How do your normalize the value of a boat

We have started the search for our boat, and I am overwhelmed by the differences in prices for the same boat. We are looking at Hatteras 58 LRCs with a price spread of 200K and a mean price of around 380K. I have seen boats that they were asking 450K+ sell for ~300K. Currently there are six on the East coast ranging in price from 275K to 425K. All of the engines seem to be in excess of 2000 hrs. One of the higher priced boats has had the stabilizers removed. I was hoping there would be something like an NADA guide or something that would help in the valuation process.

I would appreciate any insights you may be able to offer.

NADA do boats!

If you have a friendly broker he can look up SoldBoats for you and find out the recent selling prices.

Build a relationship with a competent broker. For any particular boat you may be interested in ask your broker to provide you with a sold boats report for that particular manufacture's model. This will give you asking price, sold price and how long it was on the market. From that information you can glean what is the average price. Drilling down a little will provide the details that can justify why one boat sold for 1/3 more.... Brokers will have access to yachtworld's archives....

There is a NADA guide for yachts, well sort of. It is called Soldboats and contains all of the actual sales data from boats sold by brokers. And it is also only accessible by brokers so you have to work with a broker to access its data.


You have to pull down 4-5 boats of a similar age and year sold, normalize for equipment and maybe condition but that is a crap shoot and average the results. Not perfect but it is better than any other way.


At least it is real, unbiased data (well mostly) unlike any other source available.


Hatteras LRCs should be fairly well represented on Soldboats, but condition which is not discernible from listings will be the biggest unknown. A boat with a pristine interior and meticulously maintained engines will go for more than a dock queen.



David

djmarchand said:

There is a NADA guide for yachts, well sort of. It is called Soldboats and contains all of the actual sales data from boats sold by brokers. And it is also only accessible by brokers so you have to work with a broker to access its data.


You have to pull down 4-5 boats of a similar age and year sold, normalize for equipment and maybe condition but that is a crap shoot and average the results. Not perfect but it is better than any other way.


At least it is real, unbiased data (well mostly) unlike any other source available.


Hatteras LRCs should be fairly well represented on Soldboats, but condition which is not discernible from listings will be the biggest unknown. A boat with a pristine interior and meticulously maintained engines will go for more than a dock queen.



David

Click to expand...

Pretty good points here. Keep in mind when you are looking at boats that old, another factor is all the modifications and "updates" that decades of owners have visited upon each vessel. Engine hours also become a less certain spec, as many will have been overhauled by this time and quality and thoroughness of overhauls can vary. A really good engine survey by, in the OP's case, an experienced Detroit mechanic is essential. A boat with comprehensive maintenance records and receipts has a lot of value.

Start going to see a few and you'll know what I mean. It's way different from cars.

This is why “guides” will have zero value. Generally you have boats that are significantly “different”, low numbers of comparison, wide range of values, options and condition. Which is exactly why you have to assemble a number of comps and arrive at a value that way. It takes work, but also opens a number of opportunities. I say opportunity, because few buyers will take the time, and be capable of being objective. Even fewer sellers are remotely capable of being objective. Thus there are many opportunities to find an overpriced boat and identify sellers who likely have received no, or significantly below market offers. Play psychology right and you can predict when your research can be convincing. Sold boats is pretty much necessary as selling prices are often vastly different than list. Be careful though, the selling prices were historically on the honor of the broker. Many of which have figured out that reporting honest sales values is not necessarily in their best interest.

If you find a NADA or BUC guide or otherwise, ignore it. The statistical challenges are both insurmountable and usually obvious.

Welcome aboard. I would not be nearly as concerned about the hours on the diesel engines as how have they been maintained. 2000 hours on a diesel isn’t that many hours. Actually a boat that has more hours probably has been maintained better than one with very low hours since it really had to run to accumulate the hours. Good luck in your search.

I agree with the previous post. But for the most part the data provided by brokers for Soldboats is accurate. I was a broker in Annapolis for about a year. The only time I noticed that reported values were inflated was when the listing broker was the dealer for that line of new boats. Otherwise there is no incentive to fudge the data.

It does take a lot of effort to analyze and normalize (adjust for significant equipment differences like a genset or repower) the Soldboats data. Ask a broker who you have a relationship with to provide you with the full listings of comps and do the analysis yourself. That is the only way to understand the market and weed out the overpriced boats that never make it to Soldboats at that price.

Have you ever read a real estate appraisal. You won't find a word about listing prices there. In other words do not pay any attention to listings unless you are a seller and similar boats are priced lower than the one you have to sell. Then ask yourself why?

David

Great point on the engine hours! If well maintained, heck even if just OK maintained, 2000 hours is nothing.

I bought Sonas just over three and a half years ago when she had ~4800 hours on the engines. 13 year old boat. That was more than a lot of the other boats we were looking at. But I was salivating at a boat with twin Luggers, and when the engine surveys came out with flying colors, plus very positive comments from the mechanics (Shearwater) it was a done deal.

In fact we went to lunch with our buyers broker right after seeing her for the first time. I went to the bathroom and I heard about this conversation from my wife well afterwards.

Broker: "I need to talk to him, he really needs to put an offer in on this boat."
Wife: "No, you need to say absolutely nothing, he is buying this boat."

