Archive for March, 2010

Spring Has Sprung

March 31, 2010

Maybe it was the crazy winter snows or the fact people have spent 2 years sitting on their wallets but we have seen a fantastic start to spring. The white board at the office has been out of space and the deals written, closed, and pending are at much higher levels than seen in a long time. The good news is the buying is at all price points of our inventory. From $25,000 small boats to $400k modern express or sportfish. Since mid-February the pace and serious buyer interest for us has been far ahead of schedule. It seems the base we built on highly visible advertising, exceptional customer service, and listings that catch buyers eyes are paying the dividends from 2 years of formation.

As a seller look around and see how others advertise, promote, and therefore attract eyes on their product and decide whether you deserve an average effort or exceptional effort. Average in a tough market will get you nowhere, but as you can see from our early start in the rebound exceptional efforts will lead the way.

What a great sign of things to come here and in our Virginia market. Look for 2 major announcements in the coming months as we roll into 2 more markets. The competitors in the market will keep imitating our approach (some even violating trademark law) but the consumer will keep rewarding innovation and original thinking.

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MONEY IS OUT THERE YOU’D BE WISE TO GET PRE-QUALED

March 11, 2010

It seems the credit market may have slowly turned the faucet back on to consumer credit. It’s true lending standards have tightened considerably since the meltdown of the financial markets but we have been seeing a trend of 80% of our loans going to the bank come back approved. Contrast that with one year ago where it was 50/50 at best. The quality of buyers may have improved as people with sub-standard credit may be realizing in this new world banking order you better make what you say and not have too much debt to income when applying for credit.

As the spring boat market heats up IT IS VITAL if you’re a buyer that you take the one or two days it takes to get pre-qualified. As you shop if you are a pre-qualified buyer you get the following advantages over the non-funded finance contingent buyer:

-YOU KNOW WHAT YOU CAN AFFORD (saves time and streamlines your search)

-YOUR OFFER IS SO MUCH STRONGER TO THE OWNER (everyone is shopping price and it is so much stronger a negotiating position for an owner to know he has a qualified cash ready buyer as opposed to an offer with a series of hurdles to go before survey.)

-YOU GET TREATED A DIFFERENT WAY (coming in with a pre-qualification letter to a broker when shopping shows you are at the last stages of your boat shopping, serious and ready and educated to make a purchase. While we like to treat all prospects equally you better believe you jump to the head of the line as a ready pre-qualified buyer carries a big stick.

So contact a marine lender today (Trident and Scott Financial are nationwide marine experts) and become a serious buyer in a buyers market the likes of which may never be seen again.

John and Jimmy Buy A Boat At The Same Boat Show

March 3, 2010

WHY ARE 2 BOATS PRICED AND SOLD AT SUCH DIFFERENT LEVELS ?

If you are listing a boat for sale I want to provide some food for thought as to what we see from callers all the time who say “I can’t sell for less than $160k because that’s what I owe the bank”. As we try to instruct people on how to price I think the following example may help in your pricing decision.

John buys a shiny new diesel Sea Ray for $230,000

John goes into the boat show having saved and sold some stock determined to buy his new boat for cash. He gets a deal done and pays $230,000 cash for the boat he has always dreamed of owning.

Jimmy buys the same shiny new diesel Sea Ray for $215,000

Jimmy being a shrewd negotiator walks into the same boat show and buys the exact same boat for $215,000. Wanting to keep his money working for him he decides to put 10% down and finance over 15 years. I’d venture to say 70% of us are more like Jimmy than John and finance our boats with only 10-15% down in the past.

3 YEARS LATER IT IS TIME TO SELL THE BOAT

For whatever reason John and Jimmy decide its time to sell. Could be getting out of boating, money, moving out-of-state…. Regardless they both decide to list their boats and as fate would have it the market is a bit tighter than when they purchased. They decide to call Knot 10 to discuss selling their boat. In looking at the numbers we can see the settled sales of that boat being $140-$155k as 6-8 have sold and we can see what the numbers looked like.

