Buying a boat // Questions about Brokers and Insurance

[boatsisboats]

Hey everyone.

These threads may exist, but I wasn't able to navigate to them, feel free to correct me.

Questions about dealing with brokers:
1. What is their standard cut?
2. Has anyone used a purchasing broker? Does that exist?
3. What typically is the sellers & brokers price expectation from a list price?
4. Should I test sail the boat first?
5. Do you negotiate price after the survey?
6. Should I try to find my own survey or use the brokers referral? (if options exist)
7. How long can you 'hold' a boat with a deposit?
8. Is there a standard list of questions to ask an agent about a boat?
9. Any pro tips??

Questions about finding insurance:
1. Any referrals on grade A insurance agents/companies?
2. Do you change your insurance based on where you cruise each season?
3. Is staying out of the Hurricane zone in a given season worth the reduced price?

Thanks very much

[Jammer]

Originally Posted by boatsisboats

Hey everyone.

These threads may exist, but I wasn't able to navigate to them, feel free to correct me.

Questions about dealing with brokers:
1. What is their standard cut?

10%, but it varies.

2. Has anyone used a purchasing broker? Does that exist?

Yes if the value of the transaction is high enough.

3. What typically is the sellers & brokers price expectation from a list price?

Other than, "project boats," listings usually sell fairly close to asking price. There are exceptions.

4. Should I test sail the boat first?

A sea trial is customary after an offer, with money down, has been accepted and a survey completed.

5. Do you negotiate price after the survey?

Usually buyers try to adjust the price based on items found on the survey that were not clear in the listing or as part of a cursory look around.

6. Should I try to find my own survey or use the brokers referral? (if options exist)

There are various approaches depending upon how you want to handle negotiation and purchase. There is a tradeoff between keeping the transaction simple, straightforward, and successful, and getting the most for your money with the least risk. Some surveyors are more thorough. Some make a big deal of minor matters which can put a perfectly good deal at risk. Any surveyor will miss something some of the time, with good ones it happens less often and is usually less consequential.

7. How long can you 'hold' a boat with a deposit?

The expectation is that you don't place a deposit unless you're willing to follow through and have the financial means to do so.

9. Any pro tips??

Remember that the purchase should be an enjoyable part of the boating experience, both for you and for anyone in your life who you have a close relationship with who will be sharing the boat with you.

1. Any referrals on grade A insurance agents/companies?

Use whoever writes your car or house insurance unless you can't live with the policy limits, because they are going to be cheapest. Most USA-based household name insurance companies will write insurance on boats as long as they stay in the waters of the U.S. and Canada, often with some coverage as far as parts of the Bahamas and Mexico. When you outgrow that, you'll have to get a more expensive policy.


More global coverage will be easier to get and cheaper once you can show experience.

Is staying out of the Hurricane zone in a given season worth the reduced price?

It depends on your situation and the value of the boat. Usually there's more to it than money. You have to have a hurricane plan approved in advance, and follow it, for any losses to be covered. There are plenty of people who keep their boats in these areas year around and deal with the risk. There are plenty of people who head north (or to Aruba).

[littleships]

all good input from Jammer

[ChrisJD]

A good, thorough response from Jammer, though I’d take issue with two responses:

- The list price is called the “asking” price for a reason. There are some boats that sell at or close to the list price and plenty that do not; sellers have different expectations about the market value of their boats - some realistic, some not - and differing levels of need to sell. An experienced buyer’s agent with access to recent sale prices for comparable boats and a good eye for the boat’s condition should be a better gauge for how much you should expect to pay for the boat than the asking price. As a rule of thumb, an offer of 5-10% off of a new listing is often a good place to start negotiations, while a boat that’s sat on the market for a long time could easily sell for a third below the listing price.

- While your home or auto insurer may give you a competitive rate, definitely shop around, and make sure you understand what you’re getting. Some insurers (looking at you, Geico) have reputations for nickel-and-diming on repairs, and many have depreciation clauses that can make your policy effectively useless for partial losses. Others are known to be generous and easy to work with. Also, insurers may require a given level of sailing experience to write a policy.

