Why would broker ask me not to disclose price paid to surveyor?

[Willy MC]

First off, I am a Broker and I will give you my "professional" understanding of this situation. Item one is that the survey that the Buyer is paying for is his. There is no necessity for him to report the valuation to the Seller or anyone else unless it it to his advantage. During post survey negotiations we ( the buyer and Broker ) will often decide to show the Seller the entire Recommendations section of the survey so he can see the extent of his sweethearts failings while pointing out that we only want relief for "some" of her issues. At the same time pointing out that these problems are not going to go away by themselves, so it is in his best interest to negotiate with us.
In regards to informing the surveyor of the Accepted Price, there are arguments on both sides. If the Buyer is financing, he is caught between possibly wanting a lower value for negotiation purposes and not wanting to go so low that his finance company can't work the numbers in his favor. Without external pressures, my opinion is that I would not want the surveyor to have any idea of the accepted Price so that he is on his own to determine a real estimated value. This becomes a double edged sword, there is no guarantee that the surveyor will arrive at the correct value. There are many factors that he may not be aware of.
Regarding Soldboats. I use it all the time, but it must be approached with some caution. Boats are not cars, there aren't 500,000 of one model to take samples from and arrive at a "value". More often than not, there are less than 20 relevant comps. You must investigate them and find out what was going on... condition, extenuating circumstances such as divorce, bankruptcy, foreclosure are common pressures put on Sellers. In such a small sample they can have an unfair effect on the comps. Quick and dirty method is to throw out the high and low prices then average the remainder. Then try to fairly rate the position of the target boat against the sold boats.
In the case of only one or two comps, you must look at other boats in the same category and quality... vessels in direct competition with your target vessel.
Having said all this, the old adage... "Anything is worth whatever a Seller is willing to sell it for and a Buyer is willing to pay for it" ... always holds true. Some boats get sold for far more than they are worth and some get sold for a lot less than they are worth.
As far as the shenanigans that get pulled by unethical Brokers, Surveyors, Buyers, and Sellers, ( yes, this is an equal opportunity function ) just when I think I've seen it all, someone pulls a new stunt even lower than the last one. My personal take on the survey process is that I want the Surveyor to tell us what he sees and identify any problems so that both parties understand what they are selling/ buying. I want to see any issues settled immediately, not pop up a year later as papers are being served.
To those who think all Brokers are the devil incarnate, partying on their boats at any opportunity and doing their best to cheat everyone, I once had that opinion myself, when I was a sailboat delivery captain. Then one day, I became one of the "hated" class. Years later, I can tell you that being a good Broker is no walk in the park. You learn the power of the word "No",
you waste a lot of time finding out that a buyer isn't really a Buyer and your Seller is making deals behind your back. Florida Brokers are licensed and Bonded, which is a good first step. There is also a Florida Yacht Brokers Association with their own code of Ethics and yearly Seminars on such things as "Yacht Sales and the Law" A newer accreditation is available to seasoned Brokers , the "Certified Professional Yacht Broker" which involves testing and a certain number of ongoing education classes each year. You can help yourself by checking out the proficiency level of your Broker before engaging him to aid you. Semper Fi, Willy

[Zven]

Originally Posted by faa50

Ask yourself this question. How reasonable is it to expect a buyer's broker to travel with a buyer to an unlimited number of boats (at the broker's expense) before the broker tires of this, needs to stem the expense and get on with their business of selling boats? Three, four maybe five boats but after this significant amount of expended time and cost how excited do you think this broker is to travel to inspect the sixth boat?

Thanks for some excellent points about brokers. After all, they need to make a living.
If one wishes to get expert help with looking at lots of boats, I guess it is better to hire someone who works and gets paid by the hour...
A surveyor, perhaps.

Sent from my SM-T805 using Tapatalk

[Imprezza72]

I have read these previous comments all have a valid POV curiosity got the best of me however. Why didn't the OP ask the broker why he suggested keeping the purchase price quiet in the first place? All be it, the truth may not come out but it would be interesting to know....

[Capn Jimbo]

The number of posts on this subject would seem to indicate a high value on expressing opinions in an authoritative manner, lol. Since most of us can easily research sales and markets, not to mention our own unique personalized valuation, the value of a survey (by a good and knowledgable surveyor) is not to reach general conclusions, but rather to discover BIG surprises in the condition of the boat and equipment. To do this does not require knowing the purchase price. In the end a good and unbiased surveyor will not be influenced anyway, as he/she is fully aware of the vagaries of especially individual sales. All we really seek from our - I repeat our surveyor - is to discover the important issues and probable costs to rectify them, all fodder for our own thinking and negotiations.

