Market Value vs selling value

[boatpoker]

Originally Posted by Island Time O25

If the boat spoke to your heart and came up with a good survey, overpaying a bit (say 10%) over the FMV is not a big deal as you will long forget that overpaid amount but will be enjoying the boat for years to come. Rather than the other way around where you will be forever slapping yourself silly for a boat you let to have gotten away. We only get to go around once so don't let that 10% keep you from being happy. At least until you sell.

I surveyed a C&C 37R for a very good friend. He overpaid (and knew it) by 10k ten years ago which was a lot more than it is now.

Thats the boat he wanted and he has never regretted buying the boat of his dreams.

[Pelagic]

Originally Posted by boatpoker

Boat prices are insane. I surveyed a Trojan Tri-cabin 36 in 2014 and valued it at $15k ... it sold a few weeks ago for $40k !



We have been turning away 6-8 surveys per day all year. Many (maybe most) buyers are complete newbies and often have already purchased the boat before they even knew they need a survey for insurance. We've surveyed boats that newbs already bought for $50k and valued them for "scrap value only".



We had one case in our yacht club where the buyer thought he'd bought the slip with the boat and was shocked by the $10k bill from the yacht club.



We now automatically refuse work where the boat was already purchased. It was just to depressing breaking so many bubbles. We also automatically refuse work when the first question is "How much is a survey".

That's amazing notes on how wild the boat market is.
I imagine there are a lot of newbies (dreamers) that are just tire kickers.

One thing that confuses me was why someone first asking for your professional rate and I imagine scope of work, would be automatically refused??

That seems like part of the decision process

[boatpoker]

Originally Posted by Pelagic

One thing that confuses me was why someone first asking for your professional rate and I imagine scope of work, would be automatically refused??

That seems like part of the decision process

Thats not the first or fifth question an educated buyer asks.
We've found that question asked by people who have no idea what they are getting into.

We have the great good fortune of being in the position to deal only with people we like.
Many of our clients over the last 30 years have become very good friends.

[MicHughV]

I have found that on several occasions, a prospective boat deal went south due to the 10% sales commission fee that must be extracted from the final sale price.....this from the seller's point of view.....it's extremely rare, but does happen, that the brokerage house will deviate from the 10% commission rate.

In the same manner, the buyer will be on the hook for "sales tax" which is usually not part of any boat transaction. This varies from State to State, but expect plus/minus 7%.
So, after paying your $150K for you new or used boat, you will still be required to trundle on down to your local tax office and fork over another $10k or so in sales tax. This hurts.....as you ask yourself....$10k for what ?.....it does not provide value or otherwise any improvements to the boat. The boat already had sales taxes added to it, when first purchased, but that doesn't matter to the tax office.

Whether or not you purchase the boat, you will be on the hook for the survey and haulout charges, which can easily add $1,000's.

Other costs will likely include getting the boat documented, insured, moved elsewhere, etc, etc...and off course, you'll be on the hook for slip fees, etc.

99.9% of the time, a new owner will almost immediately start to spend $$ to fix, replace, modernize, etc...

At the end of the day, a boat purchase is an expensive proposition for most people, this is especially true, if the boat is not used much.

When time comes to sell again, most people think, well, I've added $10K of new gear, but typically those items do not go towards the final sale price and they forget about all those other added costs they've paid over the years.

A boat is simply not a financial investment. It can be a hobby, a sport or way of life, but it's not a good financial investment.

[bstreep]

Originally Posted by MicHughV

Fair market value ?? It boils down to this...what the seller is willing to accept..what the buyer is willing to pay...in that particular year...for that particular boat.

Sure, that sounds right. But it isn't. Here's the MOST COMMONLY USED DEFINITION OF MARKET VALUE IN THE US:

The most probable price at which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting PRUDENTLY, KNOWLEDGEABLY and assuming the price is not affected by undue stimulus. Implicit in the definition is the consummation of a sale as of a specific date and the passing of title from buyer to seller under conditions whereby: (1) buyer and seller are TYPICALLY MOTIVATED; (2) both parties are WELL INFORMED OR WELL ADVISED, and each acting in what he or she considers his or her own best interest...

Emphasis is mine - but important. A boat isn't "worth what someone will pay for it."

