Cold Spring Warm Market Better Then Warm Spring Cold Market

May 5, 2013

In my travels out to photograph the fresh listings we get in I encounter many a marina owner and people milling about working on their boats. Just this week I had two marina owners say the same thing, “Boats really aren’t selling anymore are they?” Believe it or not I hear this or something similar all the time. To which I always reply “incorrect sir we are selling more boats than last year and far more than the year before that, but the boats have to be priced correct for the market and correct for condition”. A deeper conversation usually reveals they make this comment based on a few languishing boats they have in their marina’s that have been for sale by the owner or another broker for 3-4 years many of which are in the corner and covered in pollen and cobwebs. They are basing what they say on a very narrow scope of view and applying it to what they perceive is the market as a whole.

As a company Knot 10 is up significantly in settled sales over 2012 which was a record year for us. Our YTD settled sales are up 48.4% in units and 25.3% in total dollars Jan-April 2013 vs 2012. For the markets we serve the SOLD boat data for all reporting brokers was:

Mid-Atlantic SOLD:

Diesel Units Settled

Jan 1-Aprl 1, 2013                   2012                            2011

238                                    227                           205

 

Gas Units Settled

Jan 1-Apri 1 2013                    2012                            2011

791                                  941                           920

Florida SOLD:

Diesel Units Settled

Jan 1-Aprl 1, 2013                   2012                            2011

702                                    597                              704

 

Gas Units Settled

Jan 1-Apri 1 2013                    2012                            2011

1125                                1102                             1142

New England Region SOLD:

Diesel Units Settled

Jan 1-Aprl 1, 2013                   2012                            2011

213                                   209                              189

 

Gas Units Settled

Jan 1-Apri 1 2013                    2012                            2011

742                                 961                              825

**interesting that the gas units are down in Mid-Atlantic and New England in almost the same ratio equal to the slow but steady diesel sold rates**

For buyer and sellers its important for you to know Knot 10 is always here and that the only thing all of us earn our income on is selling boats. No part time brokers who bartend at night, no service business or marina operations/gas docks etc. All we do is sell brokerage boats 7 days a week and not one of our salespeople earn a dime in salary or base + commission. Sell a boat earn money, then start at zero and sell another one. With the exception of our office Admin & Closing staff  (who are quite exceptional!), not even our management team have a salary. Personally the last sales/marketing job I had with a salary was when I was 23 years old. I was earning $40k a year doing marketing for a physical therapy multi office practice. I hated it so much that I would usually dump the marketing materiel in the trash so it looked like I called on a bunch of accounts and sit in a parking garage listening to talk radio killing time. Not something I was proud of at all, but the point was I was getting paid regardless and hated what I was doing. Thankfully I quit after 3 months and took a 100% commission opportunity selling for a Nikon medical equipment dealership. It opened my eyes that without a ceiling on earnings coupled with doing something I enjoyed you could have an environment that provided the hardest workers with the greatest income and freedom. It’s a much longer story then many of you want to hear but it formed the basis for how I think all capitol equipment or high end sales teams should be structured to produce the greatest results. Pay people well, strip away the mindless call reports and “who did you see today spreadsheets” that big management companies paying sales bases and salaries brings and you end up with more peak performers pulling in the same direction. Sell a boat and start back at zero every pay period is an environment where if you don’t perform you will starve and eventually realize this is not the work for you. I’m proud of our team and assure you selling is what we do and while its not always easy or as quick as you may want there is no incentive for our team to not want to sell each and every boat we can.

Boating Needs To Be Cultivated

March 11, 2013

I’ve been thinking quite a bit about the longer term growth of boating as a lifestyle and recreational outlet. NMMA (National Marine Manufacturers Assoc) has for years promoted a “grow boating” campaign aimed at doing just that. It’s certainly something I see as a long term issue which can effect a recreation that to me offers so much and continues to bring families together in ways other recreation can not.

