How to Calculate an Offer Price

[Capt.Alex]

I would be more concerned about engine hours, standing rigging, sails, and structural integrity. Electronics are generally cheap in comparison. Old working electronics will get you where you want to go and can be replaced when it is convenient. Those things being equal then modern electronics will add value, but I would not reject a good boat without them. Find the best boat with the important things in good shape, then make a reasonable offer. In my opinion a reasonable offer is based on:
1. Can I get a boat I like better for the same or less money?
2. Is the offer in line with recent sales of the same make/model? (get your broker to print out recent sales from SOLDBOATS.com. You can't base it on asking prices.
3. Will you Feel good about owning it at that price?
4. If you really love it, then who cares, just buy it, cost is irrelevant.

[zboss]

Well, I have already bought all the charts for my ipad. However, I can't really see pulling out my ipad when the wind and the rain is going sideways all the while keeping it out of the water. I see a real wheel mounted chartplotter to be useful. An old B&W chartplotter may work but I doubt the charts can be updated and frankly, I would never really trust the info it was giving me. I really like the new simrad integration with the ipad!

I probably spoke without thinking when I said I wouldn't give any credit for electronics; its because I haven't really needed them. We have a GPS, VHF, and papercharts.

Outside the importance of getting a boat with great bones and then doing a basic safety and reliability refit, we only really want to add solar. Changing the cabin lights over to LED is cheap.

[barnakiel]

I have seen the App (Ipad, Android, etc..) integration on Ray and Garmin now I learn Simrad joined.

Looks like a very nice thing for anybody who uses mobile devices onboard.

b.

[Kenomac]

Originally Posted by zboss

Well, I have already bought all the charts for my ipad. However, I can't really see pulling out my ipad when the wind and the rain is going sideways all the while keeping it out of the water. I see a real wheel mounted chartplotter to be useful.

Our ipad is mounted at the helm using a $50 ipad bracket. When there's any possibility of it getting wet, I just place the ipad in a freezer size clear plastic baggie.

[zboss]

Originally Posted by Kenomac

Our ipad is mounted at the helm using a $50 ipad bracket. When there's any possibility of it getting wet, I just place the ipad in a freezer size clear plastic baggie.

Yea, we bought a waterproof container bag and it works really well. Still, it would be nice if someone just made a waterproof mount with built in charging.

[Dave0549jv]

Originally Posted by Capt.Alex

I would be more concerned about engine hours, standing rigging, sails, and structural integrity. Electronics are generally cheap in comparison. Old working electronics will get you where you want to go and can be replaced when it is convenient. Those things being equal then modern electronics will add value, but I would not reject a good boat without them. Find the best boat with the important things in good shape, then make a reasonable offer. In my opinion a reasonable offer is based on:
1. Can I get a boat I like better for the same or less money?
2. Is the offer in line with recent sales of the same make/model? (get your broker to print out recent sales from SOLDBOATS.com. You can't base it on asking prices.
3. Will you Feel good about owning it at that price?
4. If you really love it, then who cares, just buy it, cost is irrelevant.

I found these statements to be particularly insightful. Thank you!

[Curmudgeon]

Love should not factor into it. There ae multiple models of the same boat for sale, yes? You can love one just as much as the other.

If the boat does not have teak decks, offer 2/3 of asking.
If the boat has teak decks, offer 60% of asking.
If the boat has leaky teak decks, offer 2/3 of asking minus $40K, because that's what it will cost to replace the decks.

Don't be upset if the broker feigns shock. Look him or her straight in the eye and make the offer. Don't flinch. He or she has already marked the price up by 1/3, at least.

As for the electronics, older stuff may work perfectly well-- so long as you've got the nav chips for the areas in which you plan to sail. Nav chips for older sistems can be expensive. But if you need new, $4K will buy you a very nice system, including radar and AIS. It's not a big deal. You will pay twice as much to replace uphostery. Canvas and sails are also a bigger expense than the electronics.