[canyonbat]

Originally Posted by Imprezza72

I have read these previous comments all have a valid POV curiosity got the best of me however. Why didn't the OP ask the broker why he suggested keeping the purchase price quiet in the first place? All be it, the truth may not come out but it would be interesting to know....

I would ask the surveyor his opinion. His response, yes no or otherwise, might give you some insight into his ethics or personality. He might have some insight into why the broker is requesting withholding the sales price. I wouldn't hire a surveyor if I wasn't going to value his opinion.

[faa50]

WindwardPrinces - Please take a look at my prior posting starting with "Withhold the agreed purchase price" as several benefits are highlighted in this post.

When I say withhold the agreed purchase price from the surveyor I advise to only withhold until a survey is complete and the finished report is delivered to the prospective buyer (e.g the owner of the report.) Obviously, the listing and selling brokers have this information as does the seller. What we anticipate accomplishing by - for a period - keeping the agreement price and terms from the surveyor is to enhance their work and not influence the outcome of their report.

Once a report is complete, then is the appropriate time to sit down with the surveyor and discuss the report findings and how they relate to the agreed purchase price. If there is a "gap" between the surveyor's valuation and the agreed price, a key benefit is both surveyor and buyer can seek to determine an explanation. If the surveyor has this information prior to conducting the survey it is plausible this information could influence their judgement and drive their valuation toward the agreed price. In a sense this is similar to prejudging before having all the facts. Why run the risk?

A second benefit, you can use surveyor's valuation and the agreed price to validate the quality of the survey, once taking into consideration any unique non-public market selling considerations.

Third benefit, its really to a buyer's benefit to approach a survey in this manner as it enables a buyer to learn and control the most appropriate price. This approach does not leave it to others to dictate a price - those who may have agendas that don't correspond to a buyers.

Hope you find this helpful.

[Looking4Neptune]

I suggest that you discuss the process with your surveyor and be upfront about wanting a good, unbiased survey. Then ask whether the surveyor prefers to start with a "clean slate" or with all the info you have - not just the sale price, but issues you might have noticed during your inspection.

Then use your gut. If the surveyor gives good reasons for wanting to know everything upfront, OK. If not, don't bias them. The only downside to not telling them is that they might miss something you have seen that could lead to a more detailed investigation which could find something big. Best case would be that they agree to do the initial survey without your info, discuss what they found and what you found, and then go back and follow up on any items you and they have questions about. May cost more money because it will take more time. But maybe worth it.

Pat

[WindwardPrinces]

Originally Posted by faa50

WindwardPrinces - Please take a look at my prior posting starting with "Withhold the agreed purchase price" as several benefits are highlighted in this post.

I did look at your prior posting, and I read this one. Thanks for the response. Normally I wouldn't mention the agreed price, but I'm still not convinced it makes all that much difference one way or the other.

Either you trust your surveyor, or you don't, and I don't see them using your agreed purchase price to value your boat, but if you're getting a loan or insurance you might want to make sure his value range includes your price.

[GoingWalkabout]

My take on the boat market from what I have learned and am still learning:

1. The largest boat selling web site also keeps secret from the public real sales price data

2. The boat selling website owns a website used by brokers for obtaining information on most recent sales. Access to this database is to expensive for the regular boat buyer to access themselves. Therefor in reality only brokers have access to this data.

3. We have learned that even the database of record of actual sales information is being falsified by brokers. It should be asked WHY? Why are brokers giving inflated sale prices? Could it be because they want to help keeping artificially high prices so they can make more money per each sale. Forgetting that if the market prices were not manipulated and a true open market operated they would end up with more sales. Price manipulation always perverts the market. Resulting in lower economic activity. Meaning less actual sales.

4. In the housing market you have databases that list the actual last sales price of a property. You have public records and you brokers who are licensed who can go to jail if they commit consumer fraud by providing false and misleading information. At the very least they stand to loose their license. No such controls exist in the boat broking business. Fraud and misrepresentation is a common occurrence in the boating industry.

5. A false and artificial re sale market leads to less buyers entering the market which leads to even greater oversupply and then the greater need to falsely price and report selling price.

