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

[Boo2]

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.

Hi John,

Don't know whether you are referring to me in that but it certainly does apply to my situation so allow me to address some of your points below :

...
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.
...snip..
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.
...

You have missed out one hugely important factor that will permit a good deal to be made by anyone enterprising enough to put in an offer and that is the huge expense of keeping a boat you no longer require. A marina berth is upwards of £4k pa on the South Coast, insurance is the same for my boat as for my car, maintainance is a contnual headach and expense and then there is the time involved.

So anyone who is selling a boat has a huge incentive to "get rid" and also they are mindful that the yard it is being sold from is charging them fees for keeping her ashore the whole time she is for sale. Added to this is the fact that they either need the money or else may have already bought another boat and a buyer can be certain that the seller will be very averse to the idea of hanging on to the boat for up to or more than another year (as you yourself say) just to make "book" price in what you admit is a falling market.

Sorry but I think you are arguing from your own limited perspective as a broker (nothing against brokers, the one who handled the boat purchase I made was excellent) and it is in yours and your clients' intests for prices to make book at least.

Anyone buying a boat in todays market is in a fortunate position and a cheeky offer may not go down well every time but if you make 3 offers and the 50% offer is accepted you will be £thousands better off...

I suspect that the appearance of being a gentleman has always been exactly that : the appearance of being a gentleman. People, gentlemen or not, have always had a keen eye for an opportunity, otherwise how could gentlemen have come into existence in the first place ?

Boo2

 

[Tranona]

Hi John,

Don't know whether you are referring to me in that but it certainly does apply to my situation so allow me to address some of your points below :


You have missed out one hugely important factor that will permit a good deal to be made by anyone enterprising enough to put in an offer and that is the huge expense of keeping a boat you no longer require. A marina berth is upwards of £4k pa on the South Coast, insurance is the same for my boat as for my car, maintainance is a contnual headach and expense and then there is the time involved.

So anyone who is selling a boat has a huge incentive to "get rid" and also they are mindful that the yard it is being sold from is charging them fees for keeping her ashore the whole time she is for sale. Added to this is the fact that they either need the money or else may have already bought another boat and a buyer can be certain that the seller will be very averse to the idea of hanging on to the boat for up to or more than another year (as you yourself say) just to make "book" price in what you admit is a falling market.

Sorry but I think you are arguing from your own limited perspective as a broker (nothing against brokers, the one who handled the boat purchase I made was excellent) and it is in yours and your clients' intests for prices to make book at least.

Anyone buying a boat in todays market is in a fortunate position and a cheeky offer may not go down well every time but if you make 3 offers and the 50% offer is accepted you will be £thousands better off...

I suspect that the appearance of being a gentleman has always been exactly that : the appearance of being a gentleman. People, gentlemen or not, have always had a keen eye for an opportunity, otherwise how could gentlemen have come into existence in the first place ?

Boo2

While you may think that the pressures of mounting berthing costs may prompt sellers to reduce prices to sell the boat, for many this is not a prime consideration. They still "own" a boat and accept the costs that go with it and although it might seem rational to look at the overall costs, owning a boat is not rational - even when it comes to selling it. The capital value still dominates thinking. Of course for some sellers, getting out is the prime objective and may well be that such a seller will be more open to a low offer - just do not expect all sellers think this way. Equally (as you have no doubt discovered) the purchase price, particularly of an older boat is just an entry fee to a lifetime of expenditure and focusing on getting a bit more reduction in price can lead to not getting the best value.

 

[jonic]

While you may think that the pressures of mounting berthing costs may prompt sellers to reduce prices to sell the boat, for many this is not a prime consideration. They still "own" a boat and accept the costs that go with it and although it might seem rational to look at the overall costs, owning a boat is not rational - even when it comes to selling it. The capital value still dominates thinking. Of course for some sellers, getting out is the prime objective and may well be that such a seller will be more open to a low offer - just do not expect all sellers think this way. Equally (as you have no doubt discovered) the purchase price, particularly of an older boat is just an entry fee to a lifetime of expenditure and focusing on getting a bit more reduction in price can lead to not getting the best value.

