Dave and I have decided that it's time to clear up some misconceptions that many yacht owners have about selling their yachts. That's right! We are at it again with our naked truths!! We want to lay it all out when it comes to overpricing your yacht...
With access to so much information on the internet, sellers are approaching brokers better educated about what is going on with the listing market. Information is good and we love that our clients have so much available. It can also give us brokers new hurdles with clients who think their yacht is worth more than it really is. We often hear phrases like, "I did some research and another boat just like mine was asking X and it just sold last month, so I want to get $10K more for mine because it is nicer." This mindset creates a lot of problems for you as a seller as well as for us. These problems really hurt you as a seller and will hurt your wallet too.
Below is a break down of some of the problems we all face (brokers and sellers both!) when you mis-price your yacht right out of the door:
Problem 1: Current asking prices DO NOT reflect what your make/model yacht is ACTUALLY selling for.
We brokers see it all the time; potential sellers approach brokers armed with a stack of listings of boats currently on the market. Joe and Susie Seller say that their boat is in much better shape than similar yachts and that it has way more character (ie. updated upholstery, revarnished teak, a new headsail, etc.). Joe and Susie want to ask $15K more than the next most-expensive yacht on the current market. This is where we brokers nod, smile and inwardly cringe and possibly even laugh. We'll do it because we want the listing but we know the likely outcome down the road -- it won't sell.
No matter what boats are asking for on the market, the only information that really matters is what they are actually selling for. Just like the MLS systems for homes, yacht brokers have access to a 'broker-only' part of the YachtWorld site that the general public does not get to see. We get to see details of listings like when listed, when prices changed, how long the yacht was on the market at a new price, and finally and most importantly, what the yacht finally sold for. There's even an entry field where the listing broker can share notes about why the yacht sold for what it did. This information allows us to educate you at the very beginning what your yacht is likely worth compared to these other recent actual sales. Boats almost never sell for asking price, just like any other product on the previously owned market.
A seller can ask whatever they want, but it all comes down to your boat being worth what the current market supports. How much is that? FACT: Your boat is worth what others have paid for similar yachts. When you buy a car, you look at Kelley Blue Book and Edmunds, right? You want to know what the going rate is. When you buy a house, you ask your realtor what others are paying for similar homes in the same neighborhood. Yachts are EXACTLY the same. Here's an example of how one mis-priced yacht can lead to a pile of them -- we see this all the time. The first person to list an Azimut 43 wants $450K for it. The next guy six months later, with the same boat, sees that there's one on the market for the same money so he prices his Azimut similarly. Over a year period, five yachts end up on the market, all in the mid-$400's. What that first guy failed to discover was that the last three that sold went for $375K to $400K over th last twelve month period. These five Azimuts sit on the market for months longer than they should, wracking up marina bills, wax jobs, insurance bills, continued mortgage payments, etc. You get the picture.
Buyers are smart with their money and are not going to overpay for a product when there are other options out there. This brings us to our next point of contention....
Problem 2: Your boat is not special.
This sounds harsh, and it is. We brokers hear it all the time. "I think we can get X amount of dollars more than the going rate for my boat because someone is going to absolutely fall in love with it and will pay more to get it." In other words, the seller thinks that it is going to be love at first sight for a buyer and all smart business sense flies out the window as love fills the air. Sounds a bit silly right? Ultimately, it is.
Your boat is really nice. You've put your heart, sweat and tears into maintaining it and keeping it in great shape, for your own enjoyment and to preserve value down the road. You put a new bilge pump in when the old one failed, you replaced running rigging when it became stiff with age, and you upgraded the master cabin mattress to a TemperPedic. These are all wonderful things, but they do not mean that your boat is worth far more than any of the others. Most of these things are what we call maintenance items -- things you needed to do to maintain value, not to enhance value. Big ticket items like bow thrusters, stabilizers, low engine hours, generators are what add value to your boat. Your hard work means that your yacht will stand out in the crowd of other yachts.
Let's take this example one step further, using the Azimut again. Let's say a buyer comes along who does fall in love with your boat. You were asking $450K and you entered an agreement with him to sell it for $425K. Now we're digging into financing. WHOA NOW! The banks discovers these yachts are selling for $375K to $400K. Why are you paying so much they ask. 'I love this boat!' you say. The bank is thrilled to give you a loan BUT they're going to give you 80% of the $375K typical asking price ($300K) and you now have to come up with the rest out of pocket. This is where a deal on an overpriced yacht usually falls apart. For the most part, this almost never happens. Buyers, like you, are savvy people. They're careful with their money. Buyers just aren't going to overpay for your yacht. The hard truth is there are other similar boats out there that can be had for less. While boats are most often a romantic purchase (far more so than for a house or a car), it still all comes down to the bottom dollar and brass tacks.
Consider this: people with money tend to be pretty smart and they usually spend just as wisely as you would.
