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

I am only informed because I get to see the actual reality.

Which is not what a small minority on here would hope or like it to be.

The reality is that there is no set rule.

But why "overprice" and "bid low" to artificially create the mean that a true market creates in the first place.

The market always has and always will set the actual price.

Ask too much and you won't sell. Because someone else will instead.

Bid too low and you won't buy. Because someone else will instead. (or you will buy rubbish)

It's that simple. There are no magic formulas just the two emotions that drive all markets.

Greed and Fear.

.....but do we really need that in yachting? ;)

Concentrate on the gorgeous tumblehome, the sweet sheer and the freedom she will bring - and find a fair price for it where everyone is happy.
 
jonic said:
Concentrate on the gorgeous tumblehome, the sweet sheer and the freedom she will bring - and find a fair price for it where everyone is happy.
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Cor, blimey, John, you are beginning to sound like J Corbyn.... ooops this is slipping into the Lounge
 
I think there are a couple more factors in the thin market that assist the seller to name his price or the buyer his bid. There are boats still being built and their list prices are usually available. The asking prices of same or similar boats are available on internet. A little research can give both buyer and seller an idea of how much older boats are loosing value. The seller knows what he paid for the boat - he may not be the first owner. Brokers can advise on sensible prices, or offers, from their current experience and from their network. So one might think they could all come to a similar conclusion, scaling in factors like boat's condition. However, a wee recession comes along and kicks the conclusion into touch, buyers are in short supply. The exchange rate shifts and suddenly boats priced in squid look expensive to euro holding buyers. How long should a seller hold his price? One year, two years? Does he not need the cash? Does the fair price/offer hold at the same value? My impression is that the new boat prices are rising and used boat asking prices too but the used prices are not selling until they individually find a new fair price.
 
RAI said:
I
However, a wee recession comes along and kicks the conclusion into touch, buyers are in short supply. The exchange rate shifts and suddenly boats priced in squid look expensive to euro holding buyers. How long should a seller hold his price? One year, two years? Does he not need the cash? Does the fair price/offer hold at the same value? My impression is that the new boat prices are rising and used boat asking prices too but the used prices are not selling until they individually find a new fair price.
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The price formation process within any market takes account of the many different competing factors which together conspire to drive prices up and down. Where the yacht market differs from say the FTSE100 is that yachts are much less liquid and the market much less transparent -- trades are sporadic and relate to similar but subtly different transaction, not unlike the market for small-cap stocks.

In such circumstances it is always tempting to try and devise a clever scheme to beat the market, a fantasy which the best investors don't seriously entertain. Instead they turn to a good broker who's job it is to bring together serious buyers with serious sellers and it is clear that the two brokers on here possess the necessary knowledge and dispassionate mindset to do this job well. Their advice is uncannily similar to what a good stockbroker will tell you, which is kind of unsurprising really!
 
RAI said:
My impression is that the new boat prices are rising and used boat asking prices too but the used prices are not selling until they individually find a new fair price.
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Not sure that is the case. New boat prices have been steadily falling in real terms, particularly In £s as most are sourced from Euro states, and in some ways this affects an active part of the market. This where people are serious about buying a boat and the relatively low price of new boats affects the used boat market. Used boat prices have also been falling which might lead some owners having to keep their boats rather than sell.

The current market is very different from the past with a declining demand (in the UK) and a growing supply.
 
dom said:
The price formation process within any market takes account of the many different competing factors which together conspire to drive prices up and down. Where the yacht market differs from say the FTSE100 is that yachts are much less liquid and the market much less transparent -- trades are sporadic and relate to similar but subtly different transaction, not unlike the market for small-cap stocks.

In such circumstances it is always tempting to try and devise a clever scheme to beat the market, a fantasy which the best investors don't seriously entertain. Instead they turn to a good broker who's job it is to bring together serious buyers with serious sellers and it is clear that the two brokers on here possess the necessary knowledge and dispassionate mindset to do this job well. Their advice is uncannily similar to what a good stockbroker will tell you, which is kind of unsurprising really!
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+1 Spot on.
 
Good thread.

Lot of this comes back to trusting the broker who is the only one in the process who does this for a living. Of course, telling the quality ones such as Jonic from the dodgy ones is not so easy. I think one of the key things the potential purchaser ( and seller for that matter) can do is to research other similar boats on the market and see if they sell. Then compare those with the one you're interested in. You won't be spot on but it's fairly easy to spot one that is an outlier in terms of price or quality.