[Suijin]

If the objective is to arrive at a rational, defensible offer that provides you a sound platform for further negotiations then you should follow a pretty straightforward process:

1) Look at what comparable boats have actually SOLD for over the last year. The asking price of boats currently on Yachtworld.com or any other marketplace is meaningless, given the fact that asking price is essentially subjective and optimistic. You can get access to the "sold" listings in Yachtworld (or a similar database) through a broker. Create a set of substantially "like" boats (model year, general condition, options, bolt-on equipment or equipment of similar value). The average sold price of this set is your baseline.

2) Have the boat surveyed or if you're adequately qualified, do it yourself. You will create a list of all the things that are wrong with the boat, or at least those things that you could determine from poking around for five or six hours, which is honestly not a lot.

3) Look at how the boat is represented. Take your list of issues and, for anything that the listing presents as functional but which you found to be not or in need of immanent replacement, subtract the researched replacement/repair with like cost from the average sold price of the boats that you averaged. Be thorough and comprehensive.

4) Make your offer to the seller and hold the information you have gathered as backup for the ensuing negotiations. Also assemble a list of other examples of the same boat that are on the market, similarly equipped, that you can use as leverage ("I can get the same value if I buy that boat that's in Norfolk."). In general, selling brokers have a better sense of what a boat is worth than the owner, but the owner sets the price. If you present a defensible, sensible offer to a broker and fill them in on how you arrived it it they will most likely go to the seller and advocate for it.

[captseamus]

Electronics are only valuable if you use them. Compass; VHF and depth finder will work.

When I purchased the Midwestern two years ago I replaced all the outdated electronics with the latest model Garmin's'. That equipment was two 6212 screens with chartplotters and 3D capability; 4ft open array; AIS part A and B; Two Garmin's VHFs with DSC. Depth sounders capable of updating to Twin Scan Sonar... The final totals including labor to R&R the old outdated equipment; filling in holes in the dash and rewiring that section of the flybridge well over $18+k... Definitely not cheap by any means. It brings an older boat into the 21st Century. And it will help it resell faster than leaving the old electronics in it for the next buyer.

[FLLCatsailor]

Originally Posted by Curmudgeon

Don't be upset if the broker feigns shock. Look him or her straight in the eye and make the offer. Don't flinch. He or she has already marked the price up by 1/3, at least.
.

I would say more often then not a seller marks their boat up more than its worth. As a broker I advise my clients on what comparable boats have sold for, and where we should price the boat to sell based on condition and equipment. Unfortunately, some sellers feel that their boats are worth more than the market will bear...

Some brokers over value a boat for an owner as a way to secure a listing... When they do this they are not doing their clients justice, and are not only wasting the sellers time but their own... I recently lost the listing on a sport fishing boat to another brokerage firm because they told him the would get him 150k more than the comps... If all of the comps have sold for 450k over the past 18 months you can't realistically expect to net 550k... I'll call him next summer to try to convince him to re-list with me... Of course by then the comps will be 425k...

[Suijin]

I have a broker friend, extremely experienced, who lamented that almost universally clients have unrealistic expectations about what they can get for their boat, particularly if it has had a recent refit. He said there is a saying in the industry that it takes two years for the owner of a high-end boat to come to grips with what the boat is really worth. He uses comps of recent sales to try and inject some reality into their expectations but that does not always work. He represents boats that are dramatically over priced and says he generally does not work very hard to move them and tells inquiring buyerss flat out what he thinks the boat's real market value is.

When it comes to "bolt on" equipment, it really is an apples to oranges game. Every boat is equipped differently, with equipment in varying degrees of age and condition. I always say you should buy a boat based on it's "bones" rather than the stuff you can easily (although not necessarily inexpensively) replace.

