The wrong way to price it

“I need to price it at $xxxxxx because I owe the bank $xxxxxxx” With very little exception those words are almost said exactly as I wrote them. This is by far the biggest mistake you can make. There is not a buyer out there concerned about what you owe the bank but only what they think they can buy a boat for. As a seller you need to think like a buyer and if you are looking at buying anything in this economy (real estate, cars, boats, capitol goods) you are attracted and on alert as it is clear that buyers still have the upper hand and will for at least another season. There is clearly less low hanging fruit on the trees but that is because that fruit is the only stuff that’s getting picked.

Knot 10 I’m proud to say settled more than $12mil in closed transactions for the 2010 year. That’s a lot of boats and I can assure you none of those sales had an owner that felt great about the price. They were relieved and thankful and most say after a month or so felt great to have completed the sale, but nobody felt they got what their boat was truly worth. This brings me back to the bold mistake above. If you focus on what you owe the bank as opposed to what your boat is worth in reality then it’s going to be a long road ahead. There will always be someone selling your same model or similar who paid cash, put 30, 40, or 50% down and is willing to sell for what the market level really is as opposed to a payoff that is 15-25% higher than someone is willing to pay.

This is what we do every day to earn a living and thankfully have lots of boats since you picked Knot 10 as what you perceived to be the best chance to sell your boat. We remember that your choice has a lot to do with our success but it’s also true that owners who have taken our consul based on what we see in this market have gotten better results than making the mistake of ignoring the market. Why is it that our average length of time for selling KNOT 10 trade boats this year is 12 days? It’s because we know before we take that trade where the boat needs to be price to sell in 30 days or less. I have numerous examples but want to use an ideal true story to illustrate exactly how critical this is.

We listed a 2003 Sea Ray 340 at $119,000 in early 2010. For six months we had zero emails, zero phone calls, and zero interest getting anyone on the boat. The boat was very clean and had exceptional options. The problem is there were/are 80-95 of these on the US market between 100k-$149k. The owner was very active in engaging us to try and get the boat moved. We convinced him to go to $99,900 and be the boat that got all the phone calls and interest. In the next 2 months the boat rec’d 2-3 calls a week, was shown and rec’d 3 offers of 90, 92, & 94k. The owner had told us he would stick right to his $99k price point. All 3 offers were rejected and then in the 3rd month he rec’d a $98,500 offer which he took, the boat surveyed and is SOLD. At $110-$119k I have no doubt that boat would still be getting little interest. Price brought the interest, the cleanliness brought the offers, and eventually he got what he needed.

As a company of boaters I am very sensitive to the fact my boat is worth far less today than 2 years ago and I’m thankful I don’t have to sell in this environment. At the same time I have thought if I had to sell it I know where it would need to be priced. Not everyone is in the position to price where the market is, some simply can’t afford to, and others are willing to be more patient. At the risk of sounding like a broken record I want as many of you to avoid the #1 mistake above and focus on the following thought. If you had an offer of $xxxxxx tomorrow and would take it is your current price more than 3-4% higher than that number? If so you may want to try the strategy illustrated by our Sea Ray 340 which we have seen be more effective than anything else countless times.

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