'Asking Price' vs 'Offer Price' - brokerage boats

[Sticky Fingers]

Looking at reasonably recent production boats that sold in fair volume, so there are several examples (or even, many example) for sale via brokerage or privately at any one time. It's easy enough to draw up a table of age vs asking price to get a snapshot of what the asking prices look like (and that would probably set a ceiling price) but what's a good rule of thumb for where an opening offer on one could be pitched?

 

[Tranona]

Looking at reasonably recent production boats that sold in fair volume, so there are several examples (or even, many example) for sale via brokerage or privately at any one time. It's easy enough to draw up a table of age vs asking price to get a snapshot of what the asking prices look like (and that would probably set a ceiling price) but what's a good rule of thumb for where an opening offer on one could be pitched?

No rule of thumb. You offer what you think the boat is worth to you. With relatively new boats, asking prices generally are closer to selling prices, but as boats age, asking prices diverge as differences in condition and probably location have more impact. Of course many sellers overprice their boats so do not sell and other sellers are desperate and will sell at a lower price.

A good broker and a serious seller will not set an asking price too far above expected selling price and the broker has access to actual selling prices as guidance. However, in thin volatile markets as now where activity is low even recent selling prices may not be a good guide.

 

[Boo2]

Looking at reasonably recent production boats that sold in fair volume, so there are several examples (or even, many example) for sale via brokerage or privately at any one time. It's easy enough to draw up a table of age vs asking price to get a snapshot of what the asking prices look like (and that would probably set a ceiling price) but what's a good rule of thumb for where an opening offer on one could be pitched?

Rule of thumb would not mean much because it depends too much on the circumstances. But if you insist on some kind of average then try 70% though you run the risk of upsetting any owner who has "priced the boat to sell" after checking the market.

IMO it's better to pick a make/model of boat that there are a few of on the market then visit the 3 best ones and horse trade from there.

Boo2

 

[jonic]

FOR THE LAST TIME, THE ASKING PRICE IS WHAT THE OWNER WANTS.

There is no rule of thumb for low offers, or for extra % to be added.

Boats are not like houses where there is magic inflated equity that can be played with and "offered" on

The boat has been going down in price since the owner bought it.

If it's priced in line with the market, silly "offers" definitely will upset them.

Don't believe me?

Here is an actual quote from an owner today regarding a lowball offer that came into the office this morning on a sensibly priced boat.

"Good morning John! We have thought long and hard (2 seconds) and think you should advise Mr xxxxxx to take a long walk off a short pier! "

Names and boat changed/withheld to protect the innocent!

(I of course replied to the person who made the offer in a more diplomatic fashion )

 

[pvb]

FOR THE LAST TIME, THE ASKING PRICE IS WHAT THE OWNER WANTS.

I suppose that, as you're a broker (and, I gather, one of the better and more successful brokers) that's probably what we'd expect you to say. However, you're perhaps dealing in a different sector of the market, with more sophisticated sellers and buyers. There's no doubt that lots of boats on the bigger market are ridiculously overpriced, and eventually sell at much lower prices. So whilst the asking price may be what the owner wants, he won't always get it.

 

[Sticky Fingers]

FOR THE LAST TIME, THE ASKING PRICE IS WHAT THE OWNER WANTS.

Friendly and helpful. Not.

 

[Sticky Fingers]

I suppose that, as you're a broker (and, I gather, one of the better and more successful brokers) that's probably what we'd expect you to say...

Interesting. I'd not realised jonic is a broker.

FOR THE LAST TIME, THE ASKING PRICE IS WHAT THE OWNER WANTS.

So you're telling me with this shouty rant that every boat you sell goes for the price the owner sets? Doubt that's right. There's a delta between asking price and realised price, I can understand you may not want to reveal it. I'm more interested in the experience of buyers. Asking price vs offer price vs final agreed price.

 

[Sticky Fingers]

No rule of thumb. You offer what you think the boat is worth to you. With relatively new boats, asking prices generally are closer to selling prices, but as boats age, asking prices diverge as differences in condition and probably location have more impact.

Yes I'd expect that for sure. I'm talking about boats say 8 years old or less, good quality well maintained, production models. AWBs. So I understand that volume is there to set a benchmark for asking prices.

A good broker and a serious seller will not set an asking price too far above expected selling price and the broker has access to actual selling prices as guidance. However, in thin volatile markets as now where activity is low even recent selling prices may not be a good guide.