You can currently get a prime winter berth in the central Solent for under £1000.

Summer can then be a swinging mooring for about the same or not much more.

So if you are careful £2k a year. Not much incentive to take a £20k kick in the nuts

And Boo2, don't worry I was not referring to you but you did amuse me with your comment about my limited perspective as a broker as I have actually bought and owned 6 different yachts of my own. Four before I became a yacht broker. Actually if you include the dinghys it's six!

With regards to gentleman the context was manners and politeness not the landed gentry.

 

[RAI]

Thanks for the interesting thread guys. So you are saying there is no tendency to put 10% on the asking price with a view to accepting an offer 10% lower?

 

[Tranona]

Thanks for the interesting thread guys. So you are saying there is no tendency to put 10% on the asking price with a view to accepting an offer 10% lower?

Yes. Sellers seek to maximise the price they get for their boat. If using a broker they concentrate on the net proceeds to them after brokerage fees. Not much sense in deliberately adding on something to then take it off. However, pricing is not an exact science so the asking price is indicative and designed to attract interest from potential buyers. When offers come it is then up to the seller to decide if an offer is acceptable, taking into account an assessment of the chances of the sale actually proceeding and his own judgement about whether a better offer might be forthcoming.

 

[jonic]

The important thing to remember is, it is a market and a market in used goods.

like the stock market, prices ebb and flow depending on demand and sentiment, but the prices quoted on the day are based on what willing buyers and willing sellers are agreeing to.

Used yachts are very similar with less liquidity and velocity and those in the know will have a fair idea where the willing buyer and willing seller are meeting on that market.

There is no routine price loading or magic get some money off formula. Just market value and people's circumstances.

There is always a realistic price.

I will say though, that people who become fixated on getting a "cheap" boat. Quite often get just that.

 

[Quandary]

While you may think that the pressures of mounting berthing costs may prompt sellers to reduce prices to sell the boat, for many this is not a prime consideration. They still "own" a boat and accept the costs that go with it and although it might seem rational to look at the overall costs, owning a boat is not rational - even when it comes to selling it. The capital value still dominates thinking. Of course for some sellers, getting out is the prime objective and may well be that such a seller will be more open to a low offer - just do not expect all sellers think this way. Equally (as you have no doubt discovered) the purchase price, particularly of an older boat is just an entry fee to a lifetime of expenditure and focusing on getting a bit more reduction in price can lead to not getting the best value.

I agree, after all boats are toys, to want to own one you have to have respect for its value, if cheapness was the only factor for you why would you get in to it at all. Many of us are boat snobs and could name craft we would not be seen dead in, conversely there are boats that we take pride in being associated with, I can not help feeling that way and it has grown stronger as I have become more experienced and consequently appreciative of issues of performance and quality which I value. Every time I use my boat I get pleasure from the quality of its design, its handling, construction and its condition, I know it is not rational but is a very common human condition, I could easily have a boat with 90% of the performance for half the price but this unconscious snobbery make me want that feeling of pride of ownership of something I put a value on. I also know what my boat is worth and when I sell it will expect to get close to that, if not I will still still own something I value. The boat was bought as a toy, that is, the money spent was not part of my day to day budget, if I die it will just be part of my estate and my heirs can keep it or sell it for buttons. The average yacht now takes well over a year to sell and the period is going longer so there must be plenty willing to resist the silly offer. Boos equation of ownership costs against value is true for older cheaper boats on the South Coast but there are alternatives, my operating costs are only about 10% of the depreciation so far, so negligible as an incentive to sell.