The spark that ignites boating passion for many (me included) and needs to stay alive is the introduction to the water and boats at a young age. For many boating spans generations and the kids/grandkids of boaters are likely to catch the bug and remain passionate about boating into their adult age and so on. For me for example my dad bought a 21 Bayliner when I was about 12-13 and while he kept it only for 2-3 years I remember those times as vividly as any childhood memory. There was something about his coming home from work early mid-week and us going out fishing near Sandy Point in the Chesapeake humidity that seeped in my blood and stayed with me for good. I recall how the boat looked, how it ran, hitting a crab pot and pushing it to the beach to unwrap it from the drive like paintings in my mind. Then the boat was sold (my Mom was not a big boat lover) and I was deeper into high school sports and off to college. Late in my twenties and gainfully employed I woke up one day with spring fever and could not get the images of those times on the water out of my head. I decided then and there that I wanted that for my family and announced to Judy “hey I wanna get a boat”. Years later I have two kids who the first warm day in Feb/March start asking when the boat is going in the water and why its not already there ready to go. The bug might be genetic it seems.

For boating to prosper and thrive will require people to continuing to experience all that being on the water offers and exposing future generations to it as well. I’m not sure how that happens in today’s overly expensive cost of living where even to go to the grocery store seems more expensive by leaps and bounds versus 5-7 years ago. Boating like many things in our society has become more of a have and have not proposition. It has not always been that way but the tremendous increase in the cost of new boats and the fuel to go in them makes it far harder to justify as anything but a luxury item. Heck even going to a baseball or football game as a family takes a major amount of disposable income.

Hopefully this trend is more cyclical and at some point in the future the industry can find ways to put boats and boating within the reach of more people. You don’t have to own a 75’ Sunseeker or 42’ Sea Ray to enjoy and reap the rewards of the salt air and memories that last a lifetime. We just need to find a way to put more people on the water which will create a stronger industry not to mention families that will smile more and enjoy the bonds with family and friends boating creates that nothing else can match.

BREAKING NEWS “REALTOR’S ANNOUNCE 10% COMMISSION RATE”

February 3, 2013

Knot 10 is celebrating its five year anniversary Feb 1st and I want to take a moment to thank all of you for giving us the chance to sell your boat, choosing our company and participating in our growth. When we first started as a company in Maryland our competitors simply patted us on the head and said nice try but you will fail within a year. They took us as nothing but a discount (my most hated term) operation that won’t have any legs and will be here today and gone tomorrow. What they failed to realize was how comprehensive our approach was for the seller yet how simplified the message was for us to get across. As we grew in listings, sales, employees and location the market realized oops they are not only here to stay but leapfrogging every company out there.

We anticipated what our competitors would say about our concept and the myths they would try and propagate to customers. A few of my favorites that played out exactly as expected were:

Knot 10 does not show the boats

Knot 10 is just on the internet and does not have an office or staff

Knot 10 does not have anybody with experience (funny)

They can’t survive charging 7% (last time I checked 7% of $25million is more then 10% of $7 million?)

Other brokers won’t show their boats since they don’t co-broker (news flash we pay industry rate on co-brokerage and alert all brokerages in direct email to this fact. In the last 30 days we have been the selling broker for transactions with the 2 biggest brokers in the US. Seems other brokers have no problems selling or showing our boats)

Our concept was to simply charge 7% instead of 10% commissions to sellers yet do it with 100% full service. There is nothing discount about what we do, the only discount is that we charge less then what brokers considered their industry standard set in stone rate. Other brokers cut rates on a sexy listing, or to make a deal happen after the fact all the time. We just decided make our message clear to customers that you can get all of what we offer and pay 7% not 10 (hey Knot 10 that sounds like a good name).

Fast forward five years and we are growing every year with big plans for 2013 and the future. As we enter new markets the difference is people know we are here to stay. Competitors now like to tell us directly and to industry groups my new favorite “Knot 10 is ruining the industry”. Imagine if you would the following.

BREAKING NEWS FLASH

“REAL ESTATE INDUSTRY MANDATES A 10% COMMISSION ON REAL ESTATE SALES”

If the real estate industry tomorrow moved all rates from 6-6.5% up to 10% what would the effect on that industry be?

-Sellers would immediately be further under water on their mortgages and would raise prices to offset the increased commissions on the property.

Buyers would see less attractively priced homes to pick from

The end result is realtors would sell fewer houses as buyers would all of a sudden see houses that where not priced attractively as sellers would price in the 3% commissions to the sales price, have shrinking equity or have to write bigger checks if they are underwater on their mortgages.