You see where we are going with this and why some owners are able to mentally go to the price the market is willing to pay and others get stuck on “I must sell for xxxxx cause I can’t think of writing a check to sell my boat. BOTH GUYS BOUGHT AT THE SAME TIME (and Jimmy actually got the better deal) BUT DIG DEEPER AND YOU SEE WHY JOHN’S GONNA SELL HIS BOAT AND JIMMY IS GOING TO HAVE TO CHANGE HIS THINKING.

The Mental Side at Sale Time  Is Where They Differ

John has already parted with his $230,000 and is able to look at our data, digest it and decide yes indeed the market is where it appears and decides hey “price the boat at $155k and get it sold” In this example even if John put only 50% down instead of paying all cash he is still mentally on board with where he needs to be. He views the deal as I’ll get the boat sold and get xxxx amount of money back at settlement.

Jimmy after 3 years of payments from his $215,000 purchase with 10% down at a 6% interest rate at 180 months still owes $167,300 on his payout. He calls and we give him our honest opinion. After listening he does some quick math. If I sell at $150,000 and pay commission (7% w/ Knot 10) I will only net $139,500 and have to write a $27,800 check. So Jimmy decides gosh that can’t be possible and decides to list his boat at $184,000 which he figures after it sells he will net $170k and be ok.

Same boat, same year one priced at $155k and the other at $184k we all know which one will sell and which won’t.

THIS IS SO EASY TO UNDERSTAND AND MOST OF US ARE JIMMY NOT JOHN. But I can tell you right now in the last 2 years John has sold his boat in 2-3 months and moved on. Jimmy still is making payments and will need to decide that there are times when you need to face reality for what it is not for what you want it to be.

This was meant to illustrate and inform what we see from doing this everyday. As a company of boaters we are aware this is not easy information for many to digest but we hope some find it useful.

Knot 10 has a birthday and my have we grown!

March 3, 2010

Knot 10 Yachts Sales turned 2 years old in February and it was a brief moment for us to reflect back on what we’ve accomplished but more importantly focus on where we are going. From our initial belief that boaters wanted an alternative to what was deemed the industry standard we have received absolute confirmation that the market would shift towards our premium advertising, unmatched photography and 7% plain and simple commission structure. While the last 2 years has produced tremendous headwinds for the marine industry we have been thrilled with the amount of listings, sales and loyal following buyers and sellers have shown our brand.

Watching competitors change their structure and pay more attention to things forgotten in the past is a direct indicator that the success our model is showing has not gone unnoticed. In our opinion there is no such thing as INDUSTRY STANDARD. It is a free market with companies that can offer whatever level of service, advertising, and price strategy they feel best suits their needs and the needs of their clients. Those mired in an Industry Standard belief that you can’t offer anything new are destined to left behind by competitors that find ways to reach customers longing for a different solution. It is clear from our rapid rise in this tough economy that buyers and sellers were ready for the KNOT 10 Difference. The market will always imitate others and play catch up but it’s the innovators that will be rewarded long-term.

So what are we doing to assure we have the ability to meet our growing demand? Tremendous steps have been taken to be certain the core values we built Knot 10 around remain unchanged as we grow and expand. 6 months ago the expansion of our management and sales forces were forged with a talented team that  now offers 3 locations and 6 full-time brokers. We will soon be moving into 2 new markets in 2010 and adding another 3-4 sales people in those markets. Rest assured that as a listing client we have the office, sales, and management staff to make certain your boat is not lost in our growing inventory. Always remember that our management and sales people only earn money when a boat sells and we have built a team of experienced sales pros who focus on all sales not just the easy ones.

To everyone who has helped make Knot 10 what it is today you have our deepest appreciation and to those we will be speaking with soon we stand ready to prove the Knot 10 experience is clearly different and clearly better.