There is no doubt that buying a boat is not a cheap exercise. It is therefore important that you get the best expert, impartial, professional advice available. This article is intended to help you get that advice, covering the full end-to-end process involved in buying your boat- whether it is your ﬁrst boat or your next one.
This is part one of a two-part article. Part two will be available next month.
Maybe you do. In which case, read no further! Or, just maybe, you can save yourself a lot of time, hassle, risk and money by working with the appropriate professionals. Go Earth can assist you in this, both by providing the necessary expertise and advice, and by ﬁnding you other required professionals.
However, even if you are an experienced boat buyer, on maybe your third or fourth boat, can you really beat the professionals whose job it is, and who have done this perhaps hundreds of times?
In fact, if you have bought boats previously, you will know from experience that you may have made a few, possibly expensive, mistakes that in retrospect you should have avoided. Well, let me assure you – there are plenty more mistakes that can be made!
There is no doubt that the best boat brokers can be an invaluable source of information. They will have experience and knowledge. Also, if they are members of British Marine, they are expected to abide by the British Marine Code of Conduct.
However, there is a big issue for the boat buyer – and it is best to be honest and upfront about it. The job of a boat broker is – obviously – to sell boats, and in particular to sell the boats on their books, or that they have access to. Further, the boat broker is of course under legal contract to the boat seller. Indeed, if you were using a boat broker to sell your boat, you would expect them to act in your interests. None of this is unreasonable or surprising. As a buyer, however, you need independent advice from professionals that will act in your interests – that is the critical point – and that is where the following services can assist you.
This is not intended to be critical – merely a statement of the realities. A deal will be made simply when the interests of the buyer and the seller meet; and both parties need someone to represent their respective interests.
In our view, this typically consists of some or all of the following stages:
Let’s brieﬂy look at the first few of these stages this month, and the remainder next month MoSCoW’ has nothing to do, I assure you, with Mr Putin – it stands for:
We use our experience and knowledge of the market to help build up the requirements; and give advice on what is sensible and viable within your constraints such as budget.
A previous article in Boat Trader discussed our methods of Requirements Analysis in more detail. If you’d like a (free) copy of the article, please email me at email@example.com.
Once we have some idea of requirements, we can start searching for boats that meet these requirements.
I can hear you saying “Anyone can do a search on Google nowadays”. That is partially true – where the ‘partially’ bit is very important indeed. At Go Earth, we have built up our search expertise, using our database of thousands of boat sources (brokers and others) and our bespoke software (developed in-house) so that we can do a more thorough, more effective search than any individual can. The outcome of this is that you will get a wider choice of suitable (i.e. meet your requirements) boats.As a result, you should be able to get more cost-effective (i.e. cheaper, to be blunt) boats – potentially (dependent on budget) saving you thousands or tens of thousands or… (insert your own numbers here!!).
As a result of this, you should be able to draw up a shortlist of boats in which – on paper
– you are seriously interested. The next thing is to view them.
The sad fact of the matter is that many of the boats that you may visit may not live up to your – reasonable or unreasonable – expectations. There are two ways to handle this.
The first way is simply to visit lots of boats until you find one or two that seem suitable. This is perfectly ﬁ ne if you have the time and inclination, and can travel to the boats.
However, if your time would be better spent on other matters – such as running your business – a second option is for Go Earth to do what we call a ‘pre-visit’. We visit the boats for you (whether in the UK or abroad), and report back on them. In this way, you can eliminate those boats that would be a waste of your time. This second option is only worthwhile for boats of a reasonable value and where your time is valuable.
Let’s assume that you have one, two or maybe three boats that you would seriously consider purchasing – if the price is right. You need the most cost-effective purchases. This is where Go Earth’s Negotiating Service comes into play.
With your agreement and authority, we will negotiate the price for you. Price negotiation is an essential part of the process. Brokers do prefer to be able to tie you down to a price as soon as they can. This is not surprising. It’s their job, after all. Negotiation can become very emotional, especially considering the sums involved. Go Earth can help take the emotion away, provide a buffer and enable negotiations to be conducted so that you end up with the best viable deal. We also provide the broker with assurance our client is serious about buying – provided the price is right. In this sense, it is a win-win for all.
At this stage, any agreed price is of course subject to contract, sea-trail and survey . . topics that we will get onto in part two of this article next month.
After the negotiation phase, assuming that the negotiation was successful, a conditional offer to buy the boat is made. The terms of that offer are critically important to both the buyer and the seller. The ‘conditional’ part is subject to a number of factors, which should as a minimum include “subject to sea-trial and subject to survey”.
Normally the buyer has to sign a contract or sales agreement of some type, and also pay a deposit – usually 10%.
However, the exact terms of the offer / contract are very important. Often the boat broker will have a standard template contract, possibly derived from the British Marine template. For our clients, we always examine the contract and while we cannot offer formal legal advice, we do suggest watching out for various things, some of which are:
Any deposit paid must be fully refundable if the deal falls through
Sufﬁcient time must be allowed for the survey. This can be a real issue. If a contract only gives you, say, two weeks to reject a boat – after which you are legally committed to purchase then this may not be enough time to ﬁnd a suitable surveyor, get a date when they are available, give them time to write the report, for the buyer to have enough time to read the report and then ﬁnd out the cost of any necessary repairs or remediations.
