1. Is a boat show price the best price?
Brad Baker, Swiftsure Yachts: “It really depends on the circumstances. With the new boat lines we sell [Allures, Garcia, Outbound, Hallberg-Rassy, Outremer] the answer is not necessarily. The boats we sell are are made to order. Any boat we have at a show is there because an owner has agreed to, is kind enough to allow us to show it, and is there for demonstration purposes only. We use boat shows primarily to introduce prospects to a boat they may not otherwise have considered. The margins on these boats are relatively small, so we don’t have a whole lot of room to offer something like a boat show discount. There may be an offer for a specific option to be thrown in or something like that, but it’s likely that option would be thrown in regardless of the boat show. A more likely scenario for a discount is if a buyer is willing to make their boat available for a boat show in the future.”
Dave McKenney, Brewer Yacht Sales: “I believe that terms and price are always negotiable even at a boat show price. There are always some items to add to a new boat, like canvas and electronics.”
Stanton Murray, Murray Yacht Sales: “You’re not likely to get a bad deal at a boat show. Those representing products at shows are prepared to put their best foot forward, including purchase incentives. That said, it is common for the same incentives to be offered at events such as a dealer open house immediately prior to a show.”
Jon Rotenberg, Eastern Yacht Sales: “A boat show price is normally the best price. In many cases the manufacturer is contributing a substantial part of the show discount. When the show ends, the availability of those contributions also ends.”
Thom Wagner, Wagner Stevens Yachts: “Usually it is, because everybody puts their best foot forward and is trying to corral the highest amount of clients. It doesn’t mean you can’t negotiate a little bit. The world today is acclimated to people asking for a better price on anything, whether it’s a boat, a car or a house. The boat show price is a good price, and you get the best price. But it doesn’t mean buyers don’t ask for something in addition to a boat show price.”
2. Can you negotiate directly?
Brad Baker, Swiftsure Yachts: “For a production boat sold by dealers the answer is typically no. The builders won’t sell directly and the buyer will need to negotiate with the dealer. Most dealerships have exclusive territories so it may be that there’s only one dealer you can actually purchase the boat from. It doesn’t hurt to check prices outside of your territory. For boats that are built to order, whether or not you can negotiate directly with the builder is all over the map. For some boat lines buyers can and do have the option to purchase directly from the builder. These builders generally don’t negotiate on price. If you want to negotiate, the builder will direct you, the buyer, back to the dealer. Regardless, it’s often best to buy through a dealer, as buyers are better serviced, and there’s usually no price benefit from buying direct. A local dealer is better equipped and on hand to help with any after-sale service or warranty. In the scenario where you are negotiating on a used boat sold through a brokerage, then generally it’s best to conduct negotiations through the brokerage. Often sellers have listed with a brokerage to give separation between themselves and buyers during the negotiation process.”
Dave McKenney, Brewer Yacht Sales: “Yes.”
Stanton Murray, Murray Yacht Sales: “Of course you can negotiate directly and so can your boat dealer. A good boat dealer should be viewed as any other professional in your world. Don’t be afraid to share your dream including schedule, expected service, budget & goals. You’re likely to find that your dealer has insight concerning additional factors that will influence your decisions. One often misunderstood negotiating point is a trade. If you have a boat to trade, ask your dealer to share the realistic trade value with you. Believe it or not, the market may not like the custom curtains & cabin sole that you added to your trade-in 1982 ‘I’veseenbetterdays-32-footer’ as much as you do. our dealer may also remind you that 1982 was 33 years ago. What car were you driving in 1982 and how much is it worth as a trade-in today? On the other hand, a clean, well-maintained trade will be recognized as such by a professional dealer.”
Jon Rotenberg, Eastern Yacht Sales: “If you’re dealing with a new boat, and a dealer, you negotiate with him. With a used boat, if it’s a brokerage boat, negotiating is done through a broker and the broker has to bring the offer to a seller, who decides what he wants to do with an offer.”