The real point to make with this statement is that the old guard says “we are ruining the industry and bad for the market” when in fact we are the direct opposite. Ask yourself what would happen to the health of our industry if all brokers charged 7%? Sellers would be in a better price position and more aggressive, buyers would see more attractive deals and the net effect would be brokers sell more boats not less. Are 10% brokers for a healthy industry or part of the problem holding it back? Knot 10 is not ruining the industry but simply providing a disruption that long term will be proven to have improved it.

Shopping will never be the same

January 20, 2013

The continued up trend in leads and shoppers was no better no worse last week. We completed a sales meeting in Maryland which brought all of our offices together for 1 ½ days to go over 2012 and some of the exciting things we are going to accomplish in 2013.

For those who don’t know me I enjoy running early in the morning 3-4 days a week. Its on these runs or shortly afterwards where my most productive thoughts or ideas are formed. On one of these runs the thought came to me about how the world we live in today has become something like never before in terms of shopping. All of which can be tied back to the revolution and pace of technology. The internet opened the door but it’s the ipad, smartphone and walking mobile proliferation that has blown it off its hinges. You can stand in a store and pull your phone or tablet out and shop that item in 30 seconds. This is not going away and has altered the landscape of how people buy.

Never before has it been harder for people who own a small business to sell goods over $1000 if they are not looking out from their zip codes. For those that figured out ways to move outside of that scope it’s also a time when never before could they sell more products to further reaches. Two perfect examples of that came to me from my own experience this year.

1)      My lawn tractor was on the blink and my 15 year old said dad we need a zero turn mower it will cut the lawn time in half. He was right and I took a look locally at a few. But then I jumped online and compared brands, specs, and of course prices. My local dealers “on sale” price was $3799 plus tax. On an ipad in the back of my car driving to dinner my son found the exact model in a crate shipped from Michigan in one day for $3149 no tax no shipping from a tractor supply warehouse store. Gave them my credit card on Sunday and had it Tuesday morning. One month later needed a part walked into my local dealer and bought the part for $24.99. Had no interest in shopping to save $1.49 on the part but absolutely when spending thousands.

2)   My parents where replacing the range in their home and wanted a very upscale gas range. Knowing what they wanted my wife sent them to a really high end kitchen store. They found the brand, style and options they wanted. Shopped it online over the course of 3 days to 7 different dealers with an email that gave them “hey this is what we want, give us your best price”. The final bid was accepted and the purchase was made based on price and delivery. The high end local store was 18% higher then where we bought it from.

These were commodities where to me exceptional service mattered far less then price or support for who I ended up buying from. I am willing to accept that when I problem occurs I may have to work a bit harder to get it resolved but it’s not as if I need training on how to cut the grass. The exact same example of this occurs in every item out there over $1000 today more then ever before. It’s not everyone mind you but far more then 5 years ago and 15 years ago it was hardly even a possibility. If you have a production type boat where there are 5-10 out there this is why listed price is so vital to make the phones ring and why we wanted to show you some stats to bear this out.

THIS IS WHY WE NEED TO THINK LIKE BUYERS MORE AND SELLERS LESS.

100 Random settlements for Knot 10 in 2012 looked like this:

55% of the boats stayed in state. 45% of them went to another state or country.

55 boats listed in the same state stayed in the same state

45 boats listed in a state that sold to another state or country

Florida to Toronto

Florida to Virginia

Florida to North Carolina

MD To MI, NY(4), PA (2), MA, FL (2),VA (8), DE (2), DC

MD To Singapore

MD To Ontario

MD to Germany

MD To British Columbia

Virginia to MD (2), CA, NJ,FL,MA

Connecticut To NY (2)

Massachusetts To NH

Massachusetts To Venezuela

New Hampshire to MA

Vermont to Canada

When prices are right the end result is shoppers inquiring more about boats farther away as the cost to ship and logistics to do so outshine the local options.

2012 A Look Back

December 30, 2012

With 2013 upon us we wanted to have a quick look back on the market as a whole with some data to compare to 2012,2011,2010 and 2007 (pre great recession) to give you a sense for what the industry overall looks like. We know Knot 10 has grown quite a bit in that time but its more from taking market share as opposed to a growing pool of boats being sold. It’s interesting to see that the Maryland/Virginia market appears the most stable thru this comparison while the harder hit was Florida which coincides with the sharper decline in that market’s real estate values over this time period.

