Step 1: Selecting the right type or model boat
With the myriad of boat types and models available on the market, a good place to start when selecting the right type of boat is to examine the type of boating you imagine yourself doing. Based on the type of boating, a particular type of boat layout may be more suitable. An experienced broker can be a tremendous asset in this process and ask you questions about your ideal boating scenarios that you may not have considered. To start, here are some questions to ask yourself:
- What is your ideal day on the water?
- Will you be doing mostly day boating, or do you plan to do more long-range cruising?
- What kind of activities do you plan to do? Water activities, fishing or cruising?
- Do you plan to spend overnight time on the boat? Weekends? Longer periods?
- How many guests do you require space for? There’s a big difference if it’s just you and your spouse versus a group of ten friends.
- Where do you plan to store the boat?
- Additionally, are there considerations such as bridge height, depth and draft or slip length and width where you plan to keep the boat?
- How experienced are you in boating? Some vessels require different levels of experience and skill.
- Is speed a priority?
The above questions can serve as a great starting point for the process. Consider creating an actual checklist where you record your answers to these questions. While these answers are important, there’s still one major element not yet discussed that will likely be a major determining factor in narrowing down your boat search. We’re talking, of course, about budget.
When reviewing budget and price range for a potential boat purchase, it’s important to remember that there is always a more expensive boat. If the boat being considered will be a strain financially, it might make more sense to find a lower priced option where you can still comfortably spend on maintenance and care.
As you begin your search, you’ll notice that there is an obvious trade-off between boat size and boat age. The older the vessel, the larger the boat will be in your price range. How one navigates the size vs. age equation will ultimately be a personal decision, but if you are a novice boater, it might make more sense to go with a newer, smaller boat. Newer boats will have more updated technology, and you typically won’t have to deal with as many maintenance issues. For more seasoned boaters who are comfortable with the maintenance and repairs process, a larger boat with more years might be acceptable.
As stated previously, the initial process of narrowing your boat selection based on your boating goals, your budget and your experience is really where an experienced yacht broker can shine and deliver tremendous value to the buying process.
Step 2: Finding the exact boat to purchase
At this point in the used boat buying process, you have a decent idea of the model or type of boat you are looking to purchase. If you’re working with a broker, the broker can provide a select group of recommended options for your consideration. A quality broker can even include options that aren’t on the market yet through the broker’s own network of dealers, wholesalers and previous clients.
When looking at specific boats for sale, geographical considerations will come into play. Depending on the type of boat being sought, the search area might not be local inventory. For instance, it might not make sense to pay a $30,000 shipping bill (plus travel to inspect the boat) for a $200,000 boat to get the boat from Canada to Florida, but paying $30,000 in shipping for a $3 million boat if the deal is right may make sense. For clients in Florida, the vast majority of purchases occur instate, but as the yachts get bigger with more specific requirements, the search parameters can widen dramatically.
Once the potential options have been narrowed to a few, it is often time to go see the boats firsthand for a personal inspection. If you’re using a broker, the broker will set up showings for you and should attend with you. While brokers aren’t mechanics, experienced brokers can spot a wide number of potential issues. If you’re making a sizeable purchase and aren’t an expert on a particular model being inspected, it’s strongly encouraged to bring a trusted broker with you.
Note that if the boats in question are not within a few hours drive, and it is too expensive or time-consuming to travel to view each boat, buyers can make an offer on a boat that is subject to personal inspection. Then, following a negotiation, a personal inspection can be scheduled to ensure less wasted time. Again, a broker can properly advise on the specifics involved during this process.
Step 3: Making an offer
The process in which an offer is made on a boat can vary, but there are some important practices to consider in order to ensure a smooth process and also potentially give you an advantage over other buyers.
Before a formal offer is made, it’s good practice to have a deposit of 10% of the approximate purchase price in escrow and either have the remaining balance of the purchase price ready to go or have financing pre-approved. Coming to the negotiation table with a confirmed deposit plus the remainder of the balance ready for transfer will communicate to the seller that you are a serious buyer and give an advantage over a buyer that is potentially making offers with no deposit and subject to financing.
The offer itself is typically made up of three main components:
- The offer amount – This is the price that you will offer for the boat. If you’re on your own without much experience buying or selling boats, determining the right offer amount can be difficult. This is where having a broker on your side can be really beneficial.
- Contingencies – Having the sale be subject to sea trial and survey is standard, but we typically also suggest requesting that all equipment and accessories currently on the vessel be included in the sale.
- Timeline – The timeline has three components. First, the time in which you give the seller to respond to your offer (often 24 – 48 hours). Second, the window you wish to give yourself for a sea trial and survey and to formally accept the vessel (often two weeks from seller acceptance of an offer). Lastly, the time to close the transaction and transfer ownership of the boat (often one week from formal acceptance of the boat).
