The Five Steps to Getting a Good Deal on a Used Catamaran
By: Andrew Holland
As the Sales Manager at The Multihull Company I have seen a significant shift in the brokerage market with the proliferation of MLS searches, blogs and forums that have made the catamaran world more interconnected than ever. While some of these blogs or forums have good information, the knowledge it takes to make a sound purchasing decision still rests with the experienced hand.
Let me explain what it really means to combine the best of what the internet provides – listings – and the best of what seasoned brokers can provide – experience. First, there are the steps taken to narrow the list of boats that suit potential buyers, and then the knowledge to really recognize a “good deal”, and when to walk away. Everyone wants to get a great deal on a used boat, but not everyone has the knowledge base to recognize one.
While I am writing this as if I was working as buyer’s agent for a customer, the following tips should help those of you who wish to go it alone. If you fall into that category, you can thank me later! But, be advised, a truly good broker generally saves their buyers lots of time and money. Let me show you how.
Step One: Determining Your Budget and Voyaging Agenda
The first thing you must ask yourself is how much you want to spend. When determining this figure, it’s important to establish expectations on the condition of the vessel, how much more that you may need to invest into the boat after the purchase on necessary repairs, and also taxes and/or duties that may be due. All of these potential costs should be factored into the total budget for the vessel. If you are working with a broker, be forthright about your budget and your after purchase expectations as it will assist him or her to narrow the options.
If you are the type of buyer who wants to go world voyaging you will be shopping for a very different catamaran than the buyer who is looking to day sail around the Bahamas. And while the world voyaging catamaran may also suit cruising the Bahamas, it may not be the best catamaran for that agenda. It’s important to keep this in mind as you are reading up on all of the latest and greatest owner blogs, forums and sales literature to determine if a model may be a good fit, or if you should rule it out. In the end, almost any boat can sail around the world – at issue is whether it is the ideal boat for you to do so.
Owner blogs and forums can be full of confirmation bias, so be mindful of this. While they may love the boat they purchased they may not have had a chance to experience the pros and cons of many other boats that may have also suited their cruising agenda. In fact, we often find that most people do not make the right choice on their first boat if they are shopping alone – and this has mainly to do with them not yet figuring out what sort of cruiser they will be.
Step Two: Time to Look at Boats
Once you have established your budget it’s time to go on your preferred yacht search site and start to educate yourself on which catamaran models fall within your budget. At the onset of your search you will want to keep your parameters as broad as possible and take note of everything within your budget – from performance cruisers to comfort catamarans – you will want to take a look at everything that falls in your range. Why? Because when you first begin searches you may not have the knowledge base to understand the subtleties of the marketplace such as why two of same model catamarans of a similar vintage vary in price point so substantially. As your knowledge base grows, you will learn about the market impacts of vessel history, layout, condition, equipment and location all of which and more impact the market valuations of particular boats. Look at the pictures of the options that fall in your budget, share them with your partner in this adventure and together list which ones seem the most appealing.
Once you have a preliminary list of catamarans that you believe would be of interest to you take the time to go and see them in person. If you are going to be sailing with a partner, be sure they come along. This is always a mutual decision and factors that are important to one may not be to the other. In the used catamaran market, there is no true “one stop shop” – this makes the shopping a lot more difficult and labor intensive than you might realize.
One of the biggest benefits of working with an experienced buyer broker is the ability to rule out boats that may be on your shortlist before traveling to see them. Factors that you might not have been thinking of – whether there is enough headroom, for instance – can be dealt with quickly by a broker.
If you do travel to see boats, start by looking at all of the options that are nearby. Then expand out as required to see the various models you need to see. This will take some travel and a lot of showings arranged by your broker. But, after some time, it does help bring clarity as to the type of boat you want.