2007

2010

2011

2012

Diesel Power Boats Settled
Florida

2303

1720

1775

1613

Maryland/Virginia

594

556

529

573

CT, MA, RI

617

545

487

533

Gas Power Boats Settled
Florida

3146

2916

2864

2842

Maryland/Virginia

1571

1609

1774

1784

CT, MA, RI

2182

1923

1678

1793

It’s undeniable that certain segments of boats have been hit far harder then others. Sportfish Convertibles have had a sharp decline and performance boats have been decimated while other broader cruising and motoryacht styles have seen little impact and demand has remained consistent. This has to be a simple supply and demand equation with loads of boats built and sold from 1998-2007 and far fewer buyers coming into the market as those owners decide to sell, trade or exit boating altogether. The one positive is that in the Sportfish segment 2012 showed some signs of positive growth over previous years as prices have in many cases lured buyers to clean boats with exceptional value.

 

2007

2010

2011

2012

Sportfish Convertibles

 

 

 

 

Bertram Sportfish 39-70′ 1995-2010

75

40

49

59

Viking Sportfish 40′ to 77′ 1995-2010

177

120

128

137

Ocean Yachts 40′ to 45’ 1995-2010

35

18

23

20

Various Builds

 

 

 

 

Hinckley 35-42′ 1995-2008

28

30

24

24

Carver 39-50′ 2000-2008

106

107

114

104

Formula 30-40′ 1996-2006

164

151

170

171

Performance Go Fast

2007

2010

2011

2012

Cigarette All Models

44

14

21

18

Sonic All Models

22

11

11

3

Going into the New Year and on the heels of many boats being replaced in the NJ/NY market we expect 2013 to probably show another slow year of growth for the overall used boat market. I certainly don’t expect a decline in our own numbers but for the overall boating market slow growth I believe is the best that can be expected.

The one change that could end up impacting the boating market on a longer term basis are signs that the housing market is recovering and showing appreciation in certain areas. It’s quite hard for people to feel positive about spending money on a major purchase like a boat with a constant negative trend in home values. The psychological effect of negative home equity, foreclosures, and a sick housing market weighs heavy on those that can afford to boat and want to experience the lifestyle yet are reticent to do so until the housing news is a bit more positive. If you have noticed there has been news proclaiming a turn in housing starts, permits, and resale data. That is absolutely a trend that can only help the boating industry although those results will take a year or two to show up. Think about it if you want to spend $200k on a boat are you more likely to do it knowing your house is continuing to lose value or when signs show you are in appreciation mode?

Bigger Benefits The Individual Seller

May 8, 2012
As Knot 10 has grown in listings, staff and locations I was thinking the other day of how that benefits a single seller. The benefits to our size for an individual come in things that most sellers may not think about but each one benefits by. The amount of advertising we do and wide range of boats offered brings a tremendous amount of inquiry and volume to our website, phones and traffic to our boats. The side benefit for the individual is that many times a person inquiring on a specific boat will not be dead set on that boat but more on shopping a style.
One could argue that a boutique small broker with 20-30 listings only pays more attention and focuses more on selling your boat but the reality of what we do is that now matter how hard we focus we can’t generate interest or produce a buyer from thin air. If a broker has only 2-3 similar express boats and little to no advertising the amount of inbound interest to cross over to these other boats is fractional compared to what we see. Case in point is this weekend one of our people took a client to 5 different Motoryacht listings we had between 37-40′ who had a budget of $100-$120k. That phone call came in as “You have a number of boats that fit what we are looking for and want to see them all in one day”. The broker with only 1 motoryacht of interest simply has a fraction of a chance to have what this client wants versus our model in comparison. Lastly we have staffed our operations not only with an extremely talented team but realizing the need as inventory grows to have the correct amount of people to serve that large incoming interest. When analyzed you would actually find our broker to boat ratio is lower then a single broker with 30-35 boats.
Once that shopper enters into our domain is where the size of our inventory benefits not only the buyer with many other similar boats to consider but directly the sellers who gain exposure from our sales team vetting out the buyer to define interest and put them on the right boat. More times then not when its a brokerage boat the buyer thinks he wants a 288 Four Winns only to switch over to a 32 Sea Ray once he gets into one or see’s a boat that he otherwise thought to big or too expensive. Other times the right boat is exposed to the buyer because our brokers see an exceptional boat we have just listed that otherwise the buyer would have never thought of. I can’t tell you how many older exceptional boats we sell that owners tried to sell on their own for a year that we sell in 2 months. The reality is time and time again we see a lead come in on a boat that ends up buying a completely different boat once we capture that buyer and work them to the right fit. The for sale by owner simply never sees anything but tepid direct interest versus the number of buyers we see which increase the chances of the finding a real buyer dramatically. So it gets down to size equating to leads, where having a bigger scope of inventory directly computes to more incoming interest. When you couple that with very our pricing strategies, photographic approach, experienced brokers and broad advertising you really begin to see how the larger we grow its true the more we sell but equally true the more the individual listing client benefits.
In the end our recipe produces results but its the blend of all the ingredients versus just one that makes it the best choice on the menu.

