In this article, you will learn how to buy a used boat. This includes the typical process, things to look for and tips for ensuring a smooth transaction. Note that this guide is an overview and often cannot replace the specialized knowledge and experience of a trained yacht broker. We strongly encourage using a broker for any significant investment into a new or used boat.
The purchase price of a used boat can be significantly less than that of a new boat. Just like cars, boats depreciate each year, so finding a boat a few years old will have a lower sticker price than a brand new boat. The catch of course is that used boats typically don’t come with a warranty and may involve more maintenance and repair costs simply due to their age. As such, the search and purchase process for a used boat is extremely important. Making the right used boat purchase and avoiding the wrong used boat purchase can result in very different outcomes with respect to future enjoyment on the water and future hits to your wallet.
The steps involved in buying a used boat are as follows: Selecting the right type or model boat, finding the exact boat to purchase, making an offer, surveying the boat, acceptance or rejection of the vessel and closing and delivery. In this how to buy a used boat guide, we will walk through each step and address common questions.
With the myriad of boat types and models available on the market, a good place to start when selecting the right type of boat is to examine the type of boating you imagine yourself doing. Based on the type of boating, a particular type of boat layout may be more suitable. An experienced broker can be a tremendous asset in this process and ask you questions about your ideal boating scenarios that you may not have considered. To start, here are some questions to ask yourself:
The above questions can serve as a great starting point for the process. Consider creating an actual checklist where you record your answers to these questions. While these answers are important, there’s still one major element not yet discussed that will likely be a major determining factor in narrowing down your boat search. We're talking, of course, about budget.
When reviewing budget and price range for a potential boat purchase, it’s important to remember that there is always a more expensive boat. If the boat being considered will be a strain financially, it might make more sense to find a lower priced option where you can still comfortably spend on maintenance and care.
As you begin your search, you’ll notice that there is an obvious trade-off between boat size and boat age. The older the vessel, the larger the boat will be in your price range. How one navigates the size vs. age equation will ultimately be a personal decision, but if you are a novice boater, it might make more sense to go with a newer, smaller boat. Newer boats will have more updated technology, and you typically won’t have to deal with as many maintenance issues. For more seasoned boaters who are comfortable with the maintenance and repairs process, a larger boat with more years might be acceptable.
As stated previously, the initial process of narrowing your boat selection based on your boating goals, your budget and your experience is really where an experience yacht broker can shine and deliver tremendous value to the buying process.Contact one of the TGYG yacht brokers if you’re interested in a hand-picked list of boats and yachts available for sale for your consideration.
At this point in the used boat buying process, you have a decent idea of the model or type of boat you are looking to purchase. If you’re working with a broker, the broker can provide a select group of recommended options for your consideration. A quality broker can even include options that aren’t on the market yet through the broker’s own network of dealers, wholesalers and previous clients.
When looking at specific boats for sale, geographical considerations will come into play. Depending on the type of boat being sought, the search area might not be local inventory. For instance, it might not make sense to pay a $30,000 shipping bill (plus travel to inspect the boat) for a $200,000 boat to get the boat from Canada to Florida, but paying $30,000 in shipping for a $3 million boat if the deal is right may make sense. For clients in Florida, the vast majority of purchases occur instate, but as the yachts get bigger with more specific requirements, the search parameters can widen dramatically.
Once the potential options have been narrowed to a few, it is often time to go see the boats firsthand for a personal inspection. If you’re using a broker, the broker will setup showings for you and should attend with you. While brokers aren’t mechanics, experienced brokers can spot a wide number of potential issues. If you’re making a sizeable purchase and aren’t an expert on a particular model being inspected, it’s strongly encouraged to bring a trusted broker with you.
Note that if the boats in question are not within a few hours drive, and it is too expensive or time consuming to travel to view each boat, buyers can make an offer on a boat that is subject to personal inspection. Then, following a negotiation, a personal inspection can be scheduled to ensure less wasted time. Again, a broker can properly advise on the specifics involved during this process.
The process in which an offer is made on a boat can vary, but there are some important practices to consider in order to ensure a smooth process and also potentially give you an advantage over other buyers.