Be useful to know where that averages out.... I can't believe 30% is right, seems very high. 10% seems very reasonable. So maybe somewhere between...?

 

[maxi77]

FOR THE LAST TIME, THE ASKING PRICE IS WHAT THE OWNER WANTS.

There is no rule of thumb for low offers, or for extra % to be added.

Boats are not like houses where there is magic inflated equity that can be played with and "offered" on

The boat has been going down in price since the owner bought it.

If it's priced in line with the market, silly "offers" definitely will upset them.

Don't believe me?

Here is an actual quote from an owner today regarding a lowball offer that came into the office this morning on a sensibly priced boat.

"Good morning John! We have thought long and hard (2 seconds) and think you should advise Mr xxxxxx to take a long walk off a short pier! "

Names and boat changed/withheld to protect the innocent!

(I of course replied to the person who made the offer in a more diplomatic fashion )

Regretably I have seen brokers handling boats at significantly higher prices than similar boats in similar condition so in my humble opinion not all asking prices are realistic. Any product isworth what the buyer will pay if no buyer will paythe asking price the seller has the choice of not selling or accepting what the market will bear. I do not doubt that some brokers will persuade their sellers to pitch the price realistically, I have met and dealt with some of them.

I do however suggest that there is no percentage reduction in the asking price, and would exhort buyers to not pay more than the price the boat is worth to them. If you pay more it will end in tears. The trick for the buyer is to target boats that may be available at a price that works for them.

 

[superheat6k]

No rule of thumb. You offer what you think the boat is worth to you. With relatively new boats, asking prices generally are closer to selling prices, but as boats age, asking prices diverge as differences in condition and probably location have more impact. Of course many sellers overprice their boats so do not sell and other sellers are desperate and will sell at a lower price.

A good broker and a serious seller will not set an asking price too far above expected selling price and the broker has access to actual selling prices as guidance. However, in thin volatile markets as now where activity is low even recent selling prices may not be a good guide.

Erm, in my fairly recent experience ALL owners overprice as do most brokers.

I am also simply amazed at the condition most brokers will accept boats onto their listings in, and then insult you by allowing you to view them, whilst they ignore the detritus all around them.

When you find the boat you like, research the market, and find out from the brokers private network what similar boats have actually sold for, bearing in mind brokers might just omit to include those selling below their market expectations, this is to establish what the boat would be worth in first class condition, then work out on a spreadsheet what tasks you can identify to get it to the first class condition required assuming a professional is doing these tasks. Add 50% to this for unknowns, and deduct from the first class condition value you have established. If outside the EU adjust for VAT ( / 1.2). This is the boat's value.

Don't place an offer, but gently explain the basis of your valuation, and where any offer you may wish to place would be placed. Yes the owner may be unhappy, but that is not your problem, and if he is sensible he will at least study your basis of valuation, and you remain under no obligation whatsoever to purchase as you have not placed an offer.

Ignore brokers' nonsense that " ...boats are not valued this way... " - I suppose their point is that they are right, they are certainly over valued their way.

I flew four kites in this manner, two were rejected out of hand ( of which one was virtually valueless / beyond purchase simply due to the hassle involved sorting the heap out), a third was placed under serious longer term consideration, and the last the Broker explained the situation to the vendor who then negotiated with me via the broker to buy close to my established value.

Finally when you come to agree an offer do not accept the broker's standard terms of sale - you are still the buyer so you remain in the strongest position. I insisted upon the following being written as added in terms ...

1 No deposit will be paid until full title is established and seen. Insist also on a reasonably detailed inventory of what is included.

2 Have it written into the contract that you have full right of rejection for any reason, and without further discussion or justification, if anything you are not satisfied with is revealed at survey, less of course any direct expenses incurred in arranging the survey.

3 Notwithstanding 2 you may of course offer a price reduction for any defects not previously disclosed revealed at survey that you can accept, subject of course to acceptance by the vendor. If the vendor doesn't accept same then clause 2 applies.

The broker might not like it, but that is not your problem, and with any boat purchase always be prepared to take the high road.

 

[Tranona]

Interesting. I'd not realised jonic is a broker.


So you're telling me with this shouty rant that every boat you sell goes for the price the owner sets? Doubt that's right. There's a delta between asking price and realised price, I can understand you may not want to reveal it. I'm more interested in the experience of buyers. Asking price vs offer price vs final agreed price.

