Buying a boat series [Part 2]
We found a boat, we made an offer on said boat, and two hours later someone else made a better offer on said (read: OUR) boat. WTF. And so started our understanding that everything about a boat is twice as difficult as it *should be*.
Winning the bidding war
Matt kept telling me not to get my hopes too high or to set my mind on only one of the boats. We had seen some catamarans sell in the matter of weeks or even days during our searching, so I knew he was right. I kept myself emotionally detached from this boat for as long as possible, but after we placed our offer I just knew that it was ours! Then we hear that another (better) offer had been placed just minutes later, and by someone who hadn’t even viewed the boat yet.
Tangent: It is not uncommon for individuals to put in offers on a boat and then only travel to view the boat when under contract. From the buyer’s perspective, this make sense, but it increases the risk to the seller that the buyer will later back out after they actually see the boat in person. Pictures only say so much (approximately 1,000 words so I’ve been told). Another item work noting is that boats almost always sell for below the asking price – the amount below of course varies, but 8-12% is a pretty good rule of thumb. During strong markets (like now) and for boats that are more accurately priced, a lower percentage below asking would be expected.
We quickly gathered our thoughts and did the one thing any other rational person would do – we put in an offer higher than the other one and pretended our first offer was never made. Note: getting this heads up and the chance to revise our offer was a huge advantage of working directly with the selling broker!
The sellers then made counter offers to both of us buyers. Though we heard they countered us lower. 😉 We re-evaluated the boat, considering what it was worth, it’s resale marketability, cost of upgrades we planned to make, etc. and came back with an offer between our original (ahem revised) and their counter.
It’s important to note that for many cruisers and sailors, selling a boat is not just about the money. It’s about finding someone to love and take care of her just as much as you have. We understood this and knew it was particularly important to these sellers (as to us!). So we played the hand we were dealt and reach out to prior neighbors and friends of the sellers to put in a good word for us. This was a very kind and generous couple who actually showed us around the boat when we first traveled to Brunswick, GA and shared many stories and tips with us. We explained the current bidding war situation and asked them to root for us.
And it worked! We got the boat – well “tentatively.”
Re-negotiation of price
After coming to an agreement on the price to be paid for the boat, both the buyers and sellers are signed into a contract. At this point, though, the “risk” really lies completely with the sellers. As the buyers, we had a period of time during which we could back out of the sale for any reason. Hopefully buyers only use this to back out if something falls through like financing or bad survey results – but really you can get out for any reason. Speaking of survey results, that’s the next big step in buying and negotiating your boat. Please stayed tuned for Part 3 in our Buying a boat series for more details on the survey process and how ours went!
For now, I will continue to focus on negotiating our boat. Once you obtain survey results, which at a very high level indicate the condition of your boat – you can use that to re-negotiate the price. Although our survey results were very good, there were still a handful of items that needed to be fixed in order to comply with standard code or just be operable. We took these (medium to large sized) items – estimated a high and low cost to fix them, took the average of the total high and total low costs and then rounded up (to help cover small items not included). We sent that number back to the broker and sellers, proposing that we split the cost – which they accepted!
Tangent: A common practice of handling the survey recommendations is for the sellers and buyers is to meet in the middle and split the estimated cost. This is just a common rule of thumb, though, and definitely not required! For more insights into the common practices and responsibilities associated with the survey, check out our Boat Basics, “Marine Survey 101.”
Now we had a new revised contract, with a slightly lower purchase price. At this point we were still able to back out of the deal if we wanted to (which of course we didn’t!). Specified in the contract was an “acceptance” date – which is the date at which we would be fully locked in and obligated to purchase the boat by the “closing” date. Stay tuned for more adventures and challenges with buying a boat!