The Deals Still Command The Buyers

April 24, 2012

We sat down the other day and gauged our start to 2012. Dollars are almost double last years same time of the year for closings and our average sale is higher. Naturally curious we thought about why that may be. The answer that we keep coming back with is that our customers listening skills about price and place in the market.

We simply have had some exceptional boats but the biggest factor is positioning those boats to get traffic via all of our sources of advertising. We hear the usual protest about not wanting to give the boat away all the time but clean boats need buyers to see them and realize the opportunity. Buyers simply shy away from anything that looks over priced or in many cases even average priced.

In looking at our contracted boats a trend became very clear. An exceptional boat that is priced with almost no wiggle room gets more traffic and in most cases an offer at full price or within 1-2% of it. A boat that is average priced or priced towards the higher part of the comps fights for any traffic and offers tend to be 10-15% from asking. The key difference is the amount of boats we sell under the 1-2% from listed price  scenario and the faster time frame that sales takes place. The 10-20% boats are sold much less often and typically have been on the market for 6-12 months before finding a buyer who makes that offer.

Take a look at your RED SALES PENDING OR SOLD BOATS and then compare those to any similar boat in the market and the theory on price to length of time on the market becomes easier to see.

http://www.yachtworld.com/core/listing/cache/pl_search_results.jsp?ywo=knot10&ps=50&type=&new=&luom=126&hosturl=knot10&page=broker&slim=broker&lineonly

Changes & Additions

March 7, 2012

Knot 10 Yacht Sales is proud to announce a few key personal changes and additions as we continue to grow to meet demand.

In Florida Knot 10 is thrilled to have Mark Armstrong leading the way as our newly appointed Managing Broker. Mark brings years of experience having been involved in several large boat builds, international business development, as well as the day to day activities brokerage demands. “We cannot have a better person running our operations in Florida” says Knot 10 President Marc Benvenuto, “Mark has been with us for a while and will be able to integrate our culture, customer service demands, and unique approach not only to our sales team but directly to the customers who have made us what we are. It’s those customers recognizing our key differences that fuel our growth and nobody understands this better then Mark Armstrong”.

In the Mid-Atlantic Knot 10 has recently added Todd Wittman to the sales team and Todd will be working from our Kent Island office. Drawing on years of experience in the marine industry Todd brings the background and attention to detail customers will immediately pick up on. “For us finding and hiring the best people will continue to be my top priority” says General Manager Gary Bouthillette, “Todd represents one of the finest and his experience selling Tiara, Silverton, Cruisers Yachts, as well as smaller fishing boats will be a perfect background to serve our varied buyers and sellers for years to come. Having Todd join our team is exciting and really strengthens our brand in the Mid-Atlantic”.

In New England Mark Mukon joins Knot 10 as our 2nd season in this market is going to be a busy one. “Rich Feinen has done an exceptional job as our lead Broker in this market” says Benvenuto “and has grown to the point where adding Mark and hopefully other exceptional talent will assure us of meeting the demands this market is showing Knot 10”. Mark has been involved in almost every facet of the boat industry from builds, to engineering to sales and that experience will be obvious to any customers he interacts with.

