Advice on negotiating with a broker

[tonykool]

I am thinking about putting an offer in on a yacht in the $1-2mm range. Looking for some negotiating advice. Been tracking sales and have access to BUC Value, so I feel like I have a pretty good feel for the fair market value of the boat I am looking to place an offer on. I'm just curious the general guidelines on the initial offer. I am also a real estate broker, so I've seen a lot of different approaches / techniques. Is starting 15-20% below the asking pricing insulting? Seems like the market has slowed down and boat are currently sitting on the market. Obviously, I know it varies on the boat.

I'm not in a rush. I literally have the time and the patience if this takes a couple of years to find the right boat at the right price.

 

[O C Diver]

How long has it been on the market? If it's been on the market for a while, the owner may be more receptive. A couple of weeks may not get you a counter offer, just a no. I would find the listing date.

Ted

 

[O C Diver]

Are you working with a broker? There is a companion site to yachtworld.com. It's only available to brokers and others in the boat business. When a boat is sold off of yachtworld.com, the listing broker lists the asking and sold price. Sometimes the prices are accurate and sometimes they're not. Don't know if there's a limit on how far back the listings go, but common boats can give you a pretty good average value. Probably a more accurate reflection of sold price and how long on the market compared to BUC.

Ted

 

[KMAL]

I am thinking about putting an offer in on a yacht in the $1-2mm range. Looking for some negotiating advice. Been tracking sales and have access to BUC Value, so I feel like I have a pretty good feel for the fair market value of the boat I am looking to place an offer on. I'm just curious the general guidelines on the initial offer. I am also a real estate broker, so I've seen a lot of different approaches / techniques. Is starting 15-20% below the asking pricing insulting? Seems like the market has slowed down and boat are currently sitting on the market. Obviously, I know it varies on the boat.

I'm not in a rush. I literally have the time and the patience if this takes a couple of years to find the right boat at the right price.

Every boat seller and broker wants offers - IMO 15% to 20% discounted offers are “market”. As you know from your RE experience - make it attractive - make your contingencies solid and blow through them quickly and show the seller a painless and efficient path to an easy closing (survey, mechanical, sea trial all done in two weeks). Most people selling a boat are doing so because they need to financially or have a new boat on order. Many of us who are boat owners ascribe fungible value to our boats - not a hard asset. Play your strategy out - adjust if you need to - you have time…

 

[DDW]

My impression is that boats aren't selling lately. The broker says this is because sellers are still caught in the "Covid Bubble" thinking when anything would sell for any price. Things are coasting back to reality, slowly. I've observe this on the boats I've been following anyway. Currently in contract on a new one (had been on the market for close to a year) and looking to sell the old one. Boats same age and condition as the ond I own now, purchase in 2018, are listed at 30%+ higher than I paid then. But also sitting on the market for a long time.

 

[BruceK]

Don`t overthink it. There is a broker, but you are negotiating with the seller. Some will tell you to shove it and pull down the shutters, some will talk. You should see that in real estate. That you are not in a hurry and willing to wait for the right boat, presumably at the right price, helps. Make an offer you are comfortable with, and see what happens.

 

[BroadCove]

The question above regarding whether you're working with a broker is a good one; if you are, they should be able to give you a good idea of what the boats you are interested in are selling for, and you can make an offer based on that.

Taking your midpoint ($1.5 million), 15-20% is $225-300k below asking. If I were the seller, I would always counter - I don't get offended. But I would counter close to asking, because I don't like wasting time, which means I price things reasonably to start (with information from experts I trust). Thus, 15-20% less wouldn't be attractive to me.

I sold the boat in my avatar about 9 months ago for 3.5% below my asking price. It actually was under contract three times within three months of going on market (first purchaser didn't even survey, forgot to ask his wife before making the contract; second had a legitimate concern about an ECM that we were having trouble sourcing; third took possession after that was addressed).

Long story short, I think brokers can provide very valuable services on higher end boats, including helping understand what the boats your are interested in are selling for. Good luck with the search!

 

[SteveK]

I am thinking about putting an offer in on a yacht in the $1-2mm range. Looking for some negotiating advice. Been tracking sales and have access to BUC Value, so I feel like I have a pretty good feel for the fair market value of the boat I am looking to place an offer on. I'm just curious the general guidelines on the initial offer. I am also a real estate broker, so I've seen a lot of different approaches / techniques. Is starting 15-20% below the asking pricing insulting? Seems like the market has slowed down and boat are currently sitting on the market. Obviously, I know it varies on the boat.

I'm not in a rush. I literally have the time and the patience if this takes a couple of years to find the right boat at the right price.

If you have a good feeling about fair market value why do you have to ask. What end price are you expecting to get, 15-20% below fair market value.
Of course we all want the best available price, Market value on boats as in real estate is what a willing buyer and a willing seller say it is. If you want to underpay the current day market value then by all means take the time in years of throwing out low ball offers until one is accepted.

 

[Judy at JWY]

Many good points in posts above. However, my comments:

1. Buying and selling yachts is not real estate. Clients with a "real estate comparison" mindset usually have more difficulty in their purchasing and selling.
2. The primary selling price of a boat is based on how badly or how quickly the seller wants/needs to sell it. There are no % rules.
3. Boat owners can be thin-skinned. Offering a price too low only sets the stage for a bad relationship. You want to maintain a respectful relationship with the owner during and after the sale. If s/he feels you have insulted his beloved yacht, it won't work in your best interests short term nor long term.
3. Some lenders might still use BUC, but I haven't heard BUC mentioned in many years. The #3 post from Ted/OC Diver is accurate.
4. The questions to ask the broker, aside from a zillion on the condition, are: How long has she been for sale? Why is she for sale? Have there been any offers? How many clients have seen the boat? Are there any surveys? Do you know what the seller will take?
5. Interview the broker. While the "Listing Broker" has a contract to represent the seller, you are now his client and s/he must represent you too. Do your research on the broker. If you are not certain that the broker will be giving you full disclosure on everything, then consider a buyer's broker ("Selling broker"), but do that before you are vested in the Listing Broker representing the boat. Many brokers, both listing and selling, won't work with you if you have already had direct contact with the listing broker.
6. Regardless of economy, boats do sell quickly. If looking for a "good deal," then consider one that has disadvantages (location, lack of pedigree, condition, age..) or an owner with difficult circumstances.
7. A boat by a popular builder, in a convenient location, priced appropriately, and in very good-excellent condition is not the boat to try to low-ball.