TWL: Prep for Sale
Dear Peggy:
One of my contractual obligations to the Sellers when listing a boat is to
make suggestions and to give advice as to what improvements, repairs and general
maintenance they need to do to optimize their sales price. This is an on
going commentary between market response to advertising and direct response from
brokers or clients viewing the boat. It becomes a lot easier sometimes to be
the Messenger rather than the "monster" who has to break "reality" to a SELLER
so I really like to report the reaction of "outsiders."
No matter how hard you try to get a boat in excellent condition, something
always seems to crop up on a survey, its a boat right?
This brings us to the next question. What should be expected to be adjusted
in price on a "Survey Allowance" in your opinion? It is not a pure science and
the Surveyors seem to want to skirt the issue and just report on what is
functioning and nonfunctional. Some feel that if a radar is listed as part of the
equipment offered for sale, it should work or it should be deducted from the
listing, tossed overboard and called an artificial reef. Should a survey
allowance be adjusted for the value of a New Replacement? Or some depreciated
adjusted value? What about an exhaust system which has an expected life span of
about 6 years? How about a RIB which tubes can't hold air, does the new Buyer
get new tubes? or a patch or what if you can't find the hole? Or is a Seller
selling Where is as is. Not a perfect science.
Bubble gum repairs. I have been representing a boat which needs attention to
a ton of small and medium problems. I have been trying to represent to the
SELLER that on a boat you cannot just do "Bubble Gum" repairs. An item either
gets fixed or not. A little glue under the edge of some veneer peeling deck
as some cheap Euro boats produce is just not going to last. To me it borders
on fraud. My home had putty blended into the hardwood floors to cover termite
damage, a quick viewing of the house did not reveal the extensive termite
damage, the coverup was done by an artist. The house "inspection" did not show
the damage so I ate the damage.
Do you weld the pin holes in the exhaust or replace the elbow? You tell me,
what you expect. How about a vessel which has a repair log? Wouldn't that
add value to your asset and remove some of the "Margin" Buyers are putting into
their Offers for the "Black Hole"? A detailed "REPAIR LOG" could and should
give real value to a boat.
Gifford
YachtBiz@aol.com wrote:
No matter how hard you try to get a boat in excellent condition, something
always seems to crop up on a survey, its a boat right?
Yup.:) I'd have bet real money that my last boat (1980 Trojan F32, I'd
bought as a "project boat" and restored/updated/upgraded just about
everything but the hull) was in flawless condition, but the buyer's
surveyor found some minor problems.
This brings us to the next question. What should be expected to be adjusted
in price on a "Survey Allowance" in your opinion? It is not a pure science and
the Surveyors seem to want to skirt the issue and just report on what is
functioning and nonfunctional.
There are surveyors and then are those who only call themselves
surveyors...and bunch in between. If I were buying, I'd only want a
complete pre-purchase--not just the cursory "condition and
value"--survey done by a NAMS certified surveyor, even if it means
flying him/her in to do it. As for any "survey allowance," I've never
heard the term before. A surveyor's recommendations can be bargaining
chips or deal breakers, depending upon what needs to be corrected and
the cost of doing it all.
Although no buyer in his right mind should ever accept a seller's
survey, would it not sometimes be in both the broker's AND the seller's
best interest to have one done in order to put the seller in touch with
reality as to the REAL value and condition of his boat?
Peggie
peg.hall@sbcglobal.net
At 01:13 PM 2/8/04 -0600, you wrote:
Although no buyer in his right mind should ever accept a seller's survey,
would it not sometimes be in both the broker's AND the seller's best
interest to have one done in order to put the seller in touch with reality
as to the REAL value and condition of his boat?
Here is what is wrong with the entire scenario, how to get the seller
realistic?
The seller is totally ignorant of the boats problems. How do I know this. I
could make my fortune just betting on this 20 to one shot.
If the survey is well done, the problems will be so vast that the buyer
will walk. Jim Alexander's experience is typical, routine, you can make
book on it.
