ThirdHatt said:
Karl,
Congrats on selling the boat quickly. I agree with selling the boat yourself of you have the time and ability. Nothing like the owner/operator there telling potential buyers all about the details of the boat and what has been done, etc.
I do have one question though. You mentioned a buyer only netting $150k out of a $200k deal after broker fees. I was under the impression that all boat brokers, across the board work off of a 10% comission. I would think a $200k deal would net the seller $180k, assuming no post-survey negotiations. $20k is certainly no chump change, but 10% is much easier to swallow than 25%. What am I missing?
That a $200k listing doesn't go for $200k.
The buyer will typically offer at 10-20% under ask.
So if you price at $200, you get an offer at $180, and then you have to figure he's going to come back for a second bite of $5k (2%ish) or so post-survey. In negotiating parlance this is called "nibbling" and if you don't expect it you're in for a surprise.
If the buyer does full mechanicals and finds nothing you can probably resist that second bite, because then he's got $4-5k on the table which he loses if he walks off. In that case he's gonna try it but if there's nothing there of substance on the survey he's insane to flush his $5,000 over a 2% difference. But if he didn't do mechanicals he's got very little in the deal relative to what he's trying to take a bite of and the deal as a whole. If he got a survey done on a quick-haul he might only have $750 in the pot - not enough to give the seller any kind of real negotiating leverage. A smart buyer doesn't love your boat - he knows there's 5 more out there and he can try again for another $750.
This is why the
smart buyer doesn't do mechanicals until he has a reason to. He does his own inspection and a hull survey and sea trial, and if he's reasonably confident in the mechanicals, he takes a pass on that, instead going for the nibble.
A buyer who does it this way gets a $10k payoff out of this path forward - he doesn't spend the $5k, AND he gets another bite at YOU!
If you do full mechanicals you better find something worth that investment because if not the seller is going to tell you to stuff on the second pass - he knows full well you've got $5k in the deal and backing out is going to sting if in reality there's only a boat-buck or two worth of upgrades (at yard rates) you'd actually do anyway. And there is
always a boat-buck's worth of work on ANY boat of material size that can be done. We all know that!
Its kinda like poker, really - its all about the amount of money in the pot .vs. what you have in your hand, and what you think it costs to see the rest of the cards. Same calculation, just a different setting.
It comes down to this when that attempt at a nibble comes - do you want to sell the boat or not? He doesn't have to have justification for his second bite, in reality - he can dream up anything - if you say no he rejects the boat and walks off. Its all part of the "art of the deal", and how much each side has invested in it.
With a hull survey only the answer for the buyer is "not much."
So figure on a $200k ask you're going to be at $175 post survey for settlement (10% off ask + another 2% "just because.) Now take your 10% off that for commission and you're in the 150-160 range cash out.
The way you get around this with a broker listing is that you list at $220 or $225 if you really want $200.
But increasingly what happens to you is that the buyer
knows you have a 10% "brokers payment" in there, and he ignores it when he's looking at your "asking price!"
Remember - buyers aren't exactly stupid a good part of the time. They know the market too - and they know there's a 10% commission in there which they consider to be "fluff" (after all, what did
the buyer get out of the listing broker's services? Nada! The seller's the one getting those services.... so why should the buyer pay for them?) You can bet he's going to do his damndest to avoid paying for services which only benefit
you if he can figure out a way to do it.
So your "quick deal" comes in with the same $180 offer....
Of course you can just plain say "no f*ing way" to the original offer in that position, which people often do. The boat also often sits on the market for a year unsold; someone will come along and offer more, but reality is this - if you're truly interested in selling you have to be prepared for the fact that the first guy out of the gate is likely going to try to pounce with some sort of bottom feeding offer. And why not? He's got 4 others of the "same thing" to try the same run on if you say no.
Reality is that on a $200k deal 10% is $20,000. How much is your time worth? You can spend a couple of grand and get a LOT of exposure for the boat. If you price it right (omitting the commission that the buyer is going to try to avoid paying anyway!) you'll get that first bite, the nibble, and still settle up about where you need to be - provided you go into it with a reasonable read on the market up front.
I did quite a bit of looking around at where mid 80s 45Cs had settled up - and what time to market was like. My final number was "ok" - I would have liked more, but in reality the "bottom line" was pretty close to where we ended up. If the final number had ended up lower, I would have said no, kept the boat, done some cosmetics and a few other things that were on the plate over the summer, fall and winter and tried again in the spring at a somewhat-higher price - perhaps a considerably higher price, depending on how much time and money I put into it in the interim.
I didn't need to sell, I wanted to sell. The buyer either did a good job of researching the market as well or he was just damn lucky - one will never know - but in any event the deal "worked" because at the end of the day the 10% wasn't in there. Had it been, I suspect
this guy wouldn't have ended up buying the boat, because with his offer had there been a commission involved, I would have turned it down flat.
