Archive for January, 2011

The Finance Hurdle

January 23, 2011

I though I would do a bit of educating on the finance side of the market since many deals are still finance contingent and we are seeing banks re-adjust on values downward as repo’s and short sales effect market prices.

Say a customer comes in looking to buy a boat (example a $95,000 express cruiser) and needs to obtain financing. We like to control as much of the process as possible in steering that deal towards the lending process. Writing the deal is only the first of 3 to 4 hurdles before the finish line. Once a deal is written contingent on finance the following issues need to be addressed:

Credit Score: Banks are just not touching people lower than a 695 score and when they do look at those candidates they are going to want to see low revolving credit debt as well. Scores below 695 have been getting rejected regardless of how much money is being put down or income coming in. It’s a deal stopper if a buyer has anything dragging a score to 630-675. Do you know your score? It’s amazing how many people do not and get a big surprise. With so many services like Identity Guard or buyers of homes, cars or boats should check this first and clear up any issues.

Liquidity: Banks are going to want to see a buyer’s ability to put 15 to 20% of the deal as a cash down payment including taxes. Again this is another place where buyers used to not have a worry but has stopped deals in their tracks. Being cash poor will hurt you. On that $95,000 boat you are going to have to be able to show $17-$20k in cash non retirement savings plus a reserve on a bank statement. Retirement accounts, 401k’s all don’t matter. Good hard cash is a must and has gotten harder to get around as BUC values below discuss.

BUC Value: This and highest hurdle should we have a buyer that is close on the two factors above. The BUC (not NADA) book values are what most marine lenders are basing how much money they will lend. It’s very easy to figure (we subscribe to it), as the bank will simple look up the boat model, engines, and year and then cut the low retail # to 85%. That is the maximum amount of cash they will loan on that specific boat.
Ex: If the $95,000 contract express cruiser is a 2003 Four Winns 328 and has a low retail BUC# of $92,700 then the bank will lend only $78,795 leaving our buyer to come up with cash to make up that difference. BUC values are adjusting lower due to short sales and repo’s and can sometimes stop a deal in its tracks not only by requiring the buyer to bring more cash but also making them feel a sense of overpaying if the bank is only willing to lend so much. A high BUC value allows us to get more creative with a cash poor buyer and those cases do occur but are becoming less frequent as values are getting readjusted.

Model Year 2003 Hull Material Fiberglass
Model VISTA 328 Hull Configuration Deep Vee
Length Overall 35′ 1″ Draft 3′ 3″
Length On Deck 32′ 11″ Beam 11′ 9″
Boat Type Cruiser | Open Weight 12600 lbs.
Engine Type Inboard-Outboard
Twin 280G
The information presented here is believed to be reliable but not guaranteed. For various reasons, including the subjective nature of vessel evaluations and the possibility of incomplete or inaccurate information regarding comparable vessels and sales thereof, we do not make any warranties whatsoever regarding this report, and WE EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUC does not provide expert witness testimony.


Current Retail Value Range $92,700-$102,000
Price changed after 99th edition.

The good news is that 2 years ago we were seeing buyers that had less and less knowledge of how the credit markets have tightened up. Probably 50% of the finance contingent deals were getting rejected by the banks compared to probably 25% today. It seems a lot of the marginal buyers have been taking out of the system from being rejected or educated by the media and markets. The hurdles are still there and not coming down anytime soon but money is flowing for those that can cross all 3 factors to reach the finish line.


A Change Of Perspective

January 17, 2011

Every so often I like to use a personal story or reference to make a point and I’ve got one that I think can be useful for some. As I mentioned in a previous mailing we had decided it was time to put our home on the market and get closer to the office. I wrote about looking at the homes condition and spending money on things for the sole purpose of taking doubt out of a buyers mind. Not knowing if it would take 2 months or 2 years in this market we listed early knowing we would not move until June 11th to a permanent home on the shore. We had 2 offers in 59 days and settled on the house Jan 5th. A perfect short term rental situation was found and we are happy and settled in a rental for the next 5-6 months.

The amazing part of the process is without the urgency to buy that next house we have turned into buyers from sellers. Looking at homes now from the other side of the fence as buyers our mindset is completely different and one I think can be learned from. As a buyer now we are not willing to compromise, overpay, or deal with situations that we think are not in tune with the market. Having gone thru the process of being a seller and sprucing up our home, then pricing it to sell it has become easy to spot houses that are simply way overpriced or need too much improvement for the way they are priced for the market. It also becomes easy to spot homes that have taken every step to maximize their potential to sell and they tend to be the ones that you check on 2-3 weeks down the road and see they are under contract. Educating ourselves and being patient is going to assure of us not buying wrong in what is a very rare chance to be a buyer in this market without a home to sell and the leverage that creates.

This perspective made me think are you as a seller always taking the time to think more like a buyer? If not then spend 45min to 1 hour comparing your boat versus the comps a year older and a year newer, taking a look at how it stacks both in terms of equipment, appearance, as well as price. While doing this try to say if I was buying one of these boats which one would I inquire about first?  We know that in real estate or boats there are clearly less buyers out there in the market. The ones that are have been waiting longer and researching deeper before breaking out their wallet. When you factor in the fact a boat can be shipped anywhere in the US or World (we have been seeing 1-2 a month of our sales go overseas) it becomes really clear that thinking like a buyer can help to position yourself from 2 years on the market to 2 months on the market. I know this change of perspective for us is clearly different and hope it may be useful for you as we head into the months where we see more buyers and more opportunity.

