, with you as an unsecured creditor, so you may get 10-12% at a bankruptcy sale if anything. Worse, maybe they use those materials to build someone else's boats Andy they come back and say... well we don't know what happened to 10,000lbs of fiberglass but if you want us to keep building....

Just like any business deal the trick is rarely about getting the lowest price and often much more about shifting and allocating risk, cost, performance and quality. As I mentioned you will be in business with these guys for a year and a half or longer. Am experienced attorney can help make that a pleasant couple of years.
__________________
Greg

- If animals weren't meant to be eaten then they wouldn't be made of food.
Stumble is offline   Reply With Quote
Old 19-04-2017, 11:14   #10
Registered User

Join Date: Jul 2014
Posts: 365
Re: New purchase negotiation rules of thumb

I have to think that "total immersion" into understanding what it is you and yours want to have in a vessel is required.Or,as earlier poster mentioned find experienced boatwright to oversee an "off the shelf" vessel refit as you wish.Beyond this it is easy to go off the path.
What's the goal? For me it is out over the water as soon and as long possible!
Arthur Garfield is offline   Reply With Quote
Old 19-04-2017, 11:26   #11
Registered User
 
Steve_C's Avatar

Join Date: Apr 2009
Location: La Rochelle, France
Boat: L42
Posts: 530
Re: New purchase negotiation rules of thumb

Sounds like maybe a "St Francis 50" ??????

Would you care to give us more info and maybe we can be more specific with recommendations????
__________________
_________________
Steve
www.svfreebird.com
Steve_C is offline   Reply With Quote
Old 19-04-2017, 11:50   #12
Registered User
 
Scot McPherson's Avatar

Join Date: Apr 2010
Location: Shoreline, CT and Portmouth Harbor
Boat: Standfast 33, building a 65 ft Wooden Schooner
Posts: 636
Re: New purchase negotiation rules of thumb

sawbonz,
what you are proposing already has an industry standard. Most builders won't give you a quote without blueprints and the license to build it. Then they will offer you a quote based on what's been drawn plus any extras you have asked for. That quote will then often require 25% to 50% up front to start, and further billing will continue upon pre agreed inspection stages. If you are unhappy, all work stops and you are handed your hulk to have completed elsewhere. Most places will work with you to get things right, but they won't keep working if you start re-negging (that's short for renegotiating) on your original agreement.


At your initial quote you can talk to the builder about how to save dollars here or there, but that will come at a compromise of either luxury or safety.


Exchange rate doesn't concern the builder...if you want to gamble on exchange rate, then when you think the time is right, exchange all your money for that currency and leave it there. Then at least you know the cost won't balloon later if their currency gets stronger.


When drawing up a contract for a project this size ALWAYS have an attorney for assurances, and pay for a good one that knows international law, and especially the laws of the country you are doing business in (the builder's country).
__________________
Captain Scot, 100 Ton Master, w/Sailing and Towing
Daring Kids to be Exceptional
https://americanseafarers.us
Scot McPherson is offline   Reply With Quote
Old 19-04-2017, 12:06   #13
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
Re: New purchase negotiation rules of thumb

Quote:
Originally Posted by Steve_C View Post
Sounds like maybe a "St Francis 50" ??????



Would you care to give us more info and maybe we can be more specific with recommendations????


Well, Steve, that was actually one of the considerations!

It's also a good example of knowing why it is important if the usual is to take a certain % off of the asking price if that is the expected norm.... They quoted $850k at the Miami show but contact two weeks later were at $1.050M. Quite the difference and probably not one I am willing to swallow.
__________________
Karl Leibensperger, DO
2019 Leopard 45 "Remedy"
Sawbonz is offline   Reply With Quote
Old 19-04-2017, 12:10   #14
Registered User
 
Scot McPherson's Avatar

Join Date: Apr 2010
Location: Shoreline, CT and Portmouth Harbor
Boat: Standfast 33, building a 65 ft Wooden Schooner
Posts: 636
Re: New purchase negotiation rules of thumb

Quote:
Originally Posted by Sawbonz View Post
Well, Steve, that was actually one of the considerations!