Problem 3: You insist on asking too much for your yacht or you believe the broker who throws a drastically higher number at you.
You have an idea of what you want for your yacht so you start shopping for a broker. There are a bunch of us around, so it comes down to finding the broker who will work hardest for you. Unfortunately, this generally translates into the broker who says he can get you the most money. It's a great theory, but BE CAREFUL. Some brokers 'feel you out' so they can toss out the number they think you want to hear. Broker confession: this is how we get listings. Sadly, this is where Dave and I sometimes fail because we always give a marketing analysis with REAL numbers which may be below what you were expecting. Statistically, you're more likely to go with the broker who gives you the highest number. In this business, we all know that. It's better to get the listing and beat you down later than miss getting the listing right out of the gate because we were too honest. We feel very strongly that sitting down with you and pondering real sales data, analyzing recently sold yachts, how they were equipped, how long they were on the market, when and for how much they sold, are ALL necessary tools for us to use to decide together how best to market your yacht.
Will we take an overpriced listing? SURE! Here's how it benefits us but not you. Listings bring bodies in the door and we love that. We listed a Hinckley once on the eastern shore of the Chesapeake Bay. It was substantially overpriced. It's a Hinckley though, right!? We got great traffic. Almost every time we trapped a client in the car with us for the five hour round trip to see the boat, we got a new client. Ultimately, that client bought a different boat and we made great money off the overpriced listing. While this was great for our bank accounts, we failed to serve our Hinckley client, no matter how hard we tried. Our job was to sell HIS boat and we just couldn't do it at that price. Ultimately the boat came off the market, sat for another period of time unused and unloved, and ultimately sold with another broker for less than we could have gotten for it had it been priced competitively from the start.
When asked, "what makes this boat worth the asking price?" What do we say?!?!... We can point out all of the positive aspects of your yacht, sizzling your boat as best we can but, ultimately, at the end of the day, it comes down to the same thing: it's worth what it's worth (what others have been willing to pay) and everyone knows it.
Problem 4: You have been on the market too long and won't listen to our pricing suggestions.
So we've got this great boat, your boat, sitting on the market at the wrong price but you're stubborn and keep saying, "I want what I want," despite all of our regular market analysis updates which you continually disregard.
It sits, and sits, and sits.
Your carrying costs are continuing to mount up: paying for insurance, storage and maybe paying off your boat loan (and don't forget that yachts are depreciating assets and every year brings out new models, making your yacht another model older). You grow weary and call up to demand better work and we get our favorite question, "why, in all this time, have you failed to bring me an offer for my boat?" If you've read this far, you already know the answer. We can do all the front end work: great pics, video, awesome and detailed descriptions, constant market analysis and updates. You've got the location and you've got a yacht in great condition. Ultimately though, price is one of the most critical of the three pieces of the puzzle, and if you aren't willing to come out of the clouds and work with us, we can only do our best to give your yacht as much exposure as possible.
Problem 5: You fire your broker and go to another broker and you repeat Problems 1-4 until you finally DO lower your price.
That's right. Even when you change brokers, your boat is still worth what it's worth (is there a theme here?). Not only that, you were with your first broker at too large a price for a significant amount of time (usually at least a year), which means your boat is worth even less than what the first broker quoted because it is even older. It also may have the stigma of being on the market for a while. Your new broker is going to face the same problems that we talked about above.
Here is some more dirty cold truth for you. You're boat is going to sell for LESS than what your first broker said it could sell for at the start of your selling process. Every single time we have had a stubborn client leave, and we mean EVERY time, their boat has sat on the market with another broker for even more time until it sells way later for less money. Like we said before, boats are depreciating assets. Time is of the essence, and the more time you sit on the market, the more money comes out of your pocket in the end (lower sales price, more holding costs, and more of a headache).
Light at the end of the tunnel:
With all this brutal honesty comes a message. It's no secret that we're here to make money. We do that by selling the product you bring to market. If we're good, and we are, we'll help you get the best possible price by mastering all the parts of the process we can control. We've been on thousands of boats in our travels, sold hundreds of them and know details about the market that you don't. Trust the facts and don't ever believe that your boat is way better than the next five out there. Too large of an asking price scares buyers away and says that you are going to be a headache to negotiate with. Why should a buyer deal with that when they can just buy the next one?
A realistic price is not meant to insult you and all the hard work, love, and toil that you put in as a great yacht owner. It is simply meant to get the job done. We brokers usually have boats, ourselves! We know how much heart goes into every yacht we own, but that does not change the facts. If we can put a realistic price on your yacht we WILL get the job done! It is all just a matter of giving us something we can work with and your understanding and valuing our professional opinions.
It is our job after all... :)
We will and can get top dollar for your yacht when we work together and you give us legs to stand on. When a buyer asks that golden question, "What's it worth?" we want to be able to honestly answer that your boat is reasonably priced and worth every penny!
Help us help you get the job done.