Fort Lauderdale, FL is probably the best place in North America to see the most used cats quickly followed by Annapolis, MD. In Europe, head to the South Coast of France or La Rochelle. And in Australia, try Sydney or Mooloolaba. You may have to do a lot of driving and flying to really see all the designs you need to see first hand. If you are working with a buyers broker on your purchase, you will want to be in close contact with your agent and have them arrange a suitable itinerary of showings that suit your travel schedule. For the self shopper, you are going to have to call several different listing agents to see all of the boats you need to see and arrange a suitable time to see the boats on your list. This can be a lot of work and very inefficient as it means that if you want to see 5 boats in Fort Lauderdale on the same day, you may have to contact 5 different agents and arrange individual meeting times rather than drive around with one agent who organized all of the showings for you.
Step Three: Establishing Value
After you have done some online shopping and travelling to see boats first hand and established the type of model catamaran you are looking for, it’s time to isolate your search and determine values on particular options of this model.
Let’s say, for purposes of this exercise, you have narrowed your model to the Lagoon 420 Owners Version, and it is down to four specific boats that are currently listed for sale, all of which are in a different locations. One of them is “cruising in the Bahamas,” another is in Grenada, another in Tortola, and one of them is in Fort Lauderdale. For the self shopper, things can become quite difficult and time consuming at this juncture so buckle up. You will need to call four separate agents who are listing these particular boats and start asking questions. You will want to understand the condition of the vessel and hope the broker you are talking to is honest, has seen the boat, and can give you an accurate description of the boat. That broker, however, will not know you, has not shown you boats to see how you react to various levels of condition, so they will not be able to calibrate your expectations with his or her experience. Consider that their rating of a 6 out of a 10 may be your 4. We see so often at our company that some buyers apply condition expectations that may never be found in their budget for the models they desire. A good broker is going to be able to learn the buyer well enough to be able to focus them on what is possible, not the impossible.
I find, myself, when working with buyers that a calibration on condition expectations is vital to the success of any transaction. This to me is the largest challenge for self shoppers – getting educated on what sort of boat, in what sort of condition, falls within their budget. I often see self shoppers reject boats they should have accepted and finally – exhausted – accept a boat they shouldn’t. It takes so much time and market education to gain the confidence to know a good deal from a bad one, and often by the time they finally are educated to buy with confidence the market dynamics have changed due to currency fluctuations or supply.
The one thing I stress over and over is that every boat has a value in a given market, in whatever condition it’s in. Consider these past two months that Multihull Company Agent Carl Olivier in Tortola has been charged with the task of selling hurricane Irma salvage boats for an insurance company. Even rigless and upside down these boats have a value. It is simply a matter of determining what that fair market value is in the current market.
The determination of what is fair market value can be especially difficult for the self shopper as values can be directly tied to previously sold boat prices, which are not made available publicly. Further, even if these figures are obtained from a professional yacht broker, they may not include the necessary clarifications on the reported comp – whether the reported sold figure was a hard used ex-charter boat with little gear, a privately captained charter boat in average shape, or a pristinely cared for and privately owned vessel of a pilot or engineer who maintained meticulous logs of every piece of work they have done on the boat. The danger of course is that you train your eye on the cheapest one that ever sold, without a willingness to accept the fact that the boat was a very hard- ridden charter cat in need of some significant refits. For the buyer working with an experienced yacht broker these figures should be provided to you by your agent, with clarifications on the condition of the vessel and equipment on boat, the sold date, currency in which the vessel was sold and the value of that currency at the time of sale. The catamaran market is driven mainly by the Euro, not the dollar, so the exchange rate between these two currencies has a significant impact on the overall market.
Step Four: Making Offers
Let’s get back to our example, the Lagoon 420. Let’s say after phone calls and research you have determined that the option in Grenada is the best one to pursue. It sure looks good on paper. Should you hire a surveyor to go over and do a visual report? Fly down to see it yourself?
For a boat of significant interest, with that first condition vetting, my advice is always to make an offer pending survey and sea trial on the boat prior to any long travel to view or inspect her because you always want to establish the seller’s best price before flying any distance. While the boat may be a super 8 out of 10 in condition, that seller may want 60K more for his boat than the seller who has the same model in Tortola that is only marginally less clean, or a bit less equipped. Would you rather get a 7 out of 10 for 60K less? Most of our buyers would. That’s why we always feel it vital to establish the sellers bottom line on any yacht before investing time in flying to see her, let alone to survey her.