You will get as many answers as the people who respond - and learn very little unless you know the facts behind each transaction. All you will get is the buyer's side - and mostly from people boasting about how much they screwed the seller down.

Sorry that John's capital letters seem to have upset you, but this subject comes up on here (and the MOBO forum) time and time again, and if you care to read all the threads, you might find my first paragraph is a fair summary.

Equally pvb's observation that many boats are on offer at too high a price. This is not new - at least in recent times. There is a very simple explanation at one level, and that is there is a mismatch between supply and demand. More people want to sell (and get out) than want to buy, so prices are generally falling. Given that even in good times, boats take months or even years to sell, there is always a lag before actual sales prices affect asking prices. Just as an example, I put my boat on the market last spring (2014) at £52k based on reported sales of same model of 3 in the previous 12 months all over £50k. There were 3 others on the market, one asking £50k, one £53k and the last £55k. The lowest priced one sold this spring for just over £40k. My boat is still on the market (but not owned by me) for £45k.

On another level, many sellers are reluctant sellers and set the asking price at a level that would satisfy them - not at a level to sell. They may well have bought at a time when boats did hold their monetary value for years, and where selling a boat was often for the purposes of trading up. This pattern is in the past and the market is now much less active and both buyers and sellers more risk averse.

So the asking price and the selling price may not be the same, but there is no fixed difference as there are too many factors influencing the actions of both parties in an individual transaction. Therefore what happens in one transaction has only a limited impact on other transactions.

 

[Sticky Fingers]

^ You talk a lot of sense. Thank you. The shouty bit annoyed me because it was shouty (and wrong, in my view).

 

[jonic]

A1GSS

Sorry if you are upset, don't be. I am not that up with internet protocol like my kids are! And forget caps is "seen as shouting". I was trying to add emphasis and draw attention to something that has been said on here a number of times, but looking at your post count I can see you maybe new on here and unfamiliar with some of the previous posts so please don't take any offense.

Tranona is right and makes good sense.

Unfortunately you will also see a lot of nonsense on here, posted by people who have very little experience of perhaps just 1 or 2 transactions from a small sector of the market in their entire life times and believe that tiny representation is how it is.

I and a number of others on here, who post correctly about this subject, have probably been involved in 100's and 100's of transactions over decades and have seen it all, from all angles, all owners and buyers, all boat types and actually know what the overall reality is.

So here is some hopefully useful information for you based on a lot of real wide ranging experience. With no shouting. (I will use bold for emphasis)

It's more than your original question, but by giving a total overview may be more helpful.

(As a caveat this is info based on the market I deal in and presumes professional/qualified yacht brokers active in used yachts and not new boat dealing. I have used "he" but of course this should be transposed with "she" or "her" where appropriate.)

First of all, and most importantly the used boat market price is set by the market. It's actually a pretty pure market in that respect.

It is however in other ways like no other market I know.

There is always an over supply of used boats and there are always far fewer buyers than boats.

Most people don't need boats, but desire them instead.

The market is also seasonal, oddly cyclical but unpredictable, and hugely dependent on the personal circumstances of the owner of the boat.

It can also be very slow and the current yachtworld data sent to me a few weeks ago is giving an average of circa 350 days to sell a sail boat in Europe.

Importantly the broker does not own the boat (unless taken in stock as a part ex against a new boat) so has no margin in the boat.

He/she will be paid a fee by the seller and usually only at the end of the transaction. This fee will be for the the initial paperwork due diligence, the advertising and photography production, administering and paying for the advertising placements (which may be online and/or in the press) boatshow attendance and marketing, responding to all the email and phone call inquiries, setting up and attending viewings and demos with prospective purchasers, initial sale negotiations, drawing up and administering the sale and purchase contract, holding deposits in protected client accounts, overseeing sea trials and survey, then finally the completion process with the legal transfer of title, exchange of RCD and VAT documents and the distribution of funds and settling of any debts or mortgages.

This process is hugely speculative in both time and money. It can take a just a few weeks or months or it can take 6 months or maybe a year. It can involve extensive travel (including overseas) and is routinely out of hours and at weekends and it is expensive to maintain the PI insurance and professional association membership. To do it properly the working knowledge of boats required takes years of on the water sailing experience and hands on maintenance.

All the above is for just one boat. Times that by 20 or 30 at a time and you can imagine how utterly time consuming it becomes, let alone the costs.

