Photo credit: chuttersnap
BOAT VALUES SHOULDN’T BE A MYSTERY – HERE’S HOW BOAT PRICES WORK
Part of Waterborne’s “How to Buy a Boat” series
Understanding boat prices should be like understanding car prices, right? Just look up the NADA or blue book value and you’re on your way. Unfortunately it’s not that easy! Why? Because many personal watercraft and boat models aren’t listed in boat value guides.
Fortunately there is a way to estimate boat market values with a bit of simple math. We’re going to show you how by walking through an example. You can download a FREE calculator at the end of this post.
WHY YOUR BOAT ISN’T LISTED ON NADA BOAT VALUES
While online calculators like the NADA boat guide may be able to provide you with a boat book value, they pose a couple of issues:
- Your boat may not be listed. The problem with the NADA boat prices calculator is that the National Automobile Dealers Association (NADA) only has listings for the most popular boat types, makes and models. If you’re researching a common boat, you might be able to use this to look up prices. However, anything else is unlikely to be listed.
- The listed prices are averages and don’t consider individual deficiencies of a particular boat. Even if you find a used boat price listed in NADA, it doesn’t mean that it’s an accurate price for your boat. You’ll need to evaluate any repairs and deficiencies (See STEP 3) before you can estimate an accurate price.
Boat value guides like NADA and Kelley Blue Book can offer useful data points. However, it’s important to not rely on them too heavily and find your own pricing information. Here’s how:
When thinking about what a boat is worth, consider it from all angles.
STEP 1: EVALUATE THE LIST PRICE
We always take the listed price with a few grains of salt. From talking to yacht broker friends and from our own experiences, boats almost never sell for the list price. In fact, it’s just a starting point for negotiations. It is usually set high because the culture in sailing is to offer 70-80% of the list price.
Craigslist is especially useful for finding cheap boats, we share the secrets for searching out great deals on Craigslist.
If we are interested in a boat we usually ask for a copy of the most recent yacht survey. The survey will tell you a bit about the boat’s history and what the boat was worth at the time of the survey. Beware of sellers who use 10-20 year old survey reports to justify their current asking price.
I go on Craigslist and find a Dufour 35 sailboat from 1979, listed at $20,000. I contact the seller and ask for the most recent survey. They send me a 15-year old survey that lists the boat’s value at the as $45,000.
Special offer! Good Old Boat Magazine is offering a special deal for boat buyers. Subscribe for 1 year and get 50+ FREE articles on boat buying from their back issues. Coupon code at bottom of post.
STEP 2: DO SOME COMPARISON SHOPPING
We always start by comparing the boat we’re interested in with similar boats in the local area. The easiest way to do this is by searching yacht brokers, Craigslist, and Kijiji within a 500 mile radius.
Next, we do a search on Yachtworld and Sailboat Listings of the boat’s exact year and model. While searching, we’ve noticed that in places like Mexico, boats will be much cheaper. So searching in other areas has limited applicability for buying a boat locally.
Here are the 5 best places to buy a used boat.
There are three important things to consider when comparing used boats
- The condition – Some boats are better maintained than others which will be reflected in the price
- The location – some boat markets are cheaper than others (e.g. boats cost less Mexico and more in Australia)
- The year the boat was built – expect lower boat prices for older builds (e.g. a 1979 boat should be priced lower than a 1990 boat)
I search for Dufour 35s on Craigslist, Kijiji, Yachtworld, and Sailboat Listings and here are the results:
Use a price curve to estimate used boat market values over time
In evaluating a particular boat we have as gone as far as making depreciation curves. Don’t worry – it sounds complicated, but it’s not. You can download our free calculator at the bottom of this post.
We collect all the listings for comparable boats in Excel and then plot them on a scatter-plot graph.
For example, if we are looking at a 41’ Beneteau, we search for all Beneteaus in the 40-43’ range. We put the age and price of every boat into an excel document and plot them on a scatter-plot graph.
Next, we add a trend line (usually polynomial, order 2) to fit the data. This will give us an idea of what the price of the boat is doing over time and we can project where the price will be going in the next few years.
If we are planning to sell in a few years we would want to be near the beginning of a low slope segment of the trend line. Sometimes the trend line is skewed by overly-idealistic sellers or junk boats, which we consider outliers and often strike from the data.
I plug the used boat prices I find into the Calculator (download yours for FREE at the end of this post) and I get the following trend line. The more data points (comparable boats) you add to the excel sheet the better your estimate will be! 5 data points is not great, but it’s all I could find for a Dufour 35. Based on this curve line I should assume that a 1979 Dufour 35 (the boat I’m thinking of buying) is worth ~ $29,000.
STEP 3: VALUE BY THE NUMBERS – WHAT WILL IT COST TO GET THE BOAT TO “FAIR” CONDITION
When we go to inspect a boat, we write down any projects and repairs that will need to be done (see our boat inspection checklist). Our goal is to list all the boat systems that need work and any parts that should be repaired or replaced. Next we assign a material and labor cost to each project.
In general, we don’t add normal maintenance costs because that would skew the value and be unfair to the seller. The exception is if the seller hasn’t been maintaining the boat and we would be playing catch up.
We add all of the repair costs to the list price for a total (which is usually depressingly high). Often we often multiply the repair costs by 1.25 as we’ve found we are usually optimistic about price and time.
Upon inspecting the Dufour 35 I discover there is some work to be done! The GPS doesn’t work ($1,000 replacement cost), the main sail is wrecked beyond repair ( $2,000 replacement cost) and the furler needs to be replaced ($3,000). I’ll have to spend at least $6,000 fixing up the boat, which I multiply by a factor of 1.25 (because there will likely be addition fixes!). So, I estimate it will be $7,500 to get the boat into “fair” condition.
