12 Sep 2013
Having previously bought a cruising yacht/sailboat, one of the things we discovered during that process was how difficult it was to determine the worth, or value, of a particular boat. The obvious, not so helpful answer is…”it’s worth what someone will pay for it”. Duh! Well, that “someone” is US and we want to know that we are paying a fair market price for it. We were fortunate with our last purchase to have discovered a very nice boat and we were able to negotiate a good price. The real standard as to whether you paid too much, or got a good deal, is when you decide to sell. If you overpaid, you will take a hosing when it comes time to sell.
Comparing cruising sailboats is a lot like comparing furnished houses that come with a car in the garage. Even if you are looking at a condo in a complex where they are all relatively alike from a size and design standpoint, each one has different furnishings, equipment, as well as different levels of wear...and then they have the cars with engines and batteries and other vehicle options too. Every used boat is unique. They may have looked the same when they rolled off the assembly line, but they were probably already somewhat unique by the time they left the marina when sold, and certainly are by the time they are re-sold one or more times. This makes determining a reasonable value for a boat a very difficult task.
Since Dahleen has been in real estate for some time and I spent several years after military retirement building houses, we are familiar with “comps”. That is the comparing of a particular house (or boat) to other “like” houses or boats on the market, or recently on the market. The best comps are those that are no longer on the market because the sold. The problem is comparing boats because they are so unique. When looking at comps, 3 years seems to be a reasonable time frame when collecting "comps", and the appears to be little difference in price between older and newer versions of a given model, the prices are mostly based on condition.
Speaking of condition, that is the next variable. Excellent, above average, average, fair, poor condition tend to be the terms used to describe boats by brokers and surveyors. As expected, the definitions of the above terms are somewhat subjective. I (Greg) tend to set higher standards than a lot of brokers based on the condition of boats vs. their descriptive term of that condition. A boat kept in the tropics tends to be in poorer condition than one kept in the northern latitudes (sun does a number on boats); a saltwater boat tends to have more corrosion issues than a freshwater boat; owner maintenance influences condition in a big way. One of the selling brokers we talked to gave us some pretty good guidelines for a buyer…..typically:
- · Boats sell for about 12% less than they are listed.
- · Boats used in charter take about a 10% hit in price.
- · Location can make a 10% difference in price.
US non-tropical locations near the top
Remote (hard to get to) tropical locations near the bottom
- · The condition of a boat can make a 30% difference in price.
- · Buying a boat with the equipment you want is cheaper than buying a cheaper boat and then buying and adding all the equipment yourself.
So, just because the average boat sells for 12% less that listed price don’t assume that the boat your looking at is worth that. It could be worth less, or more, based on condition, location, equipment, and how it was previously used.