And I hadn't actually told her anything of the sort! She just knew by my reaction when I came out of the ER!

probably condition or upgraded will make the price difference in the same boats. It is much cheaper and less hassle to spend more for a care for boat.

NADA useless, Soldboats of great use and as said above a high degree of accuracy in the reporting. As to normalizing, not much normal about boats. The condition, the equipment, all varies so much. All you can do is get a range and then work within that range.

Let's say on a specific boat, you get a range of $175k to $300k from soldboats. Then you see a boat listed for $275k. Now you have to ask yourself if it's an upper end of the range quality boat. If you find it to be no more than average then you wouldn't want to pay $275k. Same thing at the other end, you think you've found a boat priced well at $210k. Then you look and it's about as bad for a boat of it's model and age as you've seen. Then $210k isn't a good deal, it's above market for that specific boat.

You guys are way too optimistic on the veracity of the sold boats data. I have it seen gamed many times in particular with trade -ins. One would get beyond reasonable trade-in value to inflate the sold price of the boat to be purchased. We are talking one to two hundred of thousands of dollars on a million dollar boat. Why? Because manufacturers like a high sold boat price and brokers would rather have 10% of a high price than a low price. The purchaser cares only about the net difference and feels like he is getting a real deal on the trade-in value.

gsholz said:

You guys are way too optimistic on the veracity of the sold boats data. I have it seen gamed many times in particular with trade -ins. One would get beyond reasonable trade-in value to inflate the sold price of the boat to be purchased. We are talking one to two hundred of thousands of dollars on a million dollar boat. Why? Because manufacturers like a high sold boat price and brokers would rather have 10% of a high price than a low price. The purchaser cares only about the net difference and feels like he is getting a real deal on the trade-in value.

Click to expand...

There are virtually no trade ins on the boats we're discussing. In fact, trade-ins are way down even on small runabouts, but dealers don't take trade-ins on larger boats, for the most part. In fact, most used boats are sold through brokers, not by dealers and the brokers don't take ownership of any boats.

BandB said:

There are virtually no trade ins on the boats we're discussing. In fact, trade-ins are way down even on small runabouts, but dealers don't take trade-ins on larger boats, for the most part. In fact, most used boats are sold through brokers, not by dealers and the brokers don't take ownership of any boats.

Click to expand...

That also is my experience in the world of boat dealers and brokers.


David

senangsekali said:

probably condition or upgraded will make the price difference in the same boats. It is much cheaper and less hassle to spend more for a care for boat.

Click to expand...

X1000

In some cases a well cared for or pristine boat will go for double the price under 100k but after that there's a certain expectation of it. IMO a 200-400k boat is less likely to be neglected for obvious reasons.


You can spend years restoring a good running boat..

Paint.. It's expensive and there's alot that needs painting on a boat. Never thought much of it but now my boat needs repainted(gel worn through in places).

Fiberglass work.. Rot seems to be common on old boats(probably not much in a Hatteras) but its hard work and it's always worse than you think. I could have easily spent what my boat is worth having all the fiberglass work done by a yard/marina.


Wiring, Genset's, plumbing, etc all adds up too.


So really it's up to you how much more the "perfect" boat is worth to you over an average or below average one.. I can tell you it's nothing like houses or vehicles i've dealt with in the past.

Brokers are like Realtors.. Some are bad, some are good and few are great so tread lightly there and dont forget what they are there for(to sell you a boat).

The Martin depreciation scale for boats may be of help. Some type of initial point is needed, new price or replacement value. It's an average approach and does not account for quality of a boat's maintenance over time, upgrades, replacements, outfitting and other details which are specific to each boat. Can also be useful if there a several of the same model of different ages on the market. Just another tool useful for reality checks.

Visiting/inspecting a number of boats will provide a feel for the intangibles. How many to visit? Depends on experience with boats, systems and quality of information about the boats and patience.

If there is enough information another approach is to estimate a 5 year cost of ownership. We went through this exercise for several boats. Many boat specific variables including other costs to purchase (travel, surveys, taxes, documentation, post-purchase repairs, moving boat to home base), annual cost to use/maintain, depreciation, lost income and finally, cost to sell with expected sale price.

Attached is a typical comparison chart. Somewhat complicated but I can provide more information if there is sufficient interest.

Note that there are several other threads which address costs with various approaches ranging from detailed to 'can't put a price on boating experience'. Just depends on how you want to look at it.

First time posting attachments, not sure if it will work.

How does an insurance company calculate value when they have to pay for a total loss ?

Benthic2 said:

How does an insurance company calculate value when they have to pay for a total loss ?

Click to expand...

Well many, maybe most yacht policies are Agreed Value. The insurance company pays an agreed sum stated in the policy independent of market value. Sure insurance companies will make sure that the Agree Value is reasonable and not twice the market value.


If you don't have an Agreed Value policy then I suspect it is a negotiation, like buying a boat. The insurance company makes you an offer, probably low, and you try to justify a higher number. I have no clue how they come up with their initial offer. Maybe they look at the last survey which usually gives a market value.



David

This is why we have surveyors as part of both the purchase and repair process.