6. We learned from the US real estate disaster of only a few years ago that there was an unholy alliance between banks, real estate brokers and valuers who conspired together to artificially inflate the market price/value of real estate. This caused one huge market distortion that nearly brought down the US economy. Why wouldn't we be suspect of the same unholy alliances at play in the boating industry. Even reaching into the offices of the boat lending companies who have a vested interest in seeing that the value of their mortgage/loan backed collateral stays high.

This is my simple observation of the boat market. I could be off base and I would welcome the input of others in the community.

[faa50]

Totally agree, hiring a surveyor that you don't trust is a fools errand. The salient issue is not about trust but instead human nature to influences that are difficult to control. If I were a professional surveyor, I would prefer to learn the agreed price after conducting the survey not before. I also understand to each his own and I'm totally "cool" with that.

Being new to buying a boat, I make a point to personally inspect each boat (spending hour or two onboard) prior to entertaining engaging a surveyor. I take a copious amount of notes, for my own education and later follow up. I then attend the survey and encourage the surveyor to educate and teach me as they conduct the survey.

As I've progressed in my learning, I'm now identify many more issues that line up with what a surveyor identifies, but not all as I'm unable to turn on the electronics or engines.

This due diligence process I've found beneficial to my learning curve, but I understand this process takes time is not attractive nor may work for others.

Items identified during an initial inspection I share with the surveyor as we together proceed through the boat. My list is not used as a "gotcha" Oftentimes, items initially identified are simply rectified or not nearly as important or expensive to repair as I had imagined. This is a valuable benefit of having a great surveyor who is interested in teaching. Not all are.

[Willy MC]

Originally Posted by Zven

Thanks for some excellent points about brokers. After all, they need to make a living.
If one wishes to get expert help with looking at lots of boats, I guess it is better to hire someone who works and gets paid by the hour...
A surveyor, perhaps.

Sent from my SM-T805 using Tapatalk

Zven, In regard to your question about why a Broker would go to the 6th boat showing with a client... my personal record is working for 7 years with one client.... taken as an isolated instance, that sounds crazy, but put it in the context of a Broker, why wouldn't you ? I've already invested the time and effort on the other showings, should I walk away and let some other broker be rewarded for my groundwork ? Hey, Edison had thousands of failures before he got it right.... most importantly, this one client isn't the end all be all, every time I view another boat, go into another boatyard or marina, I am expanding my knowledge base for the next client. A good Broker thrives on constantly meeting new people and getting acquainted with new boats, marinas, boatyards, subcontractors etc., etc. This knowledge base is what makes it easier for a broker to help his clients make a good decision about which boat to buy and follow through with proper protocols for the transfer of Ownership. Willy

[tomfl]

Let's see if I got this right.

The surveyor is suppose to do research and come up with the selling price of similar boats to be used in determining the value of the boat. Seems to me any half way decent surveyor would be able to come up with the asking price of the boat being surveyed. Also seems any decent surveyor would know the price paid would be lower, or perhaps the asking price. Being fairly close to the buyer and seller seems any decent surveyor would be able to come up with something close to the price paid.

I do understand the theory of having the surveyor working in the dark so to speak so they come up with the best value of the boat. But if the surveyor is not doing that already I am not sure how decent a surveyor he is.

[GoingWalkabout]

