The 70% Rule

[MBLittle]

I've heard over and over that the typical first offer when buying a yacht is 70% of the list price.

I'm fully aware that a list price is just an owners starting point and that the first offer by a buyer is their starting point with the eventual price being somewhere in between the two.

My question is, based on your experience, how many boats actually sell for around the 70% of asking price? Is someone who is selling a boat for $160,000 really expecting to only get $120,000? And someone listing their yacht for $120,000 really only expecting $80,000?

If you don't think 70% is a good first offer, what do you suggest? Why?

[sailorboy1]

if you are a buyer get a broker to work with you and ask these questions ass they rate toward the boat you are interested in

[Navicula]

Honestly.... It depends on the boat....I have seen the 50% rule come into play....some people think way too highly of there boat...

[Cheechako]

Originally Posted by Navicula

Honestly.... It depends on the boat....I have seen the 50% rule come into play....some people think way too highly of there boat...

Yep... old boat? Not a super popular design? Been neglected a bit? Long on the market? Maybe start at 50-60%.
Selling at 70% not too uncommon I dont think. The Hans Christian 38 in my avatar was listed like all the others at the time at $135k. Sold 1.5 years later at $90k. What's that... about 66%? No issues with the boat and lots of gear.

[letsgetsailing3]

If a boat is priced right, it sells quickly. If not, it stays on the market for a while, maybe forever, or until someone offers a lot lower amount and it sells.

I'm not sure what the strategy is, but there is a lot of gamesmanship in the boat market.

I'd LOVE to see the actual prices boats sell for.

[Navicula]

some people make the mistake of adding in the sentimental fee into there price...and then it sits on the market for a long time............that at least 30% you can deduct

[Paul L]

There is no 70% rule. It is just dumb to make an offer based on some percentage of the asking price. Determine what the boat is worth to you, i.e what would you pay for it based on your ability to pay, the other similar boats on the market, the condition and terms of this boat etc. Now you have your number and the sellers offering number. Then you can come up with a starting offer. If a boat is listed to sell quickly, then it may go for 10% under the listing, if it is listed because the wife said sell it, it may never sell or may sell at 50% of the asking price. There's no pat answer. You can get a list of comps from any broker that will give you insights into what the listing and selling price was for similar boats.

[zboss]

Originally Posted by Paul L

There is no 70% rule. It is just dumb to make an offer based on some percentage of the asking price. Determine what the boat is worth to you, i.e what would you pay for it based on your ability to pay, the other similar boats on the market, the condition and terms of this boat etc. Now you have your number and the sellers offering number. Then you can come up with a starting offer. If a boat is listed to sell quickly, then it may go for 10% under the listing, if it is listed because the wife said sell it, it may never sell or may sell at 50% of the asking price. There's no pat answer. You can get a list of comps from any broker that will give you insights into what the listing and selling price was for similar boats.

While I generally agree with this, I also feel that it's relatively unhelpful advise to a new potential boat owner. We have all heard this advise, including myself 12 months ago.

What isn't factored into that method is that the new-to-the-boating world buyer has no idea what a boat is worth to them because they have no idea how much things are worth or how much they cost go replace/fix in the boating world. Roll in huge variances in service and product pricing and it's just a fiasco. When I was shopping I thought I had cone my homework only to discover that I had vastly underpriced myself.

I think the rule of thumb should instead be... Find a boat you like and offer how much you want to pay. Forget the asking price, it is contrived since a boat is only worth what someone will pay for it. Leave 10-20 percent for negotiation and be willing to walk away if you exceed your budget.

[boatpoker]

Being new to the boat market is a very good reason to find a good broker before you pull out a cheque book. Contrary to some on this forum, good brokers do exist although you do have to dig for one

As had already been noted a broker can pull the soldboats.com data on actual selling prices or you can sign up for soldboats yourself ... My wife handles all things money but I think we pay about $600/yr. for access.

[Suijin]

Originally Posted by boatpoker

Being new to the boat market is a very good reason to find a good broker before you pull out a cheque book. Contrary to some on this forum, good brokers do exist although you do have to dig for one

As had already been noted a broker can pull the soldboats.com data on actual selling prices or you can sign up for soldboats yourself ... My wife handles all things money but I think we pay about $600/yr. for access.

I would second this. A good buyer's broker can save you a pot of money and it comes out of the seller's pocket, not yours.

As far as the 70% rule goes, I think it's nothing more than an average, and it strikes me from my experience as a pretty good reflection, overall, of asking prices vs. actual selling prices. But it's just an average. Some boats are priced reasonably and well, and some are not. It's up to the buyer (perhaps in conference with an experience buyer's broker, who knows the market for particular model boats and what should come off the asking price) to educate to the point you can negotiate effectively and successfully on a given boat. And successfully does not always mean that you reach agreement.

[JPA Cate]

MBLittle:

The crux of this is this: find a good broker. Which is lovely advice, but depending on where you are looking at boats may be really difficult to find, Just like a good surveyor.

When you have told CF where you are planning to buy your boat, then the members may come up with specific advice that will help you.

Personally, I liked the advice, "offer what you can afford; and walk away if the offer is not accepted." Bargaining in Western countries doesn't seem to be quite the art it is reported to be in the middle East. So now you have all this input, and you have to put it into a construct with which you are comfortable. Good luck.

Ann

[Celestialsailor]

I think you should keep reducing the percentage...eg: 70%...to 60%...to 50% and so on until the seller punches you in the face...then that was too low.

[denverd0n]

As Paul L said, there is no 70% rule. There is, in fact, no "rule" at all. Every boat is different. Every seller is different. If you apply some standard "rule" then you may be grossly overpaying, or you may be making an insultingly low offer.

And, as zboss said, someone who is new to the boating world may not know what is a reasonable offer. That, of course, is why newbies always hope to find some simple, standard, rule that they can apply.

No rule exists, and the only way to know what is a reasonable offer for any particular boat is to do your homework. That means spending a lot of time looking at boats, and spending a lot of time perusing websites finding out what typical issues an older boat might have and how much it might cost to fix. There isn't any shortcut. There isn't any simple, easy, standard rule that will help you to avoid paying too much or offering too little.

Of course, having said that, it is always better to offer too little than it is to offer too much. The worst that can happen is that the seller gets offended and refuses to deal with you any further (in which case he is taking this way too personally). Fine. Now you have an idea of what "too little" is. Move on to the next boat and try again.

Good luck.

[Hud3]

Ditto what denverd0n said. ^^^

[letsgetsailing3]

Originally Posted by Ann T. Cate

MBLittle:

The crux of this is this: find a good broker. Which is lovely advice, but depending on where you are looking at boats may be really difficult to find, Just like a good surveyor.

When you have told CF where you are planning to buy your boat, then the members may come up with specific advice that will help you.

Personally, I liked the advice, "offer what you can afford; and walk away if the offer is not accepted." Bargaining in Western countries doesn't seem to be quite the art it is reported to be in the middle East. So now you have all this input, and you have to put it into a construct with which you are comfortable. Good luck.

Ann

I agree. Someone should also point out that even "a good" broker's job isn't to get you the lowest price, it's to help you find a point of agreement. So part of this depends on how much homework you've done, and your negotiating skills.

I read on this forum that if the broker doesn't report the "sold" price of a boat, the last listed price is used in soldboats.com. I don't know of that's true, but it sounds like it might be. The boat market isn't transparent, and the people who would benefit from a transparent market aren't controlling it, so there is lots of room for manipulation.

In other words, it's really up to you to figure out the value of boats, without a lot of accurate data being made available to you.