If the survey is well done, the seller will never be able to swallow the
paper loss and turn into a real loss. It is simpler to wait until a pigeon
shows up, who can be lulled into buying the boat.
There are more pigeons, than turkeys. The turkeys can and will be sold. And
you can make book that they will be sold for more than they are worth. The
percentage of people that I come into contact before they buy the turkey is
going down. The percentage of turkeys is going up. My suggestions regarding
what to have surveyed, assuming the buyer comes to me before the sale is
complete, results in about 80% of the sales coming to a dead end. A few
months later I hear from the buyer that they have finally found a boat
worth being entangled with.
Sorry, but this is the ice cold reality, I see this all the time.
Are all the boats on the market, turkeys? No. But I estimate that only
about 10% of the offered boats are worth buying at or near the price
offered. That at least 20% of the boats offered are not worth a second
glance at 1/4 the price and that at least 60% of the offered boats are not
worth more than about 2/3 the asking price. (I know that's not 100%).
Why the 60% not worth the 2/3 price asked? Because if you pencil it out,
there is no point paying the asking price, when there are about 10% of the
boats that are worth the asking price and by the time you fix the one up
that needs all the fixing, you will be back to, up to the price of the 10%
boats. It's just money. If you pencil it out, realistically, you don't want
to pay more than a similar boat in good condition, UNLESS good condition is
not what you are after.
The cost and time to fix a boat back up is shocking. If you buy a boat,
replacement value of 1 million, you can expect that anything you do
properly will cost a percentage of the million. Not a percentage of the
price you paid for the boat, but a PERCENTAGE of the million. And building
it piecemeal, may cost even more.
What an awful thought for a quiet Sunday.
Mike
Capt. Mike Maurice
Wilsonville, Oregon (Portland).
My personal experience supports what Mike has stated. What do the
brokers out there say?
Honest Alex, I did snip a little bit.
Mike Maurice wrote:
Here is what is wrong with the entire scenario, how to get the seller
realistic?
The seller is totally ignorant of the boats problems. How do I know
this. I could make my fortune just betting on this 20 to one shot.
If the survey is well done, the problems will be so vast that the buyer
will walk. Jim Alexander's experience is typical, routine, you can make
book on it.
If the survey is well done, the seller will never be able to swallow the
paper loss and turn into a real loss. It is simpler to wait until a
pigeon shows up, who can be lulled into buying the boat.
There are more pigeons, than turkeys. The turkeys can and will be sold.
And you can make book that they will be sold for more than they are
worth. The percentage of people that I come into contact before they buy
the turkey is going down. The percentage of turkeys is going up. My
suggestions regarding what to have surveyed, assuming the buyer comes to
me before the sale is complete, results in about 80% of the sales coming
to a dead end. A few months later I hear from the buyer that they have
finally found a boat worth being entangled with.
Sorry, but this is the ice cold reality, I see this all the time.
Are all the boats on the market, turkeys? No. But I estimate that only
about 10% of the offered boats are worth buying at or near the price
offered. That at least 20% of the boats offered are not worth a second
glance at 1/4 the price and that at least 60% of the offered boats are
not worth more than about 2/3 the asking price. (I know that's not 100%).
Why the 60% not worth the 2/3 price asked? Because if you pencil it out,
there is no point paying the asking price, when there are about 10% of
the boats that are worth the asking price and by the time you fix the
one up that needs all the fixing, you will be back to, up to the price
of the 10% boats. It's just money. If you pencil it out, realistically,
you don't want to pay more than a similar boat in good condition, UNLESS
good condition is not what you are after.
The cost and time to fix a boat back up is shocking. If you buy a boat,
replacement value of 1 million, you can expect that anything you do
properly will cost a percentage of the million. Not a percentage of the
price you paid for the boat, but a PERCENTAGE of the million. And
building it piecemeal, may cost even more.
--
Nick Meloy
44' Custom Trawler "Serendipity"
mulatfl@att.net 30 32.855 N 87 07.550 W
(850) 994-6165