 

[jonic]

I agree, after all boats are toys, to want to own one you have to have respect for its value, if cheapness was the only factor for you why would you get in to it at all. Many of us are boat snobs and could name craft we would not be seen dead in, conversely there are boats that we take pride in being associated with, I can not help feeling that way and it has grown stronger as I have become more experienced and consequently appreciative of issues of performance and quality which I value. Every time I use my boat I get pleasure from the quality of its design, its handling, construction and its condition, I know it is not rational but is a very common human condition, I could easily have a boat with 90% of the performance for half the price but this unconscious snobbery make me want that feeling of pride of ownership of something I put a value on. I also know what my boat is worth and when I sell it will expect to get close to that, if not I will still still own something I value. The boat was bought as a toy, that is, the money spent was not part of my day to day budget, if I die it will just be part of my estate and my heirs can keep it or sell it for buttons. The average yacht now takes well over a year to sell and the period is going longer so there must be plenty willing to resist the silly offer. Boos equation of ownership costs against value is true for older cheaper boats on the South Coast but there are alternatives, my operating costs are only about 10% of the depreciation so far, so negligible as an incentive to sell.

+ 1

I have two phrases that I have heard over the years.

Yachting always has been and always will be a rich man's sport.

and

Never run a slide rule over the costs as the enjoyment is priceless.

I was lucky enough to spend almost 8 years wandering the globe on our boat as a liveaboard and probably "lost" 10's of thousands on the yacht.

But I would have paid £Millions for the experiences that came from that trip.

 

[westhinder]

I agree, after all boats are toys, to want to own one you have to have respect for its value, if cheapness was the only factor for you why would you get in to it at all. Many of us are boat snobs and could name craft we would not be seen dead in, conversely there are boats that we take pride in being associated with, I can not help feeling that way and it has grown stronger as I have become more experienced and consequently appreciative of issues of performance and quality which I value. Every time I use my boat I get pleasure from the quality of its design, its handling, construction and its condition, I know it is not rational but is a very common human condition, I could easily have a boat with 90% of the performance for half the price but this unconscious snobbery make me want that feeling of pride of ownership of something I put a value on. I also know what my boat is worth and when I sell it will expect to get close to that, if not I will still still own something I value. The boat was bought as a toy, that is, the money spent was not part of my day to day budget, if I die it will just be part of my estate and my heirs can keep it or sell it for buttons. .

+1
For a further insight into the feelings associated with owning a boat, see the 'what if?' thread

 

[Boo2]

While you may think that the pressures of mounting berthing costs may prompt sellers to reduce prices to sell the boat, for many this is not a prime consideration. They still "own" a boat and accept the costs that go with it and although it might seem rational to look at the overall costs, owning a boat is not rational - even when it comes to selling it.

You can currently get a prime winter berth in the central Solent for under £1000.
Summer can then be a swinging mooring for about the same or not much more.
So if you are careful £2k a year. Not much incentive to take a £20k kick in the nuts

It's fair to say though that owning a boat is quite generally expensive and owning two when you only use 1 of them will rapidly lose any appeal. I think I can stand by my asseertion that in a falling market, where the particular boat has no unique qualities or scarcity value then a deal will be available from someone at a lower price than the average of that which is being asked. The trick for the buyer is spotting the boat that the owner is particularly keen to sell and which has no hidden expenses in tow.

And Boo2, don't worry I was not referring to you but you did amuse me with your comment about my limited perspective as a broker as I have actually bought and owned 6 different yachts of my own. Four before I became a yacht broker. Actually if you include the dinghys it's six!

With regards to gentleman the context was manners and politeness not the landed gentry.

I was referring to your current perspective as broker which must influence your opinion as to discounting, also not impuning anyone's gentlemanliness in any way

Thanks for the interesting thread guys. So you are saying there is no tendency to put 10% on the asking price with a view to accepting an offer 10% lower?

Yes. Sellers seek to maximise the price they get for their boat. If using a broker they concentrate on the net proceeds to them after brokerage fees. Not much sense in deliberately adding on something to then take it off. However, pricing is not an exact science so the asking price is indicative and designed to attract interest from potential buyers.

The important thing to remember is, it is a market and a market in used goods.

like the stock market, prices ebb and flow depending on demand and sentiment, but the prices quoted on the day are based on what willing buyers and willing sellers are agreeing to.