[littleships]

Agreed... Some sellers attach a dollar value to the love they have for their boats.... a love not necessarily shared by the boat buying public.
Market forces rule.... Strongest one is the one who is prepared to walk away.... To quote an old client of ours..
" There are important things to keep in mind like the fact that the broker works on a commission off the sales price. So his incentive is not keeping the price down, but in our experience Tony went to great lengths to have both seller and us walking away from the deal smiling.
So if you are in the process of looking for a boat don't loose all faith in humanity there are good honest brokers out there."

[dougweibel]

Great responses so far.

The only thing I'll add is to clarify/amplify/modify (not sure which) Jammer's response about hurricane territory and insurance. We generally move with the seasons, north in the summer and south in the winter, and our boat has no particular home base. Insurance companies will require you to specify a home port so we pick some marina we expect we might be stopped in for some period of time during the year. We have seen as much as a 40% difference in insurance premium between specifying a home port in Florida versus the Chesapeake.

[boatsisboats]

Hey all.

I wanted to circle back to you now that we are in escrow with a boat laying in the Caribbean. Maybe someone will be looking to do the same thing that we have done. So it's all in one place here.

We looked (in person) all over the Pacific North West and online at boats all over the world- not really wanting to travel right now. My wife and I have a pretty good idea of what we wanted out of a boat and what wanted to do with it and after viewing a number of world cruising options in the PNW, we settled on a Hallberg-Rassy. Super quality boats that will go anywhere. This well equipped fairly priced boat had our attention.

Our broker was mostly interested in boats that were available in the PNW (obvious Covid reasons), but seemed to be amenable to us offering on a yacht out of the country.

This is our first yacht purchase after a decent amount of bareboat cruising around the world.

The question of Brokers: I believe they are essential for a purchase of over, maybe $150K? Good for a good contract if nothing else, as it's much like buying a house it turns out. We didn't find ours to be good at negotiation per se, so we did what we wanted with the numbers. Good brokers will go with you to the boat for the survey and test sail, which would be great for us considering it's our first purchase. Unfortunately, our broker after the contract and early communications with the selling broker, decided to 'opt' out of the trip for our Survey etc. A surprise and huge bummer. We will now only have the surveyor and selling broker for the remainder of the deal. Not cool. In a perfect world, this is not how it would go down. After buying a couple of properties with real estate agents that were working both sides, we vowed to never do that again, and here we are...

My question of how close to asking we should expect to end up at: Yes, this can vary widely. After looking at Sold Boat Data, it seems that 10% off is relatively standard. We ended up about 7-8% off the asking price. Not sure how this changes with more or less expensive boats. We believe our purchase was aided because of where the boat was located (again, Covid times...).

To the question of a test sail: Yes, we were completely ignorant about the progress of a purchase when posting our list of questions It goes like this; find boat, write offer, counter until and deal is reached, wire deposit, travel to boat, be involved in survey, ask a million questions during test sail (I guess it's normal for this to happen post survey [same day] WITH the surveyor and brokers and sellers all on board), go through all systems, accept boat as is or with credits (or corrections), close escrow 5 days later. Much like a house.

The question of finding a surveyor, etc: When our broker peaced-out (still getting commission) we just jumped on all of it ourselves out of necessity. We found and booked the surveyor, learned about how to and where to flag the vessel, insurance and all small or large steps along the way. It is a lot to undertake when its all new. We found out later that the broker was supposed to refer if not outright set up all of this for their client. Nope.

To the question of how long can you 'hold' a boat in escrow: This question was principally to (possibly) get into escrow with two boats concurrently while understanding which would be better for us. It seems that in non-Covid times, this would be timing difficult to arrange two escrows simultaneously as the total escrow period is not too long, maybe 20 days total. We did not as we did not locate a second boat of real interest. Some feel this 'rude'. I do not, it's the business of buying a boat and effectively no different than declining a boat after a survey.

The question of Grade A insurance agencies (and hurricane season location: This is (now) 2021, and new boat owners insurance to cruise internationally has and will serve as the most difficult part of the entire purchase process. No 'regular' homeowners insurance would touch this boat laying in the Caribbean. Not knowing how it all worked exactly, we began speaking with three brokers. We did not have success looking for direct insurers as opposed to brokers, not knowing if they would even write us a policy directly. We found quickly that the brokers (two in US, 1 in the UK) all seem to look to the same insurers to write us a policy. As of writing, it seems that only one insurer IN THE WORLD will think about writing a policy. They are all either wrung out from recent hurricane payouts or totally out of the business. The fact that we have not before owned a similarly sized boat is why almost no one will talk to us. Even still, once they receive the survey, etc, they could still decide not to write us a policy. We would have to kill the entire deal.


