Archive for July, 2011

Recent Trends In Sales

July 22, 2011

At Knot 10 we have a wide variety of inventory and typically offer 170-200 boats which gives us a good indicator of whats hot and whats not. In 2011 for the first 6 months we had just shy of 100 closings and listed around 110 new boats to inventory. Some boats listed sold in 2 weeks and others have not had any interest at all. While pricing by the owners is a major influence on the sale there are certain trends that we have noticed this year:

Bow Riders= The market for under $35k bow riders on the Chesapeake is probably the hottest boat segment around. Every time we have a customer bring one to the Kent Island lot it is like a magnet. It seems there is always someone looking for a low-cost fun way to get out on the water. HOT and if you’re a buyer and see a clean one do not wait.

Performance Boats=Go fast style boats have been hit hard as buyers are few and far between. We have seen some sales of under 30′ Fountains and Formula go fast style boats but the prices had to be very attractive to get any interest.

Center Consoles= A definite difference exist in sales of large center consoles (> 32′) versus the sales of 22′-28′ center consoles. The smaller boats have been moving very well if priced right where the bigger boats have been sluggish even when priced at numbers below market. It seems $50k or less is and will remain the hotter segment for center consoles. That said if it’s a Grady or Boston Whaler we see strong interest even up to $150k boats.

Aft Cabin= The aft cabin gas boat market has in 2011 been very challenging. It seems so many were made and sold in the 1997 to 2006  that supply well exceeds demand. As that occurs buyers who are few and far between seem to only nibble at rock bottom priced boats and even then buyers can be hard to find. I see this possibly reversing a bit as sales of smaller boats are improving which in a lot of cases supply the buyers of Aft Cabins.

Large Motoryachts= Recently we have seen some renewed interest on pilothouse and large motoryacht product. The long slide downward in prices seems to have finally reached a point where buyers see the benefit and do not want to delay the big boat of their future much longer. Some great buys exist and the cleanest boats are moving if priced to the point buyers come for a showing.

Flybridge Sportfish= Another segment that has been sluggish is the Convertible sportfish market. This is another market that supply is greatly exceeding demand. The buyers that are there are coming  from far away if the boats are priced below market but your local buyer is just not there in the numbers that move older or average priced product.

Small Express Boats= Small express boats in the 24-32′ range have been selling well at most price points if the boat is priced aggressively. It’s a case where buyers are there and when they can see the value against the comps are not afraid to buy. This is a positive sign as many of these sellers may be looking to that next bigger boat.

Big Express Boats= Large gas and diesel express boats are selling but not nearly at the same pace as the smaller boats. The ones that are seeing interest have  to be priced aggressively and buyer trends are shifted towards options like hardtops, cockpit air condition, and IPS drives. It’s not that big express boats without those features can’t sell its just that the prices needed to do so have to be very much discounted to attract any interest.  

So far for 2011 Knot 10 is selling lots of boats and would declare 2011 to be much stronger than 2010. The cleanest boats don’t last long if they are priced correctly as the fruit being picked is not just the lowest hanging but the ripest as well. The cleanest boat in the market if listed at too high a price just won’t get the call but if the price is attractive and the boat is above average it will soon be on to its next owner.

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Boating Can Change

July 22, 2011

Many buyers will at some point in the  process ask the question “why are they selling” as we linger on the boat they have their eyes on. While there are many reasons sellers sell one reason is that boating for many people changes over the years. Starting out with a small express cruiser you will realize in a season or two that you absolutely love this lifestyle and want to go to that big cruiser that puts long weekend within reach. Now you are a seller of a 24-28′ boat that some other family will decide is the perfect starter boat to get out on the water.

Maybe you’ve had a boat for 10 years and climbed up to the mid 40’s Flybridge cruiser and have done that for years. Sensing its time for a change but not being able to fathom not being out on the water you decide to downsize and go to a small runabout or center console that greatly changes your boating but has benefits in many other ways. Big boats are labors of love and require lots of TLC to be kept in great working order. Going to a smaller boat you quickly enjoy the benefits of hose it off and be done in 10 minutes. The buyer of your big Flybridge boat is probably the opposite with a growing family and desire for the benefits only a bigger boat can offer. Far away destinations can be reached and explored despite nasty weather