Step 4: Surveying and inspecting the boat
Once you have a deal with a seller, it’s time to begin the survey process. If you’re working with a broker, ask him to provide a list of approved surveyors that he or she recommends. Not all surveyors are equal and just because one has the appropriate certification does not necessarily mean he or she is the right person for the job. As the types and models of boats and yachts vary widely, having a surveyor with experience on the specific boat type being considered is important.
Here are a few things to consider when planning the survey:
- A good surveyor is worth their weight in gold and often times really good surveyors can be quite busy. This is where a broker’s relationship can be crucial in getting the right person to handle the survey.
- The degree to which the boat is checked out might vary depending on the size and age of the boat. For instance, if you’re buying a 40 foot boat that is a year old with a warranty still intact, a simple one-day survey including a haul out to inspect the hull might be sufficient. If buying an older, much larger yacht with many onboard systems, a survey team for a multi-day inspection is more likely required to thoroughly check all systems on board.
- Unless advised otherwise by your broker, it can be a good idea to notify the surveyor that you intend to be present during at least part of the survey. This can contribute to accountability, but also it allows the surveyor to show you findings in person. Additionally, if a surveyor requests that the buyer (or the buyer’s broker) not be present during the survey, it could be a red flag and an indication that you need a different surveyor.
- Based on your initial research, if there is a potential deficiency that would disqualify the purchase, communicate this upfront to the surveyor so it can be examined at the beginning of the survey. Should the boat be disqualified early in the inspection process, it can save time and possibly result in a lower rate for the survey.
- While the surveyor is typically hired by the buyer, it’s not necessarily the surveyor’s role to recommend for or against the purchase of a boat. The surveyor will provide an objective survey report that details the boat’s overall condition, descriptions of the systems onboard the boat and findings of potential issues with the boat (often ranked by severity).
After receiving the results from the survey, review the results with your broker. If follow-up questions present themselves, you can ask the surveyor or contact a different mechanic for more detailed answers on a specific item. Note that the surveyor likely will always find some issues with a boat no matter how new or well maintained it is. As such, expect some findings and be sure to ask any questions to ensure proper understanding.
Surveyors are often members of and governed by the codes of ethics from the Society of Accredited Marine Surveyors (SAMS) and the National Association of Marine Surveyors (NAMS). Before getting your survey, it can be helpful to read through the information provided by these organizations.
Step 5: Acceptance or rejection of the vessel
Following the completion of the survey, receiving satisfactory answers to any remaining questions and being comfortable with the overall understanding of the boat you are considering, there is one question that remains: Are you ready to own this boat?
Typically there are three answers to this question, each with a different path to take in the purchase process. They are acceptance of the vessel, conditional acceptance of the vessel and rejection of the vessel.
Acceptance of the vessel occurs when no major surprises occurred during the survey process. Perhaps there are a few minor issues, but nothing major. If acceptance is desired, the buyer can submit a clean acceptance of the vessel which means that you are ready to accept the boat as-is, close the deal and take possession of the boat. If submitting the acceptance, the buyer’s 10% deposit typically becomes non-refundable at this point and both parties proceed to closing.
A conditional acceptance of the vessel occurs when the survey went generally well, but a few major issues revealed themselves that the buyer was not expecting. Note that this typically does not refer to routine maintenance items, but rather issues and needed repairs that are impeding the boat’s expected operation. If this has occurred, the buyer can request an adjustment to the purchase price factoring in the cost of the needed repairs. The Conditional Acceptance of Vessel form maps out the request and states that the buyer is willing to move forward with the purchase if the requested cash adjustment is made. If the seller accepts, then the 10% deposit becomes non-refundable and both parties proceed to closing.
A rejection of the vessel occurs when the boat surveys quite poorly. If the number of issues and potential repairs revealed compromises the integrity of the boat or there’s no amount of price adjustment that would occur to make the buyer want to move forward, then the buyer can reject the vessel at this point. After submitting the rejection of the vessel, the buyer’s initial deposit is returned. While this result is not desirable, incurring the cost of a survey and a bit of wasted time is a better result than acquiring a boat that will lead to major problems down the road.
Step 6: Closing and delivery
After the buyer accepts the boat, it’s time to complete the paperwork and take possession of the boat. Prior to finishing the deal, it’s important to have a few things taken care of.
First, ensure that you have boat storage sorted out. Whether you’re keeping the boat at your home, a marina or at a high and dry, make sure that you have the storage set up before taking possession of the boat.
Next, having insurance coverage before taking possession is a must. If financing is involved, this will be required.
If you are in the state of Florida, you can title the boat with the State of Florida or Coast Guard Document (assuming you are an American citizen). For larger yachts or international boaters, circumstances may lead to foreign flag the boat. If unclear on the best approach, consult your broker or a maritime lawyer.
For larger yacht purchases, understanding operations of the yacht and/or assembling the right crew are also important considerations before taking possession.
Closing on your used boat purchase can be very straightforward or a headache depending on a few variables, none bigger than having an experienced broker guiding you through the process. Your broker can ensure all paperwork is prepared and make sure that you have everything taken care of prior to taking possession of the boat.