Originally Posted by Willy MC

First off, I am a Broker and I will give you my "professional" understanding of this situation. Item one is that the survey that the Buyer is paying for is his. There is no necessity for him to report the valuation to the Seller or anyone else unless it it to his advantage. During post survey negotiations we ( the buyer and Broker ) will often decide to show the Seller the entire Recommendations section of the survey so he can see the extent of his sweethearts failings while pointing out that we only want relief for "some" of her issues. At the same time pointing out that these problems are not going to go away by themselves, so it is in his best interest to negotiate with us.
In regards to informing the surveyor of the Accepted Price, there are arguments on both sides. If the Buyer is financing, he is caught between possibly wanting a lower value for negotiation purposes and not wanting to go so low that his finance company can't work the numbers in his favor. Without external pressures, my opinion is that I would not want the surveyor to have any idea of the accepted Price so that he is on his own to determine a real estimated value. This becomes a double edged sword, there is no guarantee that the surveyor will arrive at the correct value. There are many factors that he may not be aware of.
Regarding Soldboats. I use it all the time, but it must be approached with some caution. Boats are not cars, there aren't 500,000 of one model to take samples from and arrive at a "value". More often than not, there are less than 20 relevant comps. You must investigate them and find out what was going on... condition, extenuating circumstances such as divorce, bankruptcy, foreclosure are common pressures put on Sellers. In such a small sample they can have an unfair effect on the comps. Quick and dirty method is to throw out the high and low prices then average the remainder. Then try to fairly rate the position of the target boat against the sold boats.
In the case of only one or two comps, you must look at other boats in the same category and quality... vessels in direct competition with your target vessel.
Having said all this, the old adage... "Anything is worth whatever a Seller is willing to sell it for and a Buyer is willing to pay for it" ... always holds true. Some boats get sold for far more than they are worth and some get sold for a lot less than they are worth.
As far as the shenanigans that get pulled by unethical Brokers, Surveyors, Buyers, and Sellers, ( yes, this is an equal opportunity function ) just when I think I've seen it all, someone pulls a new stunt even lower than the last one. My personal take on the survey process is that I want the Surveyor to tell us what he sees and identify any problems so that both parties understand what they are selling/ buying. I want to see any issues settled immediately, not pop up a year later as papers are being served.
To those who think all Brokers are the devil incarnate, partying on their boats at any opportunity and doing their best to cheat everyone, I once had that opinion myself, when I was a sailboat delivery captain. Then one day, I became one of the "hated" class. Years later, I can tell you that being a good Broker is no walk in the park. You learn the power of the word "No",
you waste a lot of time finding out that a buyer isn't really a Buyer and your Seller is making deals behind your back. Florida Brokers are licensed and Bonded, which is a good first step. There is also a Florida Yacht Brokers Association with their own code of Ethics and yearly Seminars on such things as "Yacht Sales and the Law" A newer accreditation is available to seasoned Brokers , the "Certified Professional Yacht Broker" which involves testing and a certain number of ongoing education classes each year. You can help yourself by checking out the proficiency level of your Broker before engaging him to aid you. Semper Fi, Willy

Hi Willy. Thank you for your contribution. I have no doubt you are one of the good guys. I hate to use the real estate manipulation of only a few years ago as a reference but it should be noted that the collusion between brokers, valuers and lenders took place in an environment where the real estate brokers were licensed. Licensing is great but without effective consumer protection body enforcement it means nothing.

Here is a novel idea. Why doesn't sold boats.com open up its database to all? You could have a low sign up of say $99 that would earn money for the database owner while providing access to information to all in the industry. Another idea is why not have seller and buyer be given a discount or other benefit for providing information and have a user agreement that provides for a financial penalty for providing false sales price information. You could have an entry for the boat seller to insert the sale price and on the same listing have a section for the buyer to fill in how much he paid. If they don't match then there are consequences.

I am absolutely sure that if the boat industry doesn't reform itself it will happen by outside people that will see providing a better flow of information to the market could be a nice new business. Look what Zillow and RealEstate.com has done to the real estate market. Nothing stopping a competitor using that same model and based on mutual buyer seller input to start up offering a great new service that I am sure every seller and buyer would jump on.

Happy sailings and a happy 2016.

[wunderluster]

In reading all of the replies the main point I get is a large number of people trust only themselves. Everyone in every profession is a liar and a thief, except their self. That's a sad world to live in.
Now, my response to the OP; I see no reason to tell the surveyor the purchase amount but, then I see no reason not to. A professional surveyor will do his research and put the correct value on the boat. However, the value is subject to several factors therefore, can not be exact. The surveyor can only put in one amount, not a range. So, if you need the price to be on the higher side of the estimated value, for financing purposes, the surveyor may use a little higher value. If you need it to be in the middle for negotiation it could be on the lower side. There will not be a wide margin put may help you either way. I don't see this as dishonest. You as the owner and payer of the survey will get the best value for your buck. The survey is yours and will not be shared with the broker or the seller unless you authorize it.

ditto everything Willy MC said!

[faa50]

Going Walkabout - your observations are dead-on and thank you for sharing your experiences.

One point that I may differ regards bankers and mortgages on boats. Financial institutions are at risk of loans being under collateralized due to fraudulent "sold" prices. Banks didn't hold the paper on real estate loans so in large part the financial institutions off loaded the risk of fraudulent sold prices or bogus survey valuations.

Financial institutions do not hold the paper (debt obligations) on boat loans but instead sell them to institutions who package them into a portfolio and then sell this bond to the unsuspecting public.

There is nothing inherently wrong or unethical in the above process, but until we hold financial institutions accountable for the loans they create this problem will persist.

IMHO, it is impossible to legislate ethics.