Electronics have a pretty short half-life in terms of value for the simple fact that the technology is moving forward pretty quickly and prices are steady or even falling in many cases. My boat has a very nice suite of networked Garmin units and at 5 years old while they are perfectly serviceable they don't really add much in value to the vessel. They would perhaps add to it's "salability" compared to a boat with older electronics, but they are far from state-of-the-art.

Personally, all other things being equal, I would buy the boat with dated electronics and take the money I save and put it into a brand new system. The current generation of equipment out on the market today is pretty remarkable stuff.

[Curmudgeon]

I did not mean to vilify brokers. There are some very experienced brokers who price boats realistically if their clients let them.

But whether it's the broker, the seller or whatever, 2/3 of asking is a realistic rule-of-thumb offer in today's market. Maintenance costs have skyrocketed, and boatyards gouge when they can. Plenty of owners are looking to unload white elephants, particularly older boats over 40 feet.

[FLLCatsailor]

Originally Posted by Curmudgeon

I did not mean to vilify brokers. There are some very experienced brokers who price boats realistically if their clients let them.

But whether it's the broker, the seller or whatever, 2/3 of asking is a realistic rule-of-thumb offer in today's market. Maintenance costs have skyrocketed, and boatyards gouge when they can. Plenty of owners are looking to unload white elephants, particularly older boats over 40 feet.

I would disagree to a certain degree. While some people are looking to offload their older 40-50ft range boats a lot of them have too much of an emotional attachment to price them accordingly.

What I always tell my clients is that if a boat has been on the market for over a year it is because the boat is either overpriced, not accurately portrayed in the listing, or in poor condition... Sometimes all of the above... Scratch that... Most of the time.

Obviously there are exceptions...

[Curmudgeon]

I bought my current boat from a very experienced broker. The boat hadn't been on the market that long and had been under contract, but the prospective buyers walked away (no one knows why). I asked the broker, what will it take to get this done? He gave me a fair price, around 28 percent below the listed Yachtworld price. I offered somewhat less than that, and the seller took it.

Brokers and sellers invariably list boats for more than they are worth because they don't want to bid against themselves. I can understand that. And some buyers overpay, so that strategy sometimes works. However, it follows that the average selling price of a comparable boat is not always the best gauge. The "true value" is usually somewhat lower.

My advice to all the sellers out there: for God's sake, clean up the boat. A friend of mine recently bought a boat that was listed for $230K for $170K. It was a 43 ft. 2004 model and very nicely equipped (boom furler, watermaker, genset, dual cycle heat a/c, older but working chartplotter, radar, etc. But the sellers had left the boat on the hard for two years with a very poorly done shrinkwrap job. The shrinkwrap was all torn, the boat was mildewed and filthy and water had seeped in. If the sellers had invested $3,500 in a Fairclough cover the boat would have sold for $30-40K more.

[zboss]

Having a buyers broker has been the correct choice, or as Ferris Bueller would say "they are so choice!". He was able to bring up a list of how much each vessel of that model was sold for over the last 8 years or so. This helped us arrive at an affordable but reasonable offer, without feeling like we were getting ripped off.

We ended up making low bids on a few boats that were placed well out of our price range - not with the intention of low balling the seller but with offering what we could. All said no, but then one came back with a counter-offer, after a short round of negotiation we came to an agreement on a price that was still within our price range. We were ecstatic because we never thought that we would be able to afford this particular boat.

Its at this stage that I think a lot of confusion arises...

We completed an engine and a full survey and are now negotiating a lower-than-agreed price to make up for things that were not immediately apparently wrong with the boat. For example, the boat is listed as having a fridge, we were not able to test it before making an offer, and it was discovered during the survey that it does not function. So, a little off for that and so on for other items.

I think my original question was due to ignorance - I was not as well educated on the purchase process that most buyers go through. The powerboats we had, came with the house we bought so we never went through this process.

In the end, we are paying about 10K more than we had hoped but that just makes the kitty just a bit smaller - BUT we are going to end up with a MUCH better vessel all around.