December of 2010 Comparison

January 10, 2011

Despite the cold weather and dodging some snow we have had a nice start to the 2011 season. By the middle of last week phones started ringing and we had solid calls from both local and out of state shoppers. We ended up with contracts on 4 boats and a 5th expected. It’s a nice way to start the year and helps to keep the blood flowing having to do sea trials in this weather.

Over the next few weeks we will see the start of the winter boat shows. We will have 5 boats shows in total between the end of January and beginning of March and expect to meet and talk with buyers looking to get an early start on the season and have a boat in the water as soon as the weather breaks.

For the month of December 2010 the settled boats in the Mid-Atlantic looked as follows versus the past 2 years:

Gas Boats Sold

2010=   123 units

2009=   177 units

2008=   111 units

Diesel Boats Sold

2010=   54 units

2009=   61 units

2008=   30 units

I found it surprising that 2009 beat 2010 by a significant amount in both gas and diesel sales. With the really bad weather (trying not to remember) of last winter hitting in Jan and Feb it will be interesting to see how that trend looks in the next 2 months comparison.

As far as shopping trends we still see buyers in the $75k and under boats at a much higher rate than the $100-$250k buyer. That segment for 2 years has been the absolute slowest to come back to the market and only seems to do so when the deals are extraordinary. We hope to see that segment return as time goes on as the inventory for those buyers is tremendous and deals are still attractive for those that do decide to enter the $100-$250k segment. Some of the problem can also be attributed to the fact those buyers are not first time non trade boaters. We speak with lots of potential customers who have boats to sell or trade that where bought in 2001-2006 and have so much negative equity that trading makes no sense and selling for the price they need to sell takes them out of the possibility of buying that next boat. Very linear to what is happening with certain segments of the real estate market. It will take some time to work itself thru but all said I think we are in a better place today than the same time in 2008 or 2009.

Knot 10 Moves Into New England

January 7, 2011

With the addition of Rich Feinen Knot 10 Yacht Sales is proud to announce an expansion into the New England market. With experience in new boat contruction and a career in sales Rich has the experience and credentials to serve this market well.

The New England market has been one we have been interested in entering for some time but needed the right person for the job and Rich has what it takes to represent buyers or sellers with the exceptional service people have come to expect from Knot 10. Contact Rich Feinen at (978) 660-1213 to see what the Knot 10 difference is all about.

2011 Boat Shows

January 7, 2011

We are going to be quite busy and active in the winter with boat shows for all our markets. Its a great time to stop by and discuss your interest in buying or selling. Upcoming shows are:


Jan 27-30th


Feb 11-13


Feb 18-20


Feb 26- March6


March 11-March 13

The New Normal

January 7, 2011

We just finished up the 2010 season and boy what a difference from 2-3 years ago. True boat buyers and current owners seem to have adjusted to THE NEW NORMAL. The new normal as I’m referring to has replaced the euphoria of the early to mid 2000’s in our economy that is gone and likely not to be seen for many, many years. Cheap money and the ability to count on your investments and real estate continuing to climb without adjustment are over and from our perspective people are finally starting to adjust to a new normal. What that means for people selling what we sell is that buyers are coming back because they truly love the boating lifestyle, have found of feel stability in their career or place in life and feel confident enough that prices are great as more owners have made a similar adjustment.

When you contrast this year speaking to customers to what the mentality was 1-2 years ago there is a shift in mindset clearly taking place. Gone are the long faces, head shaking, general malaise and fear of pulling out your wallet as confidence and assets seemed to have no bottom. Both buyers and sellers have for a great part woken up to the fact that if you reset your expectations, go back to a more means based approach that you still can appreciate luxury and enjoyment from things like boats and vacations. Attitudes are just so much better overall and we are left with a growing contingent of people not in an state of denial but awoken to reality that things in life has to be chosen wisely, paid for, and you had better have the means to back up that decision.

This is not a rant that we are out of the woods and boats are selling like hot cakes but if you do we do 7 days a week there is a pulse coming back to the market that while faint is growing ever so slightly. This boat show and I expect others in the future are a great sign of positivity. People used to walk into our booth with comments of “No way I’m not buying anything” “I have a boat and its worth $ blah blah blah”, “no thanks I’m just looking” “I’ll wait another year as I may not have a job”, “these boats are all going to be worth ½ next year”. The comments we hear now are “I want to sell my boat and tell me where we need to be as I know it’s less than what I owe” and “boy the prices are great and we are looking to buy a …..” “we have been watching and are looking for…”. A TOTAL SHIFT FROM 1-2 YEARS AGO.

Are there more buyers than in the euphoric days? NO. Are those days coming back? NO. IT’S A NEW NORMAL and once you find it and see it for what it is trust me it’s better place than where we were 1-2 years ago.