Ready, Set, Compete

February 12, 2012

Ok let’s get the obvious stated first. IT’S A BUYERS MARKET FOR BOATS, HOUSES, PLANES, or any other high-priced item that requires a deployment of capital in what has been a down economy. From the looks of things overseas and at home one really can’t point to a sign of “green shoots” “tea leaves” “crystal ball” “silver lining” or any other jargon the talking heads and economist like to use for indicating they know what’s coming.

It really looks and feels like this financial crisis which began in 2008 is going to be a malaise that reaches more into the fabric of change effecting how people live for years to come. Those waiting for a snap back are going to be waiting a long time as pay attention and you can see this is not something in history repeating itself but more a fundamental cleansing of bad habits and living above our means that was bound to catch up to us and did. Never has the world been so small and connected via the technology that we all love and use everyday but that also means worlds economies are intertwined and prone to all catching the same cold as bad economic decisions trickle from one land to the next.

That’s about as negative a rant as you will ever see from a person like myself who is an eternal optimist and always glass half full mentality. But a wise quote I once read said to “face reality for what it is, NOT for what you want it to be”.

The reality is buyers will be less in number but mighty in opportunity. Boating will never go away as it remains for many the greatest return of pleasure for dollars spent. What I suspect you will see is a continued adjustment to living within means which is hard to measure at times. You will decide the shiny $400k new boat looks great at the boat show but the grown up thing to do is look at that 2008 or 2009 model for $200k instead. That’s still a boat buyer but one that made a shift in habit that is hard to measure.

Buyers are out there as our growth indicates but sellers are competing for them and it’s a competition that requires effort, price and conditions that many find hard to meet. If you have a boat that you’ve decided to sell it has to meet a set of criteria not dictated by us but by our observation of the market on a daily basis. The boats that sell are priced at the lowest rungs of the ladder (buyers start on the low rungs first), have been kept up cosmetically (don’t give up on your boat or it will sit and be passed by every time), and have owners willing to see that selling requires competing more and less “I’m not giving my boat away” or “but mines the nicest” chest thumping.

Competition is one of the reasons Knot 10 has grown in a business that many others are hanging on for dear life. We have had other brokers claim we are ruining the industry, not making any money, only successful because we charge 7% instead of 10% etc etc. NOPE THAT’S NOT IT. Business is a competition and every business has challenges to their model. Our strategy is simply to be as good as we can be with what we offer realizing it’s the customer that decides. That end point customer does not subscribe to any “industry standard” notion. Why is it some 10% brokerage operations we admire locally still do great and are growing? Why is it that competitors of ours have advertised 5% or 6% rates with no impact on our business (or us complaining) whatsoever? It’s because the buying and selling customers look at what is presented still have and will always have a choice in whom they do business with.

We only look big at first

January 28, 2012

As Knot 10 enters 2012 we will have a fourth birthday coming up (Feb 1). We also will be entering the Florida market with a major expansion as well as possibly putting the pieces together for a NJ/NY office. We have been careful in our planning to avoid some of the issues all growing companies experience. In general what we want to avoid is the perception of being too big, the watering down of our brand, our message and the factors that have led to our success from day one.

Do we have a large amount of boat listings? YES. But keep in mind we have 9 present full-time brokers and soon will be adding another 4-6 in these new markets. We recognize that one person can only sell and list so many boats so we always will staff up accordingly so that our listing and buying customers receive the proper care and time they deserve and require.

In addition our use of technology and planning allow us to give you a boutique approach regardless of how big we may appear. Our markets are all viewed internally as distinct offices and markets that interweave to support our common brand message and culture.

I faced a similar experience when choosing a realtor in 2010. The firms I interviewed ranged in size from small, medium and large. In the end I went with the biggest player not because of size but because their presentation, advertising, and niche service took away any concerns I had about being a small fish in their big pond. My decision was justified once I was listed as the feedback, technology, and systems they used made me feel catered to and how my concern of how big they were melted away with exceptional customer service and support.

In closing as a listing client our large size benefits you from the equally large ad budget, stellar photography, technology and increased amount of global eyes on our inventory. As a buyer you will get the attention you deserve, a large selection of inventory, and the confidence of knowing we are always aware we need to serve each individual regardless of our size or success.