So as this is all speculative, time consuming, costly and with no payment until the end, which may be a long time in the future, no decent broker is interested in over pricing a boat and not actually selling it. Not at all.

It is quite simply a colossal waste of time and a direct drain on resources and finances.

So if the broker has done the job properly they will base the asking price on what boats of a particular model are actually changing hands for. They will have this information on a daily basis from their own book, the paid for information services, and other brokers up and down the country. Then the condition of the yacht, age, location and level of equipment (hugely variable) will be factored in.

Ironically it is often private sales that are "overpriced" because the seller simply does not have access to the depth of real time sales information that we have.

If the boat is priced correctly it will be priced at or near a mean of the actual prices that the boats are changing hands for with the variables factored in. The broker will also now have a fair idea of the timescales and turnover each year of that particular craft.

The difficulty some brokers have is getting the owner to accept this, often because they do not really research the price properly in the first place.
So on occasion you will see a wildly out of kilter price that has no reason (like a new engine or new sails etc) to back it up.

Or the market moves and the broker correctly informs the owner of the move, but the owner just will not adjust with it.

The broker also has little control over how the owner keeps his boat and in what condition it is in when the owner wants to sell it. After all it belongs to the owner. Believe me, with some owners we try and try until we are blue in the face to get them to treat their boats well, but as the boats do not belong to us and if the owners do not take our advice on presentation we have no means to force them. One man's immaculate is another man's worn out. It is human nature and again hugely varies between owner to owner. Fortunately for me the vast majority of owners I work with do take the advice and due to the niche I work in run the boats well anyway.

The market will also move depending on the time of year. Some owners will go with this, whereas some will keep using the boat and not move the price until the end of the next season in the hope that the others may have sold by then.

Sometimes you will see a boat listed for a long time and assume it's "overpriced" where it's simply because there have been NO buyers in that market. Then suddenly one comes along because the business has now sold or the inheritance has arrived and the boat is sold.

So you can see there is no simple % or formula to apply between asking prices and selling prices. It depends on the mood of the market at the time, the average selling price at the time, and if the broker has the resources and contacts to get it right as well as the owners circumstances. The last boat I sold was sold for 97.25% of it's asking price. It was well priced.

When you are buying a used car and squeezing a car dealer he has actually purchased the car himself and you are squeezing his in built margin. Which he will allow for. When you are buying a house and squeezing a homeowner you are usually squeezing his built up equity (unless a crash is on!)

With a used boat, you are squeezing the boat's actual owner and are directly taking his capital - which has already probably substantially diminished since he bought the boat in the first place.

If the boat's price is in line with actual current market sales prices and a buyer bids way under that, it will do nothing but seem offensive and will indeed look like the buyer is trying it on and taking the owner for a ride. Hence my earlier post showing a client's response to just that situation.

However on the flip side, circumstances may suddenly and unexpectedly change and the price will move out of the average. Have a look at a couple here and you will see exactly what I mean https://www.facebook.com/JohnRodriguezYachts

Currently the market is thin because the Euro has been so weak (less Euro buyers coming here and more Brits prepared to travel) so there has been an adjustment downward as a reaction to that. On the other hand some sectors of the market are improving with increases in volume and more robust prices compared to 2014.

Interestingly what has become noticeable over the last decade is how yacht buyers have changed. In the past they were usually a fairly gentlemanly bunch and transactions were primarily conducted with a genuine enthusiasm and emphasis on the performance and ability, not to say looks and beauty of the yachts. Sometimes nowadays that can be overshadowed by quite an ugly sense of "how can I take the owner for a ride" or a totally misplaced fear that the owner is doing likewise. We have discussed this at a high level within the industry and have concluded that it's the rash of TV programs where people are positively encouraged to do so when buying property or antiques!

I try very hard to keep it to the former.

Hope that helps.

 

[TiggerToo]

Hope that helps.

John, that is a very informative post: how do you manage to write all that sensible stuff at 3.00 am ;-)?

 

[jonic]

John, that is a very informative post: how do you manage to write all that sensible stuff at 3.00 am ;-)?

God knows! I must be nuts.

But I do dislike the misinformation that is posted on here and I really don't like the lets screw 'em for as much as we can brigade that seem to becoming more prominent in today's Britain.

