Market Value vs selling value

[maijipo]

After the survey should you buy about over his market value set by the expert?

I am a bit confused by the concept.

First the survey state that the typical value asked is between 125k and 150k for this type of vessel but then the market value is set to 90K. The survey didn't find any big issue and everything is above average. I signed for 100K.

I am interested to understand the role of the market value and if a buyer should even consider paying more than that value.

Thx you.

[Pelagic]

The market value is only a vague appraisal based on average prices being asked and market availability

Remember, those can already be inflated if it is a rare, sought after model.

Also, the asking price can have a very large range, especially on older boats. So treat market value more of a tool for the selling broker to get the highest commission.

You hire a surveyor for technical appraisal not for assessing value. If he gives you a value number, it is only his opinion, often influenced by replacement costs, so normally high.

So it really boils down to what you are able to negotiate with hopefully a motivated seller and what you are willing to pay.

That decision comes in stages after you get to know the boat and inventory intimately, read survey and do sea trials.
Then based on what you find and feel, pick your walk away number if seller is still asking more than you own evaluation

[maijipo]

Originally Posted by Pelagic

The market value is only a vague appraisal based on average prices being asked and market availability

Remember, those can already be inflated if it is a rare, sought after model.

Also, the asking price can have a very large range, especially on older boats. So treat market value more of a tool for the selling broker to get the highest commission.

You hire a surveyor for technical appraisal not for assessing value. If he gives you a value number, it is only his opinion, often influenced by replacement costs, so normally high.

So it really boils down to what you are able to negotiate with hopefully a motivated seller and what you are willing to pay.

That decision comes in stages after you get to know the boat and inventory intimately, read survey and do sea trials.
Then based on what you find and feel, pick your walk away number if seller is still asking more than you own evaluation

Thx. I will need to check and see if the insurance is willing to ensure the boat at a higher value than the market value.

[bstreep]

I'm a real estate appraiser. We also had a very large claim (The boat should have been totaled, even though it was nearly all cosmetic damage - that's what happens when your neighbor's rig gives way and removes nearly everything on your deck, and cuts through dock lines).

There are VERY specific definitions of what many people just lump into "market value". You need to know the law where you are located.

For instance. In Texas, by law, the insured value is defined as "Actual Cash Value", unless the policy states differently, such as an Agreed Value policy. This is further defined as Cost New minus depreciation. "Market Value" has not a lot to do with this definition, as it turns out.

That being said, the value opinion by the surveyor - and most of the good ones have taken appraisal classes - should be Fair Market Value. If the surveyor says the market value for your boat is $90K, and you are paying $100K, you need to ask yourself if the boat you are under contract to buy is actually worth what you are paying for it.

[boatpoker]

The value of a surveyors' market value greatly depends on the quality of the surveyor and how they come up with that value.

Many surveyors put a value on the report with no indication of how they arrived at that value. Many others search YachtWorld and use comparitive asking prices which have often little to do with how much the boat actually sells for. Others go into more detail. Never hire a surveyor without seeing a sample of his work.

Take a look at the last page on one of my reports to see how I come up with a "market value" I don't show all my workings in my reports just enough to show that I did make an honest effort at a "Fair Market Value".

[maijipo]

Originally Posted by boatpoker

The value of a surveyors' market value greatly depends on the quality of the surveyor and how they come up with that value.

Many surveyors put a value on the report with no indication of how they arrived at that value. Many others search YachtWorld and use comparitive asking prices which have often little to do with how much the boat actually sells for. Others go into more detail. Never hire a surveyor without seeing a sample of his work.

Take a look at the last page on one of my reports to see how I come up with a "market value" I don't show all my workings in my reports just enough to show that I did make an honest effort at a "Fair Market Value".

Thx you. This website named on your report is for professionals only? I am going to look at 3 more boats over the weekend any price reference would help. I am going to see a 1993 C&C 37/40 XL, A Sweden Yacht 40 from 85, and a Sabre 42 from 85.

[Pelagic]

Originally Posted by maijipo

Thx. I will need to check and see if the insurance is willing to ensure the boat at a higher value than the market value.

Boatpoker an Bstreep's advice was really informative but it sounds like you are still looking and not found "the One"

That really should be your first priority, to keep searching and gain a personal yardstick on the features and condition you will be happy managing.

Basic Notes:
You never get what you deserve but what you negotiate, so the only meaningful number is what you are willing to pay for the One.

Asking prices and market evaluations are a guideline, but with large plus and minuses factored in.

Insurance Valuations are similar and calculate based on assumed depreciation and other factors as bstreep explained.

If you want a high insured hull value, then some surveyors will oblige but the insurance evaluator may disagree at the time of claim processing

Once you've found the "One", negotiate hard based on the conditions of acceptable survey and sea trial and show commitment with a refundable deposit.

Pay for a good surveyor like boatpoker who does his homework, but also survey yourself to learn and ask many questions..
... Money well spent, especially if you are new with boats!

The Final Price after Trials is the real negotiation where your hit list of needs are monetized into an agreed amount to be discounted.

It can be a large or small amount and it is all about who is most motivated

If happy and you are close to making a deal, give a little bit back to the Seller, if he has been a good consciousness Owner.

He may become a valuable resource as you try to figure things out and find parts as the new Owner.

[Jolly Roger]

I was going to say that it doesn't matter what the market value or any other estimate is. Ultimately it comes down to what the buyer is prepared to pay for the boat, but Palegic said it all for me.

[maijipo]

Originally Posted by Jolly Roger

I was going to say that it doesn't matter what the market value or any other estimate is. Ultimately it comes down to what the buyer is prepared to pay for the boat, but Palegic said it all for me.