Used yachts are very similar with less liquidity and velocity and those in the know will have a fair idea where the willing buyer and willing seller are meeting on that market.

There is no routine price loading or magic get some money off formula. Just market value and people's circumstances.

People try to get the best price they can whether it's for a car or a boat or second hand furniture. There are hundreds of Mondeos on Autotrader, almost all of them at prices way above book. The reality is that when someone comes to sell a car (or a boat) they put up for the price they think it is worh, taking into account every effort and penny it has cost them and discounting the fact that every other similar item can have the same said about it. That's human nature. When a buyer is actually to hand though, then things look rather different. If that buyer is on their way to see two other boats the same then the seller has to do something to stay in contention, that is also human nature and the fact is that there is no such thing as a seller's market.

Anyone who has a choice of similar things to buy is in the driving seat and if you buy an AWB without putting in a cheeky offer on at least one of the contenders then you are chucking your money away IMO. As I said above, you need to knock of 30% from an average boat sale price to get near to what it will actually achieve, but that does depend upon there being other similar boats at similar prices available. Yer Swans and Malos etc may be different but AWBs and MABs especially are just commodity products in a current oversupply and a buyer should have no trouble getting a good discount off the asking price.

Boo2

 

[Quandary]

Our boats have always been like family pets, sharing a big part of our lifes adventures and looking after us in all sorts of situations. My whole life experience has been massively extended by sailing, it is a big part of why we live where we do. The boats have introduced us to lifelong friends and provided greatly treasured memories. It is hard not to feel offended by a derisory offer, I do not really want that person to have charge of my boat. So when we sold our last one we were really pleased that she was purchased by a family who looked after her and valued her as much as we had done. We kept an eye on them and they passed with flying colours.
Similarly I would be reluctant to buy a second hand boat from someone who did not value it. The attitude of the last owner is a big part of the transaction and would be reflected in the keenness to offer.
It is daft, no need to tell me, but I sympathise with people for which it is just a commodity.

 

[dom]

People try to get the best price they can whether it's for a car or a boat or second hand furniture. There are hundreds of Mondeos on Autotrader, almost all of them at prices way above book. The reality is that when someone comes to sell a car (or a boat) they put up for the price they think it is worh, taking into account every effort and penny it has cost them and discounting the fact that every other similar item can have the same said about it. That's human nature. When a buyer is actually to hand though, then things look rather different. If that buyer is on their way to see two other boats the same then the seller has to do something to stay in contention, that is also human nature and the fact is that there is no such thing as a seller's market.

Anyone who has a choice of similar things to buy is in the driving seat and if you buy an AWB without putting in a cheeky offer on at least one of the contenders then you are chucking your money away IMO. As I said above, you need to knock of 30% from an average boat sale price to get near to what it will actually achieve, but that does depend upon there being other similar boats at similar prices available. Yer Swans and Malos etc may be different but AWBs and MABs especially are just commodity products in a current oversupply and a buyer should have no trouble getting a good discount off the asking price.

No disrespect, but I don't really agree with any of this. My knowledge of the boat market is mainly anecdotal, but in my limited experience most people price fairly realistically. That said jonic referred to stock markets, something I do know about.

Here on a daily basis one sees folk who are forever waiting for good stocks to fall to a level at which they are happy to buy; in the meantime they wax lyrical about the canniness which has left them under-performing for years! As time goes by they become attracted to cheap stocks, which unfortunately are cheap for a reason and this is known in the trade as the "dash for trash" or less politely the "flight to sh*te".

Edit: It's probably best to follow the advice of a true master; so here's Warren Buffett:

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

 

[jwilson]

Edit: It's probably better to follow the advice of a true master; so here's Warren Buffett:

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Exactly. If asked I always tell most boat buyers, once they have decided on a particular type, to go and find the very best example around and pay a bit more for it if needed. Unless they simply don't have the money, or enjoy fixing things more than sailing, and there are people who do like it this way round, and nothing wrong with that.