Hope this helps. I'm finding that information today is very different than only a year ago in regard to most all of these questions that we had as new boat owners.

Thanks again for all that read and commented in an effort to help us out.

[SV_Sweet_Ruca]

Great follow up post!

[Nahbrown]

My experience buying a boat.

Listed $375.000, we submitted an offer for $325.000. Our agent and the sellers agent both said no way will the seller accept.... 2 days latter the seller accepted the (contingent on survey) offer.

People will tell you that you must justify your offer AND THAT IS SIMPLY NOT TRUE. We offered less because that was all we had budgeted for and were going to go for a different boat in our price range but made a low offer on the one we really wanted first. MORAL OF THE STORY- GIVE THE SELLER A CHANCE TO SAY YES OR NO.





The survey brought up a lot of red flags. We kept the asking price the same but asked for $32,000 seller cash at closing to make repairs. Our agent and the sellers agent both said no way will the seller accept that!. the next day the seller accepted our offer.


Its business, forget the “offend the seller” nonsense and make an offer.

[boatsisboats]

Yes, that's a great story Nahbrown.

Our offer was relatively straight forward - 25% off. The 'problem' was the sellers reply was exactly the middle between the asking and our initial offer. Smart of them. We accepted, because, we believed the boat to be worth it and with this market, didn't want to lose it.
All our decision with not much help from the broker.

We will see how the survey and test sail go... Fingers crossed. We see the boat for the first time on 1/16!

Turns out the sellers are really great and helpful. Because of our lack of representation and the sellers agent slow to reply, we contacted them direct via email. Could be seen as overstepping, but they were cool and have been very helpful.

Yes, it is business. Straight up

[NPCampbell]

If you're looking for a catamaran, Wiley Sharp has a youtube video out this week with a spreadsheet showing the listed and selling prices of all the 2020 catamarans.

[k_21_au]

Hi all,

As I commented on boatsisboats other thread I only found this forum about 2 weeks back

I happened to see a YouTube with a 'live a board' yacht and let's say saw the appeal. (After which reading much of the references available)

I haven't bought a yacht in my life..... yet but have 'flipped' a few houses in my life. In any case I think we complicate these thing more than needed. In that a Yacht deal is like a house deal or a car deal.

Seller lists a price (which is high), Buyer has a price in mind (which is lower) & then there is market price. Of course there are brokers in the middle that want to make $$'s.

I say if you are not 'attached' to the Yacht (car, house) make a reasonable offer (at the lower end of course). Then it's a matter of negotiating a fair middle ground.

If not guess what you walk away.

Pretty simple in my mind.

My 2cents.

Enjoying all the information on these threads.

Devante.

[Kathi Marie]

So I’m looking to purchase from private party . How does one go about
Writing contract without broker and complete the sale . This is coast guard registered boat in Georgia . He does have a recent survey but I think we will have
It surveyed so we can be there to see the actual condition of all the components and for a sea trial. I would love some advice if you are so inclined to help a newbie out. TIA 🥰

[Lowcountry]

Originally Posted by Kathi Marie

So I’m looking to purchase from private party . How does one go about
Writing contract without broker and complete the sale . This is coast guard registered boat in Georgia . He does have a recent survey but I think we will have
It surveyed so we can be there to see the actual condition of all the components and for a sea trial. I would love some advice if you are so inclined to help a newbie out. TIA 🥰

I would advise using the standard Yacht Brokers Association of America's Purchase and Sale Agreement form for your contract:

https://www.pdffiller.com/jsfiller-d...a28da331356c87

Do not rely upon the old survey from the seller. If you are spending over $10K USD on this boat you should absolutely commission a new survey. Your insurer is likely to require an out of the water survey less than 60 days old anyway. Also, be present when the new survey is done. It's a great way to learn about all of the systems aboard the boat and how to operate them.

[flightlead404]

Originally Posted by boatsisboats

After buying a couple of properties with real estate agents that were working both sides, we vowed to never do that again, and here we are...

I don't understand this comment. If the brokers commish is based on the purchase price (it is, for boats and houses) no broker is working for you. They are incentivized to keep the price high.