[maijipo]

Originally Posted by MicHughV

I have found that on several occasions, a prospective boat deal went south due to the 10% sales commission fee that must be extracted from the final sale price.....this from the seller's point of view.....it's extremely rare, but does happen, that the brokerage house will deviate from the 10% commission rate.

In the same manner, the buyer will be on the hook for "sales tax" which is usually not part of any boat transaction. This varies from State to State, but expect plus/minus 7%.
So, after paying your $150K for you new or used boat, you will still be required to trundle on down to your local tax office and fork over another $10k or so in sales tax. This hurts.....as you ask yourself....$10k for what ?.....it does not provide value or otherwise any improvements to the boat. The boat already had sales taxes added to it, when first purchased, but that doesn't matter to the tax office.

Whether or not you purchase the boat, you will be on the hook for the survey and haulout charges, which can easily add $1,000's.

Other costs will likely include getting the boat documented, insured, moved elsewhere, etc, etc...and off course, you'll be on the hook for slip fees, etc.

99.9% of the time, a new owner will almost immediately start to spend $$ to fix, replace, modernize, etc...

At the end of the day, a boat purchase is an expensive proposition for most people, this is especially true, if the boat is not used much.

When time comes to sell again, most people think, well, I've added $10K of new gear, but typically those items do not go towards the final sale price and they forget about all those other added costs they've paid over the years.

A boat is simply not a financial investment. It can be a hobby, a sport or way of life, but it's not a good financial investment.

I am well aware of all expenses. And we also have a budget for work to be done. Also, no it is not an investment, it doesn't mean you don't need to keep it rational. The boat will need to be insured, one day it will be sold etc..etc...Being a hobby doesn't mean you have to pay an irrational price. Like everything boats have value even if the value is somehow hard to define. However, with all the explanations given by all participants, I do understand the concept of the market value and know what to do with it.
Thx you.

[MicHughV]

yep, another way of looking at it....is that it is a love affair...you meet a new girl (or boy), you fall in love...and will do most anything to get that person to be your partner....

same way with a boat....you see something.....you want it....and you'll move heaven and earth to have it...

That's how I got into sailing...as a youngster, I was given a Bruce Roberts " build your own boat" catalog.....I idly flipped thru' the pages until there it was....a BR 38 ketch. At the time I didn't know a ketch from a stick in the ground, and also lived at least 400 miles from the nearest ocean, but that boat "talked to me" in ways I am unable to describe. It captured every fiber of my heart and soul. It took a few more years to bring it all to fruition and ended up being my home for about 11 years while I traipsed around. Me and my gurl...er...boat

[flightlead404]

Originally Posted by bstreep

Sure, that sounds right. But it isn't. Here's the MOST COMMONLY USED DEFINITION OF MARKET VALUE IN THE US:

The most probable price at which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting PRUDENTLY, KNOWLEDGEABLY and assuming the price is not affected by undue stimulus. Implicit in the definition is the consummation of a sale as of a specific date and the passing of title from buyer to seller under conditions whereby: (1) buyer and seller are TYPICALLY MOTIVATED; (2) both parties are WELL INFORMED OR WELL ADVISED, and each acting in what he or she considers his or her own best interest...

Emphasis is mine - but important. A boat isn't "worth what someone will pay for it."

Right. The oft quoted (misattributed) Adam Smith saying is rather simplistic. Ideally you want to be unmotivated (or put on a convincing act of being unmotivated) and find a highly motivated seller, or perhaps motivating a previously unmotivated seller.

Motivating an unmotivating seller is not hard. Basically you can turn just about any "sales trick" on its head and use it against the seller. "Create a false sense of urgency" is usually a good one. You'll see sellers do this with everything from "closeout/presidents day/limited time offer" etc so just make up your own reason why your offer stands for a limited time then you're gone.

Pick up a Zig Zigler book, read the closing tricks, turn them around as a buyer.

Heck I've even resorted to silly tricks like having late afternoon meetings in a west facing office and putting my desk in front of the window. It works!

[Pelagic]

Originally Posted by boatpoker

Thats not the first or fifth question an educated buyer asks.
We've found that question asked by people who have no idea what they are getting into.