Before a formal offer is made, it’s good practice to have a deposit of 10% of the approximate purchase price in escrow and either have the remaining balance of the purchase price ready to go or have financing pre-approved. Coming to the negotiation table with a confirmed deposit plus the remainder of the balance ready for transfer will communicate to the seller that you are a serious buyer and give an advantage over a buyer that is potentially making offers with no deposit and subject to financing.
The offer itself is typically made up of three main components:
Once you have a deal with a seller, it’s time to begin the survey process. If you’re working with a broker, ask him to provide a list of approved surveyors that he or she recommends. Not all surveyors are equal and just because one has the appropriate certification does not necessarily mean he or she is the right person for the job. As the types and models of boats and yachts vary widely, having a surveyor with experience on the specific boat type being considered is important.
Here are a few things to consider when planning the survey:
After receiving the results from the survey, review the results with your broker. If follow-up questions present themselves, you can ask the surveyor or contact a different mechanic for more detailed answers on a specific item. Note that the surveyor likely will always find some issues with a boat no matter how new or well maintained it is. As such, expect some findings and be sure to ask any questions to ensure proper understanding.
Surveyors are often members of and governed by the codes of ethics from the Society of Accredited Marine Surveyors (SAMS) and the National Association of Marine Surveyors (NAMS). Before getting your survey, it can be helpful to read through the information provided by these organizations.
Following the completion of the survey, receiving satisfactory answers to any remaining questions and being comfortable with the overall understanding of the boat you are considering, there is one question that remains: Are you ready to own this boat?
Typically there are three answers to this question, each with a different path to take in the purchase process. They are acceptance of the vessel, conditional acceptance of the vessel and rejection of the vessel.
Acceptance of the vessel occurs when no major surprises occurred during the survey process. Perhaps there are a few minor issues, but nothing major. If acceptance is desired, the buyer can submit a clean acceptance of the vessel which means that you are ready to accept the boat as-is, close the deal and take possession of the boat. If submitting the acceptance, the buyer’s 10% deposit typically becomes non-refundable at this point and both parties proceed to closing.
A conditional acceptance of the vessel occurs when the survey went generally well, but a few major issues revealed themselves that the buyer was not expecting. Note that this typically does not refer to routine maintenance items, but rather issues and needed repairs that are impeding the boat’s expected operation. If this has occurred, the buyer can request an adjustment to the purchase price factoring in the cost of the needed repairs. The Conditional Acceptance of Vessel form maps out the request and states that the buyer is willing to move forward with the purchase if the requested cash adjustment is made. If the seller accepts, then the 10% deposit becomes non-refundable and both parties proceed to closing.
A rejection of the vessel occurs when the boat surveys quite poorly. If the number of issues and potential repairs revealed compromises the integrity of the boat or there’s no amount of price adjustment that would occur to make the buyer want to move forward, then the buyer can reject the vessel at this point. After submitting the rejection of vessel, the buyer’s initial deposit is returned. While this result is not desirable, incurring the cost of a survey and a bit of wasted time is a better result than acquiring a boat that will lead to major problems down the road.
After the buyer accepts the boat, it’s time to complete the paperwork and take possession of the boat. Prior to finishing the deal, it’s important to have a few things taken care of.
First, ensure that you have boat storage sorted out. Whether you’re keeping the boat at your home, a marina or at a high and dry, make sure that you have storage set up before taking possession of the boat.
Next, having insurance coverage before taking possession is a must. If financing is involved, this will be required.
If you are in the state of Florida, you can title the boat with the State of Florida or Coast Guard Document (assuming you are an American citizen). For larger yachts or international boaters, circumstances may lead to foreign flag the boat. If unclear on the best approach, consult your broker or a maritime lawyer.
For larger yacht purchases, understanding operations of the yacht and/or assembling the right crew are also important considerations before taking possession.
Closing on your used boat purchase can be very straightforward or a headache depending on a few variables, none bigger than having an experienced broker guiding you through the process. Your broker can ensure all paperwork is prepared and make sure that you have everything taken care of prior to taking possession of the boat.
We’ve mapped out an overview of how to buy a used boat, and in conclusion, let’s go through a few tips to keep in mind if you’re planning a purchase soon.
Do you still have questions on how to buy a used boat? Do you have questions on how to find and work with a yacht broker? Contact TGYG today to talk to one of our experienced brokers.