John Wilson
http://www.yachtsnet.co.uk/

 

[Caer Urfa]

An interesting thread with even more interesting replies.

However coming at the subject from another angle I have done Pre Buying Inspection Visits for new buyers of Colvic Watsons for years and find many boats either overpriced or even underpriced sometimes.

Even after doing my homework and finding some of the photo's have been taken years before, then on visits you find time and time again that none of the seacocks work, some electrics don't work, the engine will not start, rigging is rusted, sails torn, cracked hoses even a few times the toilet has not been cleaned out, then the seller wonders why his boat does not sell or he gets a an offer which insults him.

For the sake of a little time and expense to making sure everything works it will get nearer the price the seller wants as it will not take a good surveyor long to find out these faults which becomes ammunition to knock the asking price down or as many times just recommend the new buyer to 'walk away'.

Yes there are good yacht brokers but oh boy there are some who would not know a Colvic Watson if they are looking at one,I actually asked one this year how did he decide on the asking price, Oh it was no problem he replied I just looked up another one of the same size and year and went on that with the seller, so 'do your own homework' .

As John Wilson says most new buyers know what they want and find the best example around and from my experiance they will pay extra when they find a nice boat as most of the time 'condition is everything' so if sellers don't realize this they will get all they deserve.

As for putting in a sensible offer from my own experience to date this year on 23 Colvic Watsons of various sizes over half went within 10% of the asking price, two sold within approx 5%, 4 I recommended to 'walk away from' and the remainder sold for between 12% and 15% of the asking price, as said presentation and condition' is everything unless you want a project !

Mike

 

[Sticky Fingers]

...once they have decided on a particular type, to go and find the very best example around and pay a bit more for it if needed. Unless they simply don't have the money, or enjoy fixing things more than sailing, and there are people who do like it this way round, and nothing wrong with that....

I'm happy with that as a strategy but like most buyers I do have a finite amount of money. I'm very willing to spend up to that, and would certainly prefer to get a better condition, better equipped, later boat over an older tattier one for less money. But that doesn't mean I can buy the "best" on the market, as at the asking price it might be double my max budget. But if there was one available that was say 10% over, could I expect a 10% reduction...? Or stretch to meet in the middle? Well, maybe.

 

[jonic]

This has actually turned into a very good thread with some very good answers and insights.
I feel like I am in the company of gentlemen again. :encouragement:

 

[Sticky Fingers]

I feel like I am in the company of gentlemen again. :encouragement:

Were you ever not...?

 

[jonic]

Clearly not.

Best of luck with your search and enjoy whatever you find.

 

[Tranona]

I'm happy with that as a strategy but like most buyers I do have a finite amount of money. I'm very willing to spend up to that, and would certainly prefer to get a better condition, better equipped, later boat over an older tattier one for less money. But that doesn't mean I can buy the "best" on the market, as at the asking price it might be double my max budget. But if there was one available that was say 10% over, could I expect a 10% reduction...? Or stretch to meet in the middle? Well, maybe.

Not sure how far you are down the road of the buying adventure, but many find that once they have looked at a few boats in their target price/type range they get a pretty good feel for what is value and what is not. You will no doubt come across many boats that are indeed overpriced, not because a "good" boat of that type would not achieve that price or thereabouts, but because that particular example is simply not good enough. Many boats, probably an increasing number, are for sale because the owners want out or cannot face the future expenditure to keep the boat in good condition. Unfortunately many such owners still imagine their boat as it was in its prime (and they had just paid a lot of money for it!) so are simply not aware that the world has changed. Equally potential buyers often have unreasonable expectations of what a 20 or 30 year old boat should be like.

Having said all that serious buyers and sellers are still around and do recognise what constitutes a fair price. Sellers who ignore the market signals and buyers who think they can demand huge cuts (just because it is a "buyers market" - whatever that means) are less likely to achieve their objectives.

 

[Sticky Fingers]

:encouragement: thanks. As I said earlier, you talk a lot of sense.