For the self shopper, in order to make an offer, you will need to call up the listing agent and ask them to put together an offer sheet for you to sign and send to the seller. Note: Please do not think that a simple email offer to a broker is going to get the seller excited to enter into serious negotiations with you. If you are going to go on a fishing expedition, you at least need to the bait the hook by showing the seller you are serious. That requires a written offer and a refundable deposit placed in the brokers escrow account. It is of course imperative that you read in full any signed offers you may submit and be sure of the legitimacy and good standing of any yacht broker for which you may send in a deposit. Outside of the U.S., most brokers are neither licensed or bonded or support dedicated escrow accounts. If you are a buyer working with a buyers broker you can send in your deposit to your agent and ask them to hold it on your behalf for the purpose of submitting offers. Your broker will then draft up contracts for you to submit to sellers or seller’s agents on any of the yachts that appeal to you.
At this point in our example, you have submitted an offer, have a deposit in escrow, and then after some back and forth have established the seller’s lowest price. That price may or may not be a super deal, so then you will have a choice to make. Prior to finalization of the agreement, it may be worthwhile to go back and review secondary options that maybe didn’t have some things you wanted, but may have a more motivated seller. For the self shopper, you will have to have your deposit sent back, send that deposit on to the secondary options listing agent, and then submit a new offer sheet.
Some buyers have to go through this process many times before they really learn what the market value is or is not. Just as many sellers have to be chastened by time to accept the true value of their yacht, many buyers have to be chastened by rejected offers to finally learn what a good deal is or isn’t.
Step Five – Post Survey Negotiations
After you have narrowed your list, found the right option and negotiated the best price, it comes time to find yourself a good surveyor. This is a very big decision. The danger is that you choose a surveyor who really doesn’t know the market well or a particular brand of boat. Or who just isn’t any good!
Remember, surveyors are paid to find problems, so they do. And this is where I often see sales fall apart. The surveyor’s role is not to tell a buyer if he has a good deal or not, but to objectively survey a boat and find her faults. And often, after a survey, the buyer asks for credits or repairs that a seller is not willing to make, and frankly shouldn’t, given the price he may be selling the boat for. The seller is not required to make repairs or to lower the price based on the survey results.
My own advice is to focus on the big stuff, the real stuff, the consequential issues that may turn up after a survey. In most survey reports there are 2 or 3 significant things that might cost a bit of money to correct, while the other 28 items are minor stuff that one could tick off with a few days of work. Pick the big battles, not the little ones. The standard level that should be expected at a survey, and whether adjustments may be necessary also largely depends on the price that the boat is under contract for and whether a premium is being paid, or if buyer is obtaining a boat for below fair market value.
Buyer Brokerage or Self Shopper- Which one is right for you?
In yacht sales there is an enormous difference between a yacht broker and a salesman. A yacht broker is selling his or her expertise and is compensated by the seller for working with and for you as the buyer upon the sale. A salesman is someone who is really only interested in selling you what he or she has listed for sale. In our industry that means a listing he or she might have, or a new boat they can flip you on to, as opposed to presenting you with the better option even if it is listed by a competitor. A good buyer broker sets aside what might be their best immediate financial gain to serve your best interests, is deeply knowledgeable about all of the catamaran options in your budget, and is prepared to take the time to understand you and your needs to help you find the best boat.
As I said to start, the internet brings the world of boat sales to your door. But it does not help you understand what to do with all those choices once you open the door. That is what a great broker does, they will help you sort things out so they work for you.
A truly successful broker will have sold a lot of boats and will often have a wide range of very good listings that might in fact be the best boat for you, but it is vital that you know that he or she is going to focus on your needs, not his or hers, and help you make the right decision as if they were helping a family member.