We have the great good fortune of being in the position to deal only with people we like.
Many of our clients over the last 30 years have become very good friends.

That's a great position to be in and I'm guessing your company has a deservedly great reputation and you are busy.

But I find it ironic that a first time committed buyer, who wants a Survey and probably needs your services the most!, ...
... is discounted because of a budget question.

This reminds me of my first Superyacht project as Owner's Rep for a "very" qualified customer.. who was also a first time buyer.

The first question I asked the Commercial Director at our meeting with the famous DeVries (Feadship) Shipyard was;

"How much of a premium do you place on the fame and reputation of Feadship, in your Contract Price?"

Raised eyebrows, stunned silence, skillful deflection but as I would not move on...they finally gave me a percentage..

..On cue, the client beside me laughed and said, well you're going to need to sharpen you pencil!

I thought that was it!

Three years later after millions invested in R&D for a +50m, we provided extremely detailed bid packages to 10 other Yards and DeVries .

Eventually, we signed a contract with DeVries at a competitive price.

That project became a very successful award winning build, for both yard and owner, with media articles and books that greatly enhanced DeVries's technical and finishing skills over the other Feadship yard.

Most importantly, a satisfied Owner who still enjoys his yacht today.....twenty years later along with a very loyal crew.

As I said, you get what you negotiate, not what you deserve!

[boatpoker]

Originally Posted by Pelagic

That's a great position to be in and I'm guessing your company has a deservedly great reputation and you are busy.

But I find it ironic that a first time committed buyer, who wants a Survey and probably needs your services the most!, ...
... is discounted because of a budget question.

This reminds me of my first Superyacht project as Owner's Rep for a "very" qualified customer.. who was also a first time buyer.

The first question I asked the Commercial Director at our meeting with the famous DeVries (Feadship) Shipyard was;

"How much of a premium do you place on the fame and reputation of Feadship, in your Contract Price?"

Raised eyebrows, stunned silence, skillful deflection but as I would not move on...they finally gave me a percentage..

..On cue, the client beside me laughed and said, well you're going to need to sharpen you pencil!

I thought that was it!

Three years later after millions invested in R&D for a +50m, we provided extremely detailed bid packages to 10 other Yards and DeVries .

Eventually, we signed a contract with DeVries at a competitive price.

That project became a very successful award winning build, for both yard and owner, with media articles and books that greatly enhanced DeVries's technical and finishing skills over the other Feadship yard.

Most importantly, a satisfied Owner who still enjoys his yacht today.....twenty years later along with a very loyal crew.

As I said, you get what you negotiate, not what you deserve!

There is no need to ask that question if a little due diligence had been done. Our fee schedule, sample survey reports and 100 relevant articles showing how we approach a job are all on our website.

Clearly these people hadn't checked us out before the call.
We prefer to deal with more aware people that had done a little due diligence. We take jobs only from people that sound like we'd like them.

I realize this may sound a little arrogant but life to too short to deal with people that we feel we'd neither respect nor like.

[Pelagic]

Originally Posted by boatpoker

I realize this may sound a little arrogant but life to too short to deal with people that we feel we'd neither respect nor like.

Not at all! Thanks for clarifying

[ozdigennaro]

There is only one "value" for a boat: when a seller and a buyer agree on a price, that is the "value" of the boat, for that moment.

All other "values" are estimates or guesses or manipulation. They can be useful, but they determine nothing.
Oz

[boatpoker]

Originally Posted by ozdigennaro

There is only one "value" for a boat: when a seller and a buyer agree on a price, that is the "value" of the boat, for that moment.

All other "values" are estimates or guesses or manipulation. They can be useful, but they determine nothing.
Oz

They determine your insurance premium and your loan payments

[scargo]

Originally Posted by boatpoker

There is no need to ask that question if a little due diligence had been done. Our fee schedule, sample survey reports and 100 relevant articles showing how we approach a job are all on our website.

I guess you offer discount for CPS/ECP members

It's a joke. I haven't paid my membership this year for the first time. So I am not qualified as a CPS member

[flightlead404]

Originally Posted by Pelagic

As I said, you get what you negotiate, not what you deserve!

and here's the book from which that quote was taken!

https://www.amazon.com/Business-Life.../dp/0965227499