Yes. However, I am trying to take a rational approach to this. There is no perfect boat and it will always end up being a compromise between how much we like the boat, the cost, and of course most importantly the condition. But also there are simple constraints as the capability to ensure the boat covering at least what you paid for it. This is why I love such much numbers

My target here is to put 4 boats that fit our needs in competition and get the best value.

[maijipo]

Originally Posted by Pelagic

Boatpoker an Bstreep's advice was really informative but it sounds like you are still looking and not found "the One"

That really should be your first priority, to keep searching and gain a personal yardstick on the features and condition you will be happy managing.

Basic Notes:
You never get what you deserve but what you negotiate, so the only meaningful number is what you are willing to pay for the One.

Asking prices and market evaluations are a guideline, but with large plus and minuses factored in.

Insurance Valuations are similar and calculate based on assumed depreciation and other factors as bstreep explained.

If you want a high insured hull value, then some surveyors will oblige but the insurance evaluator may disagree at the time of claim processing

Once you've found the "One", negotiate hard based on the conditions of acceptable survey and sea trial and show commitment with a refundable deposit.

Pay for a good surveyor like boatpoker who does his homework, but also survey yourself to learn and ask many questions..
... Money well spent, especially if you are new with boats!

The Final Price after Trials is the real negotiation where your hit list of needs are monetized into an agreed amount to be discounted.

It can be a large or small amount and it is all about who is most motivated

If happy and you are close to making a deal, give a little bit back to the Seller, if he has been a good consciousness Owner.

He may become a valuable resource as you try to figure things out and find parts as the new Owner.

Thank you for your advice. Yes, I am not totally decided yet. We did a survey for the Fabola Diva 451. The result is good (the boat condition is above average) with of course always stuff to do. The boat is from 97. The market value under the price I negotiated (100K) is what has triggered an alarm (I am very number-oriented ^^). So I look back at the market and 3 other boats with very good records appear (with winter coming some opportunities are coming up). The Sweden Yacht 41, the C&C 40 and the Sabre 42 perfectly fit our program. The good thing is that the two first ones are listed at 85k allowing me to recover my survey price if necessary. The Sabre 42 is listed at 137k. But of course, I always negotiate a lot, especially with 4 possibilities.

[Pelagic]

Others will know better than I, but I'd heard mentioned that since the pandemic, more demand but less boats for sale.
Maybe, that has slewd market perception, so they are sticking at above?

[boatpoker]

Originally Posted by Pelagic

Others will know better than I, but I'd heard mentioned that since the pandemic, more demand but less boats for sale.
Maybe, that has slewd market perception, so they are sticking at above?

Boat prices are insane. I surveyed a Trojan Tri-cabin 36 in 2014 and valued it at $15k ... it sold a few weeks ago for $40k !

We have been turning away 6-8 surveys per day all year. Many (maybe most) buyers are complete newbies and often have already purchased the boat before they even knew they need a survey for insurance. We've surveyed boats that newbs already bought for $50k and valued them for "scrap value only".

We had one case in our yacht club where the buyer thought he'd bought the slip with the boat and was shocked by the $10k bill from the yacht club.

We now automatically refuse work where the boat was already purchased. It was just to depressing breaking so many bubbles. We also automatically refuse work when the first question is "How much is a survey".

[Tetepare]

Originally Posted by Pelagic

Boatpoker an Bstreep's advice was really informative but it sounds like you are still looking and not found "the One"

That really should be your first priority, to keep searching and gain a personal yardstick on the features and condition you will be happy managing.

Basic Notes:
You never get what you deserve but what you negotiate, so the only meaningful number is what you are willing to pay for the One.

Asking prices and market evaluations are a guideline, but with large plus and minuses factored in.

Insurance Valuations are similar and calculate based on assumed depreciation and other factors as bstreep explained.

If you want a high insured hull value, then some surveyors will oblige but the insurance evaluator may disagree at the time of claim processing

Once you've found the "One", negotiate hard based on the conditions of acceptable survey and sea trial and show commitment with a refundable deposit.

Pay for a good surveyor like boatpoker who does his homework, but also survey yourself to learn and ask many questions..
... Money well spent, especially if you are new with boats!

The Final Price after Trials is the real negotiation where your hit list of needs are monetized into an agreed amount to be discounted.

It can be a large or small amount and it is all about who is most motivated

If happy and you are close to making a deal, give a little bit back to the Seller, if he has been a good consciousness Owner.

He may become a valuable resource as you try to figure things out and find parts as the new Owner.

Well said. I’ll pay more for The One. Learned that lesson the hard way.

[scargo]

Some two years ago, I challenged a surveyor, I hired to survey my boat for insurance puposes, how he came up with the market value. He explains that he looked at sold boats prices (from Yachtwolrd.com). The value he came up with was lower than the asking price of similar boats on yachtworld and elsewhere.


Normally the market value should be considered as "The amount that a seller may expect to obtain for his/her boat in the open market".

Now, all boats are different. And in the actual inflated market, there's apparently a shortage in boats offering and brokers are, maybe, playing games. Is the market still open ? maybe not.
I saw a few boats, being sold, and coming back to the market a couple of months later at a higher price.
Example: one boat sold in June 2021 in FL (asking price was 199K USD) is for sale now (4 months later) by the owner on FB at 275K USD. In this case, if you survey this boat right now, the surveyor may come up with a market value lower than 199K USD.

[boatpoker]

Originally Posted by scargo

Some two years ago, I challenged a surveyor, I hired to survey my boat for insurance puposes, how he came up with the market value. He explains that he looked at sold boats prices (from Yachtwolrd.com). The value he came up with was lower than the asking price of similar boats on yachtworld and elsewhere.

Asking prices and actual sold prices often bear little resemblance.