Why Wait Until Spring?

During the winter months, most boat buyers are doing their research online and wait until Spring to start climbing aboard boats.  The idea of buying a boat in a frozen boatyard isn’t very appealing for a lot of reasons but the reality is that if you really want the right boat and the best deal, you need to get ahead of the Spring buyer rush.  So aside from layering up and meeting a seller or broker in the boatyard, how do you buy a boat that can’t be fully inspected or have the engine and systems tested? 

There are safeguards in the buying process for both the buyer and the seller for these situations.  The process ensures that the buyer can secure the boat and is thoroughly protected until the boat can get a sea trial in the Spring.  The seller is protected because they are compensated for taking the boat off the market until things can get finalized.  Below is a summary of how this works.  For all the nuts-and-bolts on the process, contact us at MYS@MichiganYachtSales.com  (231) 360-9819.

  • The Deposit – everything starts with a deposit.  Keep in mind that the deposit is fully refundable based on your satisfaction of the inspection.
  • The Inspection – in the winter, it’s often too cold for sounding equipment to work properly to conduct a full survey.  Plus, since the boat is on land, some of the mechanical systems can’t be tested.  But in most cases, a surveyor can inspect the boat structurally without equipment and test 80% of the boats systems.  The surveyor can’t test for moisture in the hull, deck or rudders because when the boat’s frozen, it throws off the results.  But in most cases a surveyor can inspect the boat for catastrophic deficiencies by tapping and visually inspecting the hull, deck and rudders and most the systems.  This at least will tell you if there are major issues and if you should move forward with the sale or not. 
  • The Holdback – if you decide to move forward based on the preliminary survey findings, it’s customary for the broker to “hold back” funds in the broker account until a sea trial and final survey can be done in the Spring.  The holdback funds come from the closing.  They are funds due to the seller but the seller agrees to have the broker hold these funds until the final sea trial and inspection.  This amount varies according to the surveyors recommendations. It’s typically between $5,000 for simple boats and $20,000 for more complex boats.
  • The Closing – within a few weeks of the preliminary inspection, the buyer is expected to close (pay the balance to the seller).  The buyer pays the balance owed to the seller (holdback funds are kept in broker acct) and the buyer will receive title to the boat.  This might seem early but keep in mind that the holdback is there to cover issues that might arise at the time of Spring launch.  From the buyers perspective, they are financially covered and they secured the boat they want.  From the seller’s perspective, they didn’t have to take the boat off the market without security. 
  • The Sea Trial – when it comes down to the sea trial, the buyer is (or really should be) 99% good with the boat.  The sea trial is not a time to nitpick gel coat chips or the interior cushions, etc.  All of that should have been decided when the boat was first inspected.  The sea trial is to ensure that the major components are functional:
    • Engine starts and runs as it should.
    • Batteries and charging system
    • Air conditioning           
    • GeneratorSails and rigging and canvas
    • Electronics that couldn’t be tested on land like autopilot, depth.
    • Leaks from below the waterline

These are just a few things that are tested at the sea trial.  Anything cosmetic or minor should have been worked out earlier.  I’ve never had a deal go sour by the end of a sea trial because we discussed realistic expectations early in the process.  There were times when we found a tear in the canvas or the alternator wasn’t charging but this is why we have holdback funds.  The seller would have paid for these anyway if the deficiencies were found in the initial survey inspection. We sell many used boats over the winter and so far, (knock on teak), it has always resulted in a happy buyer and seller. 

Contact us for a PDF with detailed information on the buying process.

  

Category
Uncategorized