STEP 4: PUTTING IT ALL TOGETHER – STEPPING BACK AND LOOKING AT BOAT PRICES
When you combine the list price and the cost of repairs you’ll be left with the “true” price of the boat. Compare this to the comparable estimated price (Step 2) and you’ll have a sense of whether boat is priced too high, too low, or just right!
This is also a good time to think about transportation costs. Will you have to ship the boat? Does the price include a boat trailer? Will you pay import duties? You can often score a great deal if you search farther afield but you have to factor in any moving costs and taxes.
If you’re thinking of buying abroad, you might want to learn about sailboat arbitrage – the art of buying and selling boats in the right markets. Some people have even managed to sail around the world for free by buying and selling their boat in the right geographies.
When I take the list price ($20,000) and add the repair costs ($7,500) I realize the boat will cost me $27,500 in total. When I compare that to my comparable estimated price of $29,000, I can see that this boat is in the right ballpark and probably fairly priced.
STEP 5 (OPTIONAL): HIRE A MARINE SURVEYOR, BOAT BROKER, MARINE MECHANIC
While there’s no replacement for doing your own research, sometimes it’s nice to get a professional opinion. Here are some of the services that can help you understand used boat prices.
Once you’ve done your research it may be time to hire a marine surveyor. A surveyor will physically inspect the boat and tell you what they think the boat is worth. Usually this takes place on the dock or in a boat yard and doesn’t include sea trials.There are two types of marine survey:
- Pre purchase condition and valuation: This costs upwards of $18 per foot and involves a deep 3-6 hour inspection. The surveyor will ask to see the boat both in the water and out of water. The final report for purchase surveys will list both a “replacement value” and a “market value” as well as any deficiencies.
- Insurance condition and valuation: At $16 per foot this survey is less expensive and less detailed. It’s more for boat owners who are looking to insure their boats. Most insurance companies ask owners to submit a recent survey of the vessel. While not as detailed as the previous survey, it will still provide you with a suggested boat market value.
Do you really need to hire a professional marine surveyor? It’s comes down to your existing boat knowledge, your financial situation, and your risk tolerance. Personally, when we bought a $3,000 boat we didn’t have it surveyed professionally, when we bought a $9,000 boat that we intended to sail across the Pacific, we paid top dollar for one of the best marine surveyors around.
If you’re new to boating or looking at spending more than a few thousand on a boat, we recommend hiring a surveyor.
Get a recommendation on a marine surveyor before you hire
Some surveyors are more experienced, knowledgeable, and expensive than others. For example, there is a surveyor in the PNW who earned the nickname “Dr. Doom” by being so thorough that he almost always finds problems with a boat.
Another advantage to hiring a marine surveyor is that they can help you lower the purchase price because they’ll like spot deficiencies that you’ll miss. Always do your research and get a recommendation on a marine surveyor in your area.
While boat brokers generally represent the selling party, you can hire one to represent you as a buyer. This can be helpful, not only because brokers have an experienced-eye and a sense for the local market, but also because they have access to a very special data set. Brokers who advertise on YachtWorld (which most do) have access to a massive confidential database that shows the actual SELLING prices for boats (not just the list prices that regular users see).
If you can’t hire a broker it’s still worth calling their offices to get their thoughts on the value of a boat you’re interested in. Usually they’re very friendly and happy to share their knowledge. They may even point you in the direction of a sweet deal that you’d missed.
Marine mechanics and fuel testing labs
The value of a boat is heavily impacted by the condition of a boat’s engine because engines are so expensive to replace. For example, a $10,000 boat might be worth nothing if the engine is shot.
It may be worth hiring a marine mechanic to inspect the outboard motor or engine before purchasing. If you’re concerned about a boat’s engine you can also take a sample of the boat’s fuel and send it off to a fuel lab, they’ll send you a report with valuable information on the condition of the engine.
A COUPLE OF EXTRA THINGS TO CONSIDER WHEN LOOKING AT BOAT PRICES
Sometimes owners put so much money and hard work into a boat that they value the boat higher than the market does. It takes time and a few low ball offers to wear down the emotional seller to a more rational price point. Sometimes, the seller sets an idealistic price and won’t budge because they don’t really want to sell. We have encountered this a few times and we move onto the next boat.
The corollary to emotional pricing is emotional buying. Sometimes we fall in love with a boat; something about the interior layout or the lines or the color of the hull, even the name can have a profound influence. We can’t help but let our emotions in to the decision making process, but we have found that they should be reserved for the final decision. In order to minimize our emotions we try to quantify everything in terms of numbers and put it in an excel sheet.
Our sponsor, Good Old Boat Magazine is offering a special deal: Buy, gift, or renew a one-year subscription and get a FREE digital Boat Buyers article collection ($25 value) with 36 articles (138 pages) on buying a used sailboat.
Good Old Boat has always focused on the affordable dream, whether your dream is to trailer sail the continent, cross oceans, or sail the coasts and lakes near your home. This collection of articles will help you sort through your options and find answers
This package ordinarily sells for $25, but you get it FREE when you subscribe to Good Old Boat for a year using the special offer code: WBBOATBUY
To get your copy…
- Go to the Good Old Boat site
- Select “Print + Digital” or “Digital Only” subscription and hit subscribe
- Enter the code above in coupon box and click “Apply Coupon”
A final note, take all of this with a grain of salt and USE YOUR JUDGMENT! The calculator and recommendations above are in no way fool proof. As Publilius Syrus wrote: “Something is only worth what someone is willing to pay for it”. Good luck and happy boat buying!