Making an offer....

[PEEJAYSEA]

Hi All

After spending some considerable time trawling through marinas, brokers yards, websites etc I finally found a boat that has ticked many of my boxes - and best of all SWMBO has given the nod of approval as she loves the look, space etc.
So, long story short, I am seriously considering making an offer through the brokerage that the yacht is with. My question is simple:

What is a reasonable offer for the yacht if she is advertised for £30k?

Is there an accepted mark up (10%?) when dealing with brokers as there is with garages etc? I don’t want to appear rude when I make my offer but equally I also would appreciate not paying the full asking price as there will be additional expenditure (clothing, safety equipment etc) as she will be our first boat.

Hopefully this has not offended anyone out there (brokers or those in the industry) – it is not my intention – I simply would appreciate guidance on what may be regarded as “the norm” when making an offer.

Thanks
Paul

 

[yoda]

Let me kick this one off and see where others go afterwards.........

Firstly you should offer what you believe the boat is worth to YOU. You should allow for work you would want to do once yours and more importantly make it subject to the findings of a survey commisioned by you alone. Brokers take a 'big' (my view) percentage and will not be keen to see the price dropped too much but a boat sold is better than one still on the books. Of course your offer will need to secure the boat so put yourself in the sellers shoes. Things like location and storage charges while being prepared for the season will also need to be considered.

Yoda

 

[Coaster]

This subject has been much discussed in recent months, directly and indirectly. The correct answer to your question is no, there's no specific percentage mark-up. One reason for this is that the open market value of a boat can only be estimated approximately. And the more individual a boat is, the more approximate the valuation figure.

People will give you advice based on their own limited experience. They may boast about their negotiating skills and tell you how they obtained 75% reductions in prices. All of that is likely to be of very limited use to you.

The four key factors are these:

1. Do you really know roughly what sale prices have been achieved during the past few years for the type of boat in questioin?

2. Is the current asking price about right or is it one of the excessively optimistic ones sometimes seen (if the boat has been for sale for more than a few months it's likely to be the latter).

3. How keen is the owner to sell?

4. How keen are you to buy?

Reverting to your question, I'd say that your initial offer could sensibly be between 0% and 50% below the broker's asking price, depending on circumstances.

 

[oldsaltoz]

What ever you offer make sure it's subject to survey and don't forget that you can increase a low offer but not reduce any offer unless you place conditions on it, like subject to survey and engine inspection.

Also avoid using the dealers surveyor, select your own based on local knowledge.

Good luck.

 

[snooks]

What ever you offer make sure it's subject to survey

IIRC unlike property an offer on a boat is legally binding verbal contract, so you're only way to get out of buying a lemon if the survey proves it to be is to use the phrase "subject to survey"

If the offer is accepeted the norm is to secure it with a 10% deposit so the boat is removed from the market

 

[Lakesailor]

I also would appreciate not paying the full asking price as there will be additional expenditure (clothing, safety equipment etc) as she will be our first boat.

Don't even bring that into the discussions. That's of no concern to the vendor.
On the other hand, as others have suggested, try to pay what you are comfortable with.
Don't get hooked up into the treadmill of brokers fees, survey reports (although you do need one if spending that sort of money, to avoid a costly mistake) etc.
You gather the information and make an offer you are comfortable with.
Don't start justifying your offer as they will begin with the micro-negotiating.
If it's not enough to buy the boat either walk away (leaving contact details, preferably with the owner if you've been lucky enough to meet him) or ask for their lowest price.
After that it's up to you.

It's not any different from any purchase. You want to buy, they want to sell, if you both want it enough you come to a middle point.

 

[snooks]

I don’t want to appear rude when I make my offer but equally I also would appreciate not paying the full asking price as there will be additional expenditure (clothing, safety equipment etc) as she will be our first boat.

I too don't want to sound rude, but if you have to lower your offer to allow for the "extras" then may be you should be looking as cheaper boats.

If your limit is 30k the most you should be looking at spending is around 25k by the time you have negotiated, had her surveyed, sorted everything for the insurance, paid the yard fees and had her relaunched you'll have spent anything you managed to save on the purchase price.

 

[jac]

As others have said

No fixed mark up and depends so much on the condition, what extra equipment etc has been fitted, how old it is. Unlike cars - even with high volume makes you will be do well to find 2 boats that are exactly the same and so worth exactly the same price which makes comparison hard.

My 2p

Firstly - research other examples of that model, or competitors to that model. That will give you a feel if the asking price is in the right ball park. if it's not - then you will need to alter the following to take this into account.

Assuming the price is competitive I would start the negotiations by thinking around an offer of asking price minus 5-10% minus the cost of replacing anything you think looks even slightly worn out / tired / old.

You might then need to adjust that again to take accound of the fact that a model with new, engine, rigging, sails, electronics will be worth more that £30k and also by the competition out there. So if there are 4-5 example of your model all fairly similar then come in really low on your favourite and see what happens. You will have examples as reserves if your really mess it up!