It's also a good example of knowing why it is important if the usual is to take a certain % off of the asking price if that is the expected norm.... They quoted $850k at the Miami show but contact two weeks later were at $1.050M. Quite the difference and probably not one I am willing to swallow.
ah well a verbal boat show quote is not a contract. Did you get a written quote or a verbal estimate? There is no real such thing as a verbal quote, not enforceable most of the time anyway.
__________________
Captain Scot, 100 Ton Master, w/Sailing and Towing
Daring Kids to be Exceptional
https://americanseafarers.us
Scot McPherson is offline   Reply With Quote
Old 19-04-2017, 12:21   #15
Registered User
 
Sawbonz's Avatar

Join Date: Mar 2017
Location: Florida
Boat: 2019 Leopard 45
Posts: 215
Re: New purchase negotiation rules of thumb

Quote:
Originally Posted by Scot McPherson View Post
sawbonz,
what you are proposing already has an industry standard. Most builders won't give you a quote without blueprints and the license to build it. Then they will offer you a quote based on what's been drawn plus any extras you have asked for. That quote will then often require 25% to 50% up front to start, and further billing will continue upon pre agreed inspection stages. If you are unhappy, all work stops and you are handed your hulk to have completed elsewhere. Most places will work with you to get things right, but they won't keep working if you start re-negging (that's short for renegotiating) on your original agreement.


At your initial quote you can talk to the builder about how to save dollars here or there, but that will come at a compromise of either luxury or safety.


Exchange rate doesn't concern the builder...if you want to gamble on exchange rate, then when you think the time is right, exchange all your money for that currency and leave it there. Then at least you know the cost won't balloon later if their currency gets stronger.


When drawing up a contract for a project this size ALWAYS have an attorney for assurances, and pay for a good one that knows international law, and especially the laws of the country you are doing business in (the builder's country).


Thanks for your reply, Scot. A couple things...

As an example, a builder has a boat that they make....hull forms ready to go. They are going to install furniture for 4 cabins and the equipment to make it go. Specifics don't matter. If you want red cushions instead of green and that cabinet moved over there, no problem. Asking price is, for example, $750k. Do they _expect_ to get $750k OR is $675k (10% less) a reasonable offer? Add a fridge...$X. Once a contract is signed you are obligated, hence the reason to ask other's experiences as to what was in their contracts. I certainly don't want to reinvent the wheel OR tick off my favorite builder by doing something unintentionally insulting. I am specifically talking about negotiating the one, single, initial and final contract.

As to not caring about exchange rate: I have had one specifically tell me that their prices went up because of it (though the rate went in my favor-go figure). I expect that because everyone deals in dollars that the contract will be denominated in dollars, but this one instance makes me wary.

I have no objections to using an attorney. Heck, I already send a bevy of their kids to private schools , but because I do I know not to rely on them blindly. That's even IF I thought I could find one in Africa and interview them over the phone. Perhaps you have some suggestions?
__________________
Karl Leibensperger, DO
2019 Leopard 45 "Remedy"
Sawbonz is offline   Reply With Quote
Reply

Tags
purchase, rule

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Survey and Negotiation Eigenvector Dollars & Cents 14 18-10-2016 05:06
Bad Market - Good Negotiation Strategies ? Delancey Monohull Sailboats 228 23-12-2012 22:33
Rule Of Thumb Formulas... Michael D Seamanship & Boat Handling 58 14-07-2010 12:05
Boat Purchase Negotiation Question Lightfin General Sailing Forum 23 25-02-2008 21:45
Tips, Tricks & Rules of Thumb markpj23 Seamanship & Boat Handling 35 13-07-2006 12:06

Advertise Here


All times are GMT -7. The time now is 09:40.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.