Thom Wagner, Wagner Stevens Yachts: “If a potential buyer comes to the boat show, and meets with a salesperson of a new boat, that’s the person to negotiate with. As the marketing arm for Passport Yachts, we’re a little different: We’re the manufacturer. We don’t have distributors. Often at shows, manufacturer’s representatives are there in addition to salespeople. Usually if a client is going to negotiate, he talks to salesperson and the salesperson talks to the manufacturer’s rep,who is there to support the salespeople. It’s highly unlikely the client will speak directly to manufacturer’s rep. The salesperson is there to make the deal happen. With used boats, the broker is there to represent either the seller or the buyer or in some cases both. If a broker is doing his or her job correctly, they aren’t supposed to put the buyer and seller together. The broker should keep entities separate. If they don’t, they should make it known to both entities. At Wagner Stevens, we try to separate that. If I’m a listing broker on a boat and a client comes in, I will tell the buyer and seller I represent both. More commonly, I give the negotiation process with either buyer or seller to another broker in the office so I can represent one party 100 percent. Realize that this doesn’t always happen. Sometimes both clients are comfortable with one broker representing. At that point the broker becomes more of an arbiter. He’s trying to get two people to come to an agreement.”
3. What’s a realistic offer?
Brad Baker, Swiftsure Yachts: “For the used market it used to be that an offer that is within 10 percent of asking would be considered a realistic and reasonable starting point. Over the last five years or so, offers have often come in much lower. It has definitely been a buyer’s market. We are seeing a change as the good inventory of used boats is getting snatched up. I wouldn’t be surprised if prices stabilize or even possibly start to go up over the next few years. What is a realistic offer for new boats? I can’t really speak for other dealers, but for us, margins are small and there really isn’t room for negotiating on our new lines.”
Dave McKenney, Brewer Yacht Sales: “On brokerage boats, I consider a realistic offer one within 20 percent of the asking price. With new boats I consider the circumstances of what additions will be put on the boat. Dealers usually have a dealer prep fee, shipping charges and safety items like pfds, flares, horn, first aid kit, dock lines, fenders, anchor and rode, etc., that will be needed to take the boat away. In addition to canvas, electronics, extras, etc., those are where there can be good negotiations.”
Stanton Murray, Murray Yacht Sales: “Most books on negotiation advise of one scheme or another that starts with the asking price and works at winning the negotiation by purchasing the product at X percentage below the asking price. My advice is to first determine the market value of the boat that you wish to own, regardless of the asking price. A professional dealer or broker is more than happy to supply his/her clients with market data including recent selling prices of sister ships and a market appraisal. A successful offer is often one that is presented with supportive market data. To this end, I strongly recommend that all buyers and sellers engage the services of a Certified Professional Yacht Broker (CPYB). CPYBs are generally members of professional associations such as the national Yacht Brokers Association of America or one of the many regional associations that support the CPYB standard.”
Jon Rotenberg, Eastern Yacht Sales: “If you’re buying a new boat, basically, your offer should be what the manufacturer is able to give at a boat show price. Sailboat dealers work with a smaller margin than powerboat dealers. Powerboat dealers can take more off because they have more mechanical items that depreciate. If it’s a used boat, it’s up to the seller and his sense of urgency. In this day and age, it’s easy to know what all comparable boats for a particular model and year have sold for. So, today, prices are firmer than they once were. This of course doesn’t include cases where a sale is required due to a divorce, a death, etc. It’s worth noting that sailboats hold their value higher and longer than powerboats do. Sailboats have fewer mechanical components to depreciate. So, in the end, a sailboat is a better investment than a powerboat.”
Thom Wagner, Wagner Stevens Yachts: “If there’s a boat show special on a new boat, that’s a realistic offer. Most times a seller has reduced a price at a boat show or included an extra package of gear. It’s usually the best you can get. Brokerage or used boats are different: What we see are initial offers ranging between 10 and 25 percent less than the asking price. Somewhere in the middle is what’s going to happen. Sellers know that, buyers know that. Years ago, retailers discounted prices heavily. The world is used to discounted prices. This is very true with brokerage boats. What we find is that coming in with an initial offer 25 percent below asking price usually settles out between 10 and 12 percent off of asking price. But having said that, it’s largely driven by the initial asking price of the boat. If you’re talking about a boat that’s $150,000 to $300,000, 10 to 12 percent is a common number.”
4. Should you get a new boat surveyed?
Brad Baker, Swiftsure Yachts: “It goes without saying that a pre-owned boat should have a purchase survey done. In the case of a new boat, it’s in everyone’s best interest to have the boat be delivered without deficiencies. This avoids problems and warranty claims down the road. We all would like to think that new boats come out of the yard in perfect condition. The reality is there are always bugs to work out. A surveyor will not catch all of these issues, but typically will be helpful in catching some, if not most.”