Will asking prices be a little higher? - yes probably but in reality you should be talking about single digit percentages - perhaps rounding up to £50 below the next main threshold, e.g. advertising at £39,950 on a boat that is worth £37k- £38k but you can only establish "worth" by comparing it with similar boats advertised elsewhere. If it costs the same, similar age, similar condition and equipment then pitching 20% below asking is crazy. of course if it say 15% over priced in comparison with others then a 20% discount may be appropriate. However you should have some basis for making that deduction, e.g. I can buy the same boat, same standard for 20% less at xxx - however i'd rather buy from you as boat is more convenient.
 
jonic said:
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.
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Not the whole story is it. When we were looking for a replacement boat we saw two very interesting approx 37 foot steel yachts; one had major layout issues but was exceptional quality, the other was a superb layout but needed TLC. Both on for £80,000 having recently come down from £90,000. What do you do when you know they are going to sell for a lot less? We'd have bought either one in the blink of an eye if they'd been anywhere near what they actually sold for - sub £40,000. A series of people down the line will have had to make "silly" offers in order to settle at about the £38,000 they sold for. It's all about timing, if we'd offered £40,000 when we first looked then we'd have the broker make a polite no and the owner a sarky comment about long walks etc. If we'd have offered £40,000 the day before he finally settled on £38,000, then he'd have bitten our hand off for it.
 
Colvic Watson said:
Not the whole story is it. When we were looking for a replacement boat we saw two very interesting approx 37 foot steel yachts; one had major layout issues but was exceptional quality, the other was a superb layout but needed TLC. Both on for £80,000 having recently come down from £90,000. What do you do when you know they are going to sell for a lot less? We'd have bought either one in the blink of an eye if they'd been anywhere near what they actually sold for - sub £40,000. A series of people down the line will have had to make "silly" offers in order to settle at about the £38,000 they sold for. It's all about timing, if we'd offered £40,000 when we first looked then we'd have the broker make a polite no and the owner a sarky comment about long walks etc. If we'd have offered £40,000 the day before he finally settled on £38,000, then he'd have bitten our hand off for it.
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+1
I've been researching the market for 5 years now (that is, not the whole, just the bit that effects me). One to sell my boat and 2 to buy a very different one. In that time, I've seen the apparent value of my boat decrease and the asking price for boats I short listed decrease even more. The fair price, liked by both buyer and seller, is not static.
 
RAI said:
+1
I've been researching the market for 5 years now (that is, not the whole, just the bit that effects me). One to sell my boat and 2 to buy a very different one. In that time, I've seen the apparent value of my boat decrease and the asking price for boats I short listed decrease even more. The fair price, liked by both buyer and seller, is not static.
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Twas ever thus in any market - prices change.

As for Colvic Watsons example - if you "know" the boats are over priced by 100% then you have to ask why. Maybe the owners don't want to sell. That comes back to my earlier point about understanding what is on the market and at what price. A semi decent broker can help with that as Jonic said - they have access to actuals. But even without that if you see similar boats on at a better price ( or better boats at a similar price) then you can either buy the better boat, buy the cheaper boat and/or educate the seller
 
Colvic Watson said:
Not the whole story is it. When we were looking for a replacement boat we saw two very interesting approx 37 foot steel yachts; one had major layout issues but was exceptional quality, the other was a superb layout but needed TLC. Both on for £80,000 having recently come down from £90,000. What do you do when you know they are going to sell for a lot less? We'd have bought either one in the blink of an eye if they'd been anywhere near what they actually sold for - sub £40,000. A series of people down the line will have had to make "silly" offers in order to settle at about the £38,000 they sold for. It's all about timing, if we'd offered £40,000 when we first looked then we'd have the broker make a polite no and the owner a sarky comment about long walks etc. If we'd have offered £40,000 the day before he finally settled on £38,000, then he'd have bitten our hand off for it.
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All you are doing is illustrating the points I made earlier about the nature of the market. Those are unusual boats and doubt that the sellers had any information about sales prices of similar boats, so their asking prices would be little better than a stab in the dark as they have little idea what anyone is willing to pay. They may well of course rationalise their asking price through reference to asking prices of what they see as similar boats, or what they paid for it X years previously, or even how much money they have poured into it over the years.

