Tips on buying a used boat safely
Buying a used boat can be a tricky thing. There are plenty of people who have signed agreements by pushy sales people and regretted it.
Hidden problems can be : Getting Ripped off, After sales costs, Loosing Deposits because of dubious middlemen, Loosing a truly good deal.
Like every deal there are many things that can go wrong.
And the solution?
-The customer needs to ensure that the deal is transparent.
-Follow a right procedure of buying a used boat.
-Don’t commit to something you do not fully understand.
In brief the procedure should be.
Inquire about a boat –> Try to check if the boat broker is experienced –> Personally see the boat –> Negotiate / Offer a price subjected to inspection done by a professional surveyor –> Ensure what things stay on the boat and what is taken away –> Sign a safe agreement before putting down deposit –> Yacht Broker’s work to ensure boat is clear of loans and all documents are real –> Prepare the final payment in exchange for real verifiable documents.
1) First of all, Stay away from too good to be true deals
The maximum amount of disputes or cheating happens in “too good to be true” deals. Yes! There could be a case where a person wants to get rid of his used boat quickly due to some emergency, but that’s exactly what a dubious seller or agent will tell you too. Now, I am not talking about something that is 15% below market value, I am talking about something that is almost half the price, and when you are told that I need all that money immediately because I am in a rush. Then just walk away.
Again, this doesn’t mean that people cannot get good deals, there are times and situations when boats are cheaper, but in a general market if you are suddenly getting an unbelievable deal from an unknown broker then you must beware.
2) Ensure Transparency
Understand the commission the Broker is getting, I am not saying high commission is bad and low commission is good. But it needs to be transparent. If the commission is hidden it could mean the broker could be making a huge cut in the middle and the deal could break apart in the final stages if you (Boat Buyer) or the Boat owner finds out. You also need to understand who is paying for what. For example the surveyor and inspection costs are paid by Buyer while the owner ensures there is enough fuel and the captain is available to drive the boat for sea-trails etc.
3) Specify and understand what exactly you are looking for.
It is a lot easier to find something when you know exactly what you are looking for. That means, what type of boat, how old, and what size. When you will browse through the market you soon get an idea of the cost. A trusted boat broker will give you a good idea of market values. An experienced guy who has been in the business for long enough can also quickly tell you why a certain boat is for a very good price or why a very expensive boat is actually worth it (or not).
4) Look at the boat in detail
First thing you should do is look at the boat. When looking at boats, pay attention to the interior walls to see the condition of the teak. Always look around the port holes for water leaks. You can see generally the wear and tear of the boat. If you find small issues that could have been avoided easily, this could mean the boat is not maintained well. Things like very dirty carpets for a relatively new boat. Broken lights, broken cabinet door handles. The cockpit teak is normally a good indication. It does not have to be perfect, but a well maintained boat always has a nice oiled teak which looks undamaged. Normally the teak floor in good condition on the swim platform and cockpit gives the first impression. Even if you are not an engineer, you should still look at the engine room. A tidy engine room, which is not too rusty is a good thing. In the engine room, check the bilges (meaning take the floor panel up and see the very bottom of the boat below the engine) and see if it has a lot of water, or some oil, if it has a foul smell. Just generally neat and tidy says a lot about the captain or caretaker of the boat. A well paid and a good captain will take care of the boat as if he would take care of his own property.
5) Negotiate the Price
If you are interested in the boat, An honest yacht broker should give you a good idea of the bottom price and also calculate approximate costs of works that you might need to put on the boat. A buyer should put out a reasonable offer to the seller and wait for an acceptance or counter offer. Yes we know many buyers want to put very low offers, and see if the Seller will take it. But normally and honestly if the offer is in a ridiculous range, then a sensible or reputable Broker who also needs to maintain his credibility with the Owner will avoid putting forward such an offer. Unless the owner has told the Broker that he just wants to get rid of the boat, in which case Brokers will make the Buyer aware. Again, a decent yacht broker who is in the business for life will not want to rip off a Buyer or a Seller just to make a deal happen. This kills long term business. A good deal is a win-win situation for all parties. A decent offer which is in a right range where a deal becomes a possibility makes the broker try and persuade the owner to accept.
6) Make an item list
At this point, it is good idea to ensure that things you see on the boat, like a Jetski or an inflatable boat, and all items are inclusive in the deal. There can be times when seller could remove such items, if they are personal. Most of the times, the items that belong to the boat stay on the boat. But it is good to be clear of such things. A broker can make a list of items that stay on board, to avoid any last minute disputes.
7) Sign a professional agreement
A Professional yacht Broker that has been in business for long enough, has a good standard agreement for used boat that protect both the parties. The agreement should not be too long, should be easy to understand and clearly mention what kind of deposit the client needs to pay, and it has to be subjected to a professional inspection and the deposit has to be refundable in case there are problems on the boat. The problems could be rectified by owner or price negotiated or the deal is cancelled. The agreement should also explain clearly what happens if there is payment default, and protect the buyer and the owner against any existing debt or fraud. A good broker knows to ask these questions. Normally bigger yachts are under finance, and the broker should explain this to the buyer. If a boat is under finance the procedure of closing the deal is different. The buyer and seller should clearly understand the time frame and procedure of final payment. This is important if the money is going through broker’s account, that things should be done slightly before time to avoid any delay which might break the agreement and turn into a legal dispute. These are the type of things you should consider when closing a deal. A good broker should be able to explain such things to the buyer and the seller.
8) Hire an independent yacht surveyor
It is of most importance that you hire a good independent yacht surveyor to check all systems of the boat. The surveyor will lift the boat, check the hull bottom and super structure and ensure that the boat has not been damaged. The surveyor will check the hull for any osmosis problems (Penetration of water inside the hull). A surveyor will check all systems in the boat, take the boat for sea-trail and ensure all systems are working well. It is the best way to understand the condition of the boat. A survey report could also be useful for any insurance claims in the future.
9) Safe Closing
When all things are done, and the deal is ready to be closed. Ensure all the documents needed to transfer the ownership are there. Things like Bill of Sale could be important if you are an overseas buyer. For Example, a person who is buying boat in Hong Kong does not require a Bill of Sale, The ownership of the boat is transferred by signing a form and producing relavent documents in a government department.
All papers needed for such a transfer of ownership from both parties are given to the Broker, verified first by the broker and in accordance with the government rules and are exchanged with the bank cheque or any agreed form of payment. If the boat is under finance then the procedure is a little bit different and the Buyer is required to make payment prior to transferring the ownership. But in such a case the Broker produces documents and papers that can still safe guard the Buyer.
Hope you find this article useful
another article on how to inspect a yacht
Asia Boating Ltd