Dave McKenney, Brewer Yacht Sales: “I would always have a new boat surveyed and if ordered, I would have the surveyor inspect the various points of completion during production. This would make any warranty claim process less burdensome and less intrusive on the first year of ownership.”
Stanton Murray, Murray Yacht Sales: “When purchasing a new custom or semi-custom vessel it’s not unusual for a buyer to hire a surveyor or representative to audit the process concerning schedule and build specifications. Vessels built by reputable manufacturers and commissioned by professional dealers are covered by warranties and are usually not surveyed.”
Jon Rotenberg, Eastern Yacht Sales: “No. New boats carry warranties and if there’s a problem you go back to the manufacturer. Of course, if it’s a million dollar boat, that’s up to the buyer. For a used boat, you have to have it surveyed. We make clients who want to buy a used boat without having it surveyed sign paperwork indicating that.”
Thom Wagner, Wagner Stevens Yachts: “There’s really no reason to, because a new boat comes with a warranty. In the 35 years we’ve been selling new boats I think only one or two have been surveyed prior to delivery.”
5. Are some boats too old to finance?
Brad Baker, Swiftsure Yachts: “The majority of traditional boat lenders prefer to make loans on boats that are 20 years old or newer. There is a minority who will make loans on boats up to 30 years old or newer. Beyond that, there are a select few who are willing to look at boats on a case by case basis and if they feel it makes sense will go ahead and write a loan on older boats. It’s safe to say it definitely gets harder to procure a loan the older the boat.”
Dave McKenney, Brewer Yacht Sales: “The major financial lenders do try to keep the boats that they mortgage to under 20 years old. There are some programs available through specialty or niche marketing for particular classic fiberglass and wood boats.”
Stanton Murray, Murray Yacht Sales: “Yes and no. Availability and cost of financing is driven by the perceived risk involved. Less than a handful of banks provide the majority of national financing on boats in the U.S. They mostly follow the same basic guidelines. Loan amounts over $100,000 are restricted to vessels less than 20 years old with terms of 15-20 years and a 20 percent down payment. Loan amounts less than $100,000 are restricted to vessels less than 15 years old with terms 10-15 years and down payments as low as 10 percent on used boats. Some of the national lenders restrict themselves to vessels less than 8 years old. Notwithstanding the above, local banks and credit unions generally are more flexible and provide boat loans weighted more on the relationship with the individual than vessel age.”
Jon Rotenberg, Eastern Yacht Sales: “Yes. When boats are older, the financing changes. If you want to be smart, buy a new boat because you’ll save money in the long term. When a boat is 10 years of age or older, there are issues. There are fewer new boats on the market, and it’s a self-fulfilling prophecy. We should buy new boats. You wouldn’t buy a 25-year old car to go to work every day.”
Thom Wagner, Wagner Stevens Yachts: “Yes. Again, it depends on the boat. We at Passport enjoy a good relationship with banks because our boats hold their value well. Rule of thumb is that a bank won’t finance a boat that’s older than 20 years old. Or at least they’d charge an extra percentage rate for that. Loans are typically 15- or 20-year terms and the boat will be 40 years old by the time the note is paid. If it’s a high-quality boat like a Passport or an Oyster or Hallberg-Rassy, the banks are more agreeable to finance an older boat. The value will remain longer.”
6. Do newer boats get a better finance rate?
Brad Baker, Swiftsure Yachts: “In my experience most don’t give better rates for new or newer boats. I’m sure there are exceptions.”
Dave McKenney, Brewer Yacht Sales: “Yes, they do.”
Stanton Murray, Murray Yacht Sales: Yes. Depending on the bank, the rate goes up and the term is shortened for boats approaching maximum age in the age categories I’ve mentioned.
Jon Rotenberg, Eastern Yacht Sales: “Yes, generally speaking. An old boat also needs a survey for insurance, whereas a new boat doesn’t.”
Thom Wagner, Wagner Stevens Yachts: “Finance rates depend on the strength of the client. Banks like to lend money to people who don’t need it. If you have a high credit score, etc., a good consumer history, banks will give you a good rate. If you don’t have a good credit score or it’s just reasonable, you’ll pay more. The same applies for both new and used boats.”
