On the surface, you would think that buying and selling a yacht should be pretty much like selling everything else, a car or bike that sort of thing. However, that’s not the case; in fact, it is quite a complicated procedure, and it usually takes several weeks or months. Here we’ll take a look at the typical process, of course, it will vary from country to country, but here we’ll discuss:
- The role of a yacht Broker
- Market exposure
- Setting the entry selling price.
- Creating an excellent looking listing.
- Presenting the yacht
- Purchase and Sale Agreement
- Reviewing and accepting an offer.
- Transferring Ownership
The role of a yacht Broker.
If you’re in a bustling marina, then it may be possible to stick up a for sale sign on your yacht with your phone number on it and perhaps you’ll get some interest. Note that many marina’s don’t allow this. For boats that do not require official registration, this is not a bad option, but once you get to several tens of thousands of dollars worth of asset, things tend to be a bit more complicated.
When you choose to sell your yacht via a yacht Broker, you accept that the Broker is offering their time, effort, and access to their sales channels, in exchanging for a commission. A Broker commission is typically 10% of the selling price of the yacht. So what do you get for your money?
Instant exposure to the local and global market place.
Selling a boat is a lot about speed; it can cost a lot to keep a yacht serviced and slipped in a marina. If you are not using your yacht, each month it sits idly by it is eating away at the return you’re looking to get by selling it. A professional yacht Broker will have access to one of several online global yacht market places, at Island Spirit, we work with Yacht World, which is the largest and most popular yacht-listing portal.
When you list your yacht, we post it on both the Yacht World website and our local website, so you gain immediate exposure to both the global market place and the local marina community. In addition to listing your yacht, your Broker should also be promoting it across all digital promotion channels; Facebook, Instagram, direct email marketing campaigns and of course, good-old-fashion local networking.
Setting the selling price
Again, setting the price is a lot about how quickly you would like to sell your yacht. Of course, you can calculate a price based on the amount you paid then apply a reasonable rate of depreciation, and that is a good thing to do to determine a reference point. However, you will also want to take into account the current market conditions and look at what other similar yachts are selling for. Your yacht Broker should have access to historical sales data via its commercial partnership with their listing portal, Island Spirit Brokers have assess to the historical sales data of YachtWorld. With this, they have access to real-world data and actual selling prices to provide a starting point. From there, they can apply their knowledge of the regional and local market to help you make a well-informed decision about where to set an entry selling price.
Creating an excellent looking listing
Perusing online listings is the primary way prospective buyers shop for their next yacht. Your Broker will be there to ensure that all the information they require to be able to present your yacht to the market with confidence, and is the best it can be. This may require you employing some professional cleaning staff, especially in preparation for the photo-shoot. In addition, your Broker may recommend removing anything that is not being sold with the Yacht, IE any inventory that is personal or redundant.
Your Broker knows how important it is for your yacht to show well when prospective clients drop in and request a quick look; the last thing they want to see is a yacht full of clutter and personal effects.
Your Broker will also help you come up with a description of the yacht and to produce an inventory of items included with the sale of the boat. It is essential to note that anything mentioned in the equipment list or inventory must be in proper
operating condition unless expressly noted.
If an item is listed as included with the sale of the yacht but, during the inspection or sea trials is found to be faulty or missing, the Buyer will have the right to reduce the purchase price of the yacht to compensate for the deficiency or demand that the Seller make reparations.
Presenting your Yacht
Viewing the yacht is as far as a prospective client can go without making a formal offer to purchase the yacht. Before arriving, the client will have had the opportunity to review the full listing, including the inventory list.
Your yacht Broker will be there to show prospective buyers through the yacht. Typically this is done via prior appointment; this way the Broker has time to go and prepare the boat for showing. This should require a simple airing of the yacht, as the yacht should be kept clean and tidy at all times. Clients will be walked through the boat by the Broker; they will be free to open lockers, engine compartments and pretty much take a good look at whatever they can gain access to without dismantling the yacht in any way. This does not include starting engines, powering-up systems in any way, nor of course, does it involve taking the yacht out for a spin!
Managing the Purchase & Sale Agreement
The prospective Buyer may make an offer to purchase the yacht, and all reasonable offers (within 20% of the listed selling price) are presented to the Seller.
To make an offer to purchase the yacht, the Buyer must enter into the Purchase and Sale Agreement and place a deposit of 10% of the offered purchase price in escrow with the Broker. To be clear, in making an offer, the Buyer is committing to purchasing the yacht, pending inspection to ensure that the yacht is in the condition it has been presented to be.
If the Seller agrees to the offer, the Buyer then has the opportunity and obligation to inspect the
yacht to ensure that the yacht is in the condition as presented by the Seller. The timeframe for this
procedure is set out in the Purchase and Sale Agreement and would typically include:
The Buyer, accompanied by the Broker, will take the vessel to sea to conduct tests to ensure all systems, controls and equipment function as expected.
The Buyer may choose to have the marina lift the vessel from the water to make an inspection of the hull and ancillary equipment that can only be inspected and tested while the yacht is out of the water.
Inspection by a ships Surveyor
The Buyer should contract the services of an independent and qualified ships Surveyor to carry out a complete and thorough inspection of the yacht and provide a report on its condition.
Executing the Purchase & Sale Agreement
If the Buyer does identify deficiencies during the inspection, the Buyer and Seller may agree to:
• Reduce the price of the yacht by a mutually agreed amount in compensation to the Buyer.
• The Seller may make reparations to address the identified issues.
If there can be no agreement to resolve the deficiencies, the Buyer or the Seller may cancel the Purchase and Sale Agreement, and the Buyer would be refunded the 10% deposit. If the inspections are complete and the Buyer accepts the condition of the yacht, the Buyer must make full payment to the Broker and the Broker will issue a Bill of Sale to facilitate the ownership transfer of the yacht.
If for any reason the buyer simply decides not to complete the purchase of the yacht, the buyer forfeits the 10% deposit and that amount, less any Broker expenses, is given to the Seller.
Ownership transfer varies greatly depending on the current Port of Registration and the future Port of Registration of the Yacht.
In this post, we are discussing things in the context of why a Seller would use a Broker and what they do for their fee.
Your Broker should be willing to either provide the transfer service or work with the Buyer, the Seller and with a service provider that specialises in that field.
Island Spirit Yacht Brokers offer this service in-house, and below you can find a link to a new post that discusses the in’s & out’s of transferring the registration of your Yacht in Thailand.