I think I am going to need a lot of coffee today. :encouragement:

 

[dom]

Interestingly what has become noticeable over the last decade is how yacht buyers have changed. In the past they were usually a fairly gentlemanly bunch and transactions were primarily conducted with a genuine enthusiasm and emphasis on the performance and ability, not to say looks and beauty of the yachts. Sometimes nowadays that can be overshadowed by quite an ugly sense of "how can I take the owner for a ride" or a totally misplaced fear that the owner is doing likewise. We have discussed this at a high level within the industry and have concluded that it's the rash of TV programs where people are positively encouraged to do so when buying property or antiques!

I try very hard to keep it to the former.

Always interesting to hear the thoughts of a thoughtful professional, but as for your last comment ...well that's just so so true. The UK is damaging itself both internally and externally by identifying itself at home and representing itself abroad as a wheeler dealer -- buy cheap tat from China and then mug the unsuspecting customer off -- type economy.

Anyhow I'd like to second Tigger Too's comment, EXCELLENT POST!

 

[Sticky Fingers]

A1GSS

Sorry if you are upset, don't be. I am not that up with internet protocol like my kids are! And forget caps is "seen as shouting". I was trying to add emphasis and draw attention to something that has been said on here a number of times, but looking at your post count I can see you maybe new on here and unfamiliar with some of the previous posts so please don't take any offense.

None taken. Thanks

Hope that helps.

John, it's very helpful. Thank you. The main reason for me asking the Q in the first place was so that I can approach the transaction with some confidence on how the numbers might work. So gaining insight from you is very valuable.

 

[jonic]

Always interesting to hear the thoughts of a thoughtful professional, but as for your last comment ...well that's just so so true. The UK is damaging itself both internally and externally by identifying itself at home and representing itself abroad as a wheeler dealer -- buy cheap tat from China and then mug the unsuspecting customer off -- type economy.

Very true Dom.

I spoke with a seriously well connected top of his game marine professional just after the boat show. His company make an excellent product that I won't mention here. But it's very good and is often recommended on here. I have bought from them too. First class workmanship and service.

How you doing I said?

Great he said, if it wasn't for the wave of negative emotion I have to deal with from the clients.

There just seems to be this aggressive mentality now to attempt to knock down the price, even if the product is excellent and well priced.

 

[jonic]

None taken. Thanks


John, it's very helpful. Thank you. The main reason for me asking the Q in the first place was so that I can approach the transaction with some confidence on how the numbers might work. So gaining insight from you is very valuable.

No problem Graham, feel free to give me a call if you have some specifics that shouldn't be posted on here.

 

[Quandary]

I have owned only five yachts in my whole lifetime and three of those were bought new, only the first of those way back in the days of 2 year waiting lists was purchased for the full price, the other two were discounted, the last one quite heavily. For the two second hand boats, both bought in autumn around lift out time, the first one I made a cheeky offer but offered cash in hand where she sat in the River Crouch, without survey, within an hour of first inspection, the second one I only managed to get about 2% off but it was a fair asking price. The first three were all sold for more than I had paid for them but that was in times of inflation.
When I put my current boat, a rather rare and specialized model not well known in the UK, on the market this year the broker was able to tell me what the same model had actually been sold for in Europe and America where most of them are, over the last two years, we ignored one which seemed to be way out of line in Germany (turned out to be a different model) and set the price well below all the others as we perceived that if we could get the customer to make the effort to view they would buy. (the boat has been cosseted, ashore, mast down, under cover. waxed and polished for 6 months every winter) So far some tyre kickers but we have had just two serious views involving a test sail and one offer. The offer, however was more than 15% below my asking price because the potential purchaser 'had been told that you never pay more than that'. I tried to explain that my asking price was fair but that while I was open to offers I was not giving him 15% of the true value of the boat, I invited him to consider another offer but he was miffed at my rejection of his formula. He seemed unwilling to consider that the price asked was lower than the price anywhere in Europe and was convinced that I must surely have added 15% to the price asked to comply with this negotiating formula. I tried to explain that with the weak Euro my price had to be keen enough to get the buyer all the way here to Scotland.
I am keeping it on the market but now realize that at 50% of the original price she is not going to depreciate much more and the next five years will cost me nothing prepared to the first five so there is no pressure to sell even if I am now using her less. The big task now is to maintain the motivation to put the effort and money in to continuing the standard of care, so far this is going okay, I have just put in an improved calorifier and have purchased an improved space heater, these were pricey items but buttons compared to the depreciation cost.