In practice then if she's a 15 year old boat with original sails, electronics, engines etc then you're offering around £20k + or - depending on the above. Would expect that offer to be rejected so would then explain why it's a fair offer ) i.e. the engine / sails / electronics are shot, need replacing and it will cost £x. You'll probably find that the owner / broker will offer to do some of the work but by that stage you're into the finer stages of negitiations.

If you're offering at this time of year though remember that it is to your advantage for the sale not to complete until all the work is done as it avoids you paying storage costs until you can use the boat!

 

[Wandering Star]

As a matter of interest has anyone commissioned a pre-purchase survey and subsequently successfully claimed against the surveyor for failing to identify a problem? I know someone who once made an unsuccessful claim which was rejected on the basis the survey report T's & C's included some all encompassing clause to indemnify the surveyor. Everytime I've had a survey carried out the report has missed loads of stuff. The type/size/value of boats I normally own doesn't justify the expense of a professional survey given that the guarantees appear to be useless when put to the test!

Cheers, Brian.

 

[Tranona]

As a matter of interest has anyone commissioned a pre-purchase survey and subsequently successfully claimed against the surveyor for failing to identify a problem? I know someone who once made an unsuccessful claim which was rejected on the basis the survey report T's & C's included some all encompassing clause to indemnify the surveyor. Everytime I've had a survey carried out the report has missed loads of stuff. The type/size/value of boats I normally own doesn't justify the expense of a professional survey given that the guarantees appear to be useless when put to the test!

Cheers, Brian.

Yes, there are successful claims. I looked a boat a couple of years ago where the owner had a successful claim against his surveyor - but it was an extreme case. The important thing to remember is that the "mistake" must result in a loss to you, and often the mistakes are irritating and not worth arguing about. However if they are significant then the surveyor has insurance to indemnify him, or he could, as happened to me once, help you resolve the problem without making a claim.

The problem with most claims is that you need to prove that he is wrong which often means further cost of another "expert" to support your claim. This process can end up costing more than the loss in value. There was a recent case involving a well known yard where the owner won part of his case, but the costs exceeded the value of the boat!

BTW the survey is not a "guarantee" - it is you obtaining advice that a boat is as described because you have no comeback on the vendor (if he is a private individual)

 

[westernman]

It is very important to have a formal inventory so you know exactly what does and does not come with the boat.

Items which could conceivably be removed, such as sails, covers, anchors, engine, outboard, tender, chart plotter, radar, VHF, flares, life jackets, tailor made sheets, hand towels, crockery,...... should be all be listed if appropriate.

You don't want to end up with a bare hull with no sails and no engine

As far as offer price goes, there are no rules. Every situation is different. The longer the boat has been on the market, the more likely (in general - but not always) a lower offer is going to be accepted.

Make an offer you are definitely prepared to pay. You are entering into a contract where the only get out is if the survey reveals the boat to be in a substantially different condition than was represented by the sellers and the brokers.

 

[jonic]

Ok I'll give some insight too. I am a broker and there is NO % markup on any of my boats. It would be pointless.

Here are some real world examples for you of the last three selling prices for boats I have sold.

HR 46 asking £389500. Sold for £382000

HR 42 asking £239500. Sold for £230,000 plus approx £3000 post survey work

Jeanneau 43 asking £118500. Sold for £112500.

So all sold between 2 and 5 % of asking price.


All were priced correctly and had more than one offer at the same time.

The fact is there are no "rules". You can offer whatever you like. It's just an offer. (Make sure you make it subject to survey though.)

Have a look at other similar boats and see if the price is competitive and offer what you think the boat is worth to YOU. Offer less than that if you wish, and see what the response is. You'll either be turned down or not.

Generally with brokerage boats an offer that is 15% under on a correctly priced, popular boat with reasonable interest will fall into the realms of "not to be taken seriously". If it's been around for ever and you are the only interest, well that may be a different story!

Good luck with it

 

[Flapjack]

I would also talk to a few surveyors before you instruct one, I had an interesting experience when buying our first boat where one of the surveyors I contacted asked me what I wanted to find wrong with the boat, I explained that I was new to sailing and didn’t know lot about boats and just wanted to make sure the she was seaworthy and safe for me and my young family, he just didn’t seem to get it and kept on insisting that I tell him what to find wrong, needless to say he didn’t get my business.

 

[jonic]

I would also talk to a few surveyors before you instruct one, I had an interesting experience when buying our first boat where one of the surveyors I contacted asked me what I wanted to find wrong with the boat, I explained that I was new to sailing and didn’t know lot about boats and just wanted to make sure the she was seaworthy and safe for me and my young family, he just didn’t seem to get it and kept on insisting that I tell him what to find wrong, needless to say he didn’t get my business.

Blo***Y h***.

 

[Daedelus]

As far as surveyors go I found Tony Staton Bevan very helpful.

He did the usual surveyor thing of writing a report that terrified the wits out of me, but was more than happy to talk me through the whole thing and explain why something had been mentioned and whether it was a problem or not and what to do about it.

He did give one very useful tip which was as the boat was out of the water and he couldn't check the engine get the broker to hold onto an agreed sum, so that if there are any faults when the thing is in the water you can negotiate for repair from a position of some strength. (Turned out ours needed a head overhaul and the money withheld just paid for it).