When you offer a boat to the public - as you do when advertising - you are signalling it is for sale and indicating the price you would like. It is very similar to a guide price at auction - set to tempt bidders. If the response comes back from potential buyers that they are only prepared to pay half the price then you have a choice of accepting or deciding you would rather keep the boat. This decision may of course be influenced by what you think other boats are selling for, but if there is no good information on comparables then you have little to help you. At some point the owners of those boats have decided that the offers they got were the best they could get and decided to take the money rather than keep the boat. This does not mean that these sales will have any significant influence on sales of other boats in the future.
 
RAI said:
Quite, and the purpose of this thread was what? When you are actually trying to buy or sell, knowing the typical rate of depreciation is helpful, for example.
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Well, I started it as an intending buyer, so that I could start somewhere with gauging how pricing might be understood to work in the used boat market, as distinct from buying new. I think it's proved very informative, I certainly have a better understanding of the factors that might cause a seller to choose where to pitch his price, how that price might be tested.
 
RAI said:
Quite, and the purpose of this thread was what? When you are actually trying to buy or sell, knowing the typical rate of depreciation is helpful, for example.
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Depreciation rates are largely meaningless, partly because the base that is used (the cost to the original owner) is not fixed. new boat prices can vary by up to 30% on the same basic model. Depreciation (that is loss of value) is not pre-determined but is simply the product of a starting cost and a selling price divided by the number of years in between. As we have seen actual selling prices at any one time are difficult to determine, and so are original costs, so the rate is meaningless in a general sense.

Again different from cars where the market is big and there are literally millions of transactions a year so arriving at typical selling prices of most models of any age is easy, as is establishing a starting list price, although the latter is problematic and distorts the figures for cars that habitually sell for less than the list price.
 
Tranona said:
Depreciation rates are largely meaningless, partly because the base that is used (the cost to the original owner) is not fixed. new boat prices can vary by up to 30% on the same basic model. Depreciation (that is loss of value) is not pre-determined but is simply the product of a starting cost and a selling price divided by the number of years in between. As we have seen actual selling prices at any one time are difficult to determine, and so are original costs, so the rate is meaningless in a general sense.

Again different from cars where the market is big and there are literally millions of transactions a year so arriving at typical selling prices of most models of any age is easy, as is establishing a starting list price, although the latter is problematic and distorts the figures for cars that habitually sell for less than the list price.
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Sorry but that reads like:-
The new price is meaningless
The seller's price is meaningless
The number of years old is meaningless.
So,
Only the buyer's offer is real
and only then when the seller accepts it.

Very helpful in choosing a price, or in making an offer.
It suggests a bit of bargaining would be desirable.
 
OK, to move the thread on a wee bit ... based on everything above, can a low offer ever be truly offensive? Surely, it's more often than not just part of the process of 'price discovery' (for both parties).

I get the 'go jump off a pier' stuff, which is surely just a heat of the moment flippant way of saying 'no, not at this point and hopefully never'.

A low offer is hardly going to cause the seller to stress or lose sleep, more a case of 'thanks but no thanks', then tell his broker to keep looking for a buyer who will offer more. Unless, of course, there's a reason to need to sell fast.

Discuss ...
 
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npf1 said:
OK, to move the thread on a wee bit ... based on everything above, can a low offer ever be truly offensive? Surely, it's more often than not just part of the process of 'price discovery' (for both parties).

I get the 'go jump off a pier' stuff, which is surely just a heat of the moment flippant way of saying 'no, not at this point and hopefully never'.

A low offer is hardly going to cause the seller to stress or lose sleep, more a case of 'thanks but no thanks', then tell his broker to keep looking for a buyer who will offer more. Unless, of course, there's a reason to need to sell fast.

Discuss ...
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That would be so if boats were like (say) washing machines - a utilitarian bit of equipment that we judge purely on its utility. But somewhere along the line, boats gain sentimental attachments, and someone making a (ridiculously) low offer may well be seen as insulting, to both you as owner (have I been such a bad owner that she's not worth what others of the same type are?) and to the the boat (Is the boat I have loved for years not worth my love?). Capricious ISN'T for sale, but if she were, I'd probably tell the broker a threshold below which I didn't want to hear of the offer - the broker would reject it out of hand, without upsetting me!
 
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