Likewise, there must be sufﬁcient time for the sea trial, taking into account the buyer’s availability, tides, weather, availability of the crane to hoist the boat in / out of the water.
There must be clarity on what basis the buyer can (if necessary) reject the boat, and get their deposit back. At one extreme, the conditional offer may be subject to survey and sea trial – which implies that the buyer can easily reject the boat if they don’t like the results of the survey or sea trial – which may (depending on the wording of the contract) give the buyer an almost unfettered right of rejection. At the other extreme, the buyer may only have the right to reject the boat in the event of ‘material defect not previously disclosed’. That can leave open problems about deﬁning ‘material defect’.
The whole issue is actually quite complex, with many other factors to consider. We often ﬁ nd ourselves negotiating on various aspects
of the terms of the contract on behalf of our clients. As there are many potential issues, this is very important to protect the buyer.
Our view is that there are ﬁve main types that should be considered:
This may seem a lot – however boats are complex entities with many systems on board. You will have to balance risk and cost. We can make recommendations as to what is most applicable for you.
The pre-purchase survey by a marine surveyor is the one most commonly used. It provides the buyer with a good overview of the general condition of the boat – the hull, the services, the sails and rigging (if a sailing yacht, obviously!) the electronics and the engine.
However, the marine surveyor is typically not an expert on the speciﬁc engine type – and problems with engines tend to be expensive. (If they are not expensive, then they will be very expensive!) Therefore, we additionally recommend having a marine engineer for the engine, gearbox/sterndrive and ancillary systems such as steering.
Even the marine engineer cannot be certain of the condition of the insides of the engine. Oil analysis can help here. A sample of the oil is taken from each of the engine(s) (and gearbox/sterndrive) and then sent to a specialist laboratory. The concentration of metal particles in the oil gives an indication of how worn (or not) the engine is. Indeed, the type of metal particles can indicate which parts of the engine are worn – as different parts are made from different metals.
Do you do the survey on the same day as the sea trial – or on separate days? There are a number of considerations to er…consider.
I know that some people argue that it is best that the survey is done first, without the buyer present and then the sea trial is carried out at a later date with the buyer present.
They argue that any issues can be identiﬁed early and possibly resolved prior to the
sea-trial and the visit by the buyer. Then if the issues are serious, the buyer can simply reject the boat on the basis of just the survey, without having a wasted journey; and if they are minor they can be ﬁxed before the buyer views the boat, so the buyer can later (after they have been ﬁ xed) have a sea-trial without any issues.
We understand the arguments – however we don’t agree with them for the following reasons:
To have the survey and sea trial on separate dates pushes the costs up as you need the surveyor present on both days
If the buyer is present while the surveyor is doing the first part of the survey, then they can show the buyer any issues with the boat and discuss them at that point
We are uncomfortable with any issues not being revealed to the buyer. If they are genuinely minor, then this can be explained to the buyer
Of course, this is one of those issues where there are genuine pros and cons on both sides of the argument – a bit like Brexit (although the Brexit ‘debate’ does not always sound like that!)
Let’s talk a bit about the sea trial, as it is the most exciting part.
At last, you actually get to go out on your potential new purchase.
Typically, the broker will skipper the boat. You should take both the marine surveyor and the marine engineer with you. Between you all, you should be able to spot any issues. Some examples are differing temperatures or oil pressures on twin engines, difficulty starting, excessive creaking, some electronics not working correctly. You do need to look out for issues and identify their root cause.
If, for example, the broker is having difficulty berthing the boat back in, is that because he is not used to the boat or because there is an issue with the steering?
If you hear a strange beeping sound, is it just the wind in your ears or is the engine overheating and giving you a warning signal?
If there is a strange vibration, is it because of a choppy sea, or a bent and out of balance prop?
Normally, there are no problems – or – to be precise, the problems are minor and easily ﬁxed to the satisfaction of the buyer. We just have to remember one basic, but sad, fact: there is no such thing as the ‘perfect boat’. A boat is a complex piece of engineering, with many systems, and it is unrealistic to expect absolutely everything to be 100% perfect. The buyer needs to make a sensible judgement on any issues found.
In other words – if the issues are minor, buy it; if they are major (and too expensive to ﬁx), then don’t.
Let’s assume that all goes well (and it usually does). Then there is some paperwork to be completed. Normally the broker will provide all this – you just need to sign on the dotted line, and pay the rest of the cash.
Note that you must have your insurance in place starting from the agreed time and date of completion of the purchase.
There are a number of other activities that may need to take place around the purchase; including arranging for (and project managing) any issues to be ﬁxed, ﬁnding a suitable marina and getting a berth, transport to the marina (UK or abroad), insurance, possibly procuring a trailer, and maybe arranging training. Go Earth can assist in all this.
Yes, we have left the most important bit to the end. Enjoy your new purchase.