Years later when there was a question over something he did a further check and a reassure on something (confirmed as ok by other surveyors when we sold it) and for free as he had done the original survey.

 

[andrewfollett]

I have to disagree with those who suggest you should offer what shes worth to you. Your aim is to buy the boat for as little as possible and with luck this will be substantially less than you might have been prepared to pay. To get the best price you have to determine the psyche of the seller. How motivated is he to sell. has he already bought new, is he financially commited to a sale. Does he have family reasons for requiring a quick sale or is the whole thing speculative on his part. If its a speculative sale, in other words, he is looking to sell well and wont be overly bothered if he cant get top dollar, he just wont sell it! Consequently you will struggle to get a good deal. Brokers give a suprising amount of info away. get to know the broker by viewing the boat and asking face to face why the seller is selling. Find out what type of sailor the seller is, has he got bored, How many offers he has had, how long its been on the brokers books. has she already been surveyed, did a sale fall through because of a survey etc.
If you find the boat has been for sale for a year and the seller has not had her in the water you can start by pointing out the defects and adding up the costs to put right. both broker and seller will know them already but make sure they know youve seen them too. I would not hesitate in offering 30% less if i thought the seller was a truly motivated one! The seller will always come back with a counter offer and youll end up in the right place. Start offering only 10% less and youll compromise on 5% under the ask. One things for sure..the seller wont sell if boat is more valuable to him than your offer price. The key then is not to find a price that the seller is happy with but one that he will begrudgingly accept as his absolute lowest. It might take a few days to establish this but you wont find out if you rush in. HOWEVER.. if the boat is a corker and everyone wants it and there are 5 viewing this week offer 5% off and settle at full asking! One final thought, is dont use advertised prices to guage a boats value. Its easy to find a 25% difference in prices for a marque, that will be down to condition. Also, boats might not sell for anywhere close to asking prices. If you find an old ad for a similar boat, speak to the old broker and find out how close to the asking the sale achieved. You can then be well armed with facts. Good luck.

 

[Ubergeekian]

I have to disagree with those who suggest you should offer what shes worth to you. Your aim is to buy the boat for as little as possible and with luck this will be substantially less than you might have been prepared to pay.

My aim when I bought Jumblie was to pay a price which was fair to both me and the seller, and I believe that I did. I may have been able to get her for less than I paid, but frankly I don't care. Getting the boat I wanted at a price I could afford was far more important to me than feeling I'd screwed a bargain out of someone.

 

[andrewfollett]

As a matter of interest has anyone commissioned a pre-purchase survey and subsequently successfully claimed against the surveyor for failing to identify a problem? I know someone who once made an unsuccessful claim which was rejected on the basis the survey report T's & C's included some all encompassing clause to indemnify the surveyor. Everytime I've had a survey carried out the report has missed loads of stuff. The type/size/value of boats I normally own doesn't justify the expense of a professional survey given that the guarantees appear to be useless when put to the test!

Cheers, Brian.

Bought a boat back along. Surveyor said the sails were ok and useable. £rd sail out the main ripped when i was handling it. I met up with the surveyor on board along with a sailmaker who was required to make me a new main. It was evident that the sails were uv rotten and the surveyor refunded my full survey amount on the basis of my argument that A. if he had missed that one expensive problem i could not be confident about the remainder of the survey and B. if i had known of the rotten sails i could have negotiated a better price. Since he conceeded he had missed the problem i have no doubt that i could have sued for full loss but was happy with the end result and didnt need to embarass him or face an expensive legal battle. We pay a large amount of money for these surveys and part of the cost goes towards their indemnity insurance. If they get it wrong and its inexcusable, pursue them!!

 

[andrewfollett]

My aim when I bought Jumblie was to pay a price which was fair to both me and the seller, and I believe that I did. I may have been able to get her for less than I paid, but frankly I don't care. Getting the boat I wanted at a price I could afford was far more important to me than feeling I'd screwed a bargain out of someone.

The broker and seller are both aiming to get the BEST and highest price from a buyer. Its not personal, its just the brokers job. The buyer has to take a similar approach otherwise YOu the seller have been screwed by paying more than was required. I believe that all things sell for the correct price. If a seller is prepared to let his boat go for the minimum price and you are the only person that has offered that price, then the seller has been lucky to find you. Dont be embarrased at establishing the sellers lowest price. You dont need to screw a bargain, just act in a business like non emotional manner. Be polite and friendly and no one need be offended!!

 

[grahamthurs]

I think Yoda and Ubergeekian have got it right. The last three boats I have purchased I have monitored the market closely and worked out a value for the type of boat I was interested in. This value would be based on an average assessment of what you would expect in the way of inventory, renewals of electrics, sails etc as well as general condition. Often brokers will tell you sold prices which helps. I then put my own value on any particular boat I am interested in. If this comes within a respectable amount of the asking price I make an offer. If not then walk away or talk to the owner or broker about whay you think the asking price is too high and you may then get their bottom line and if you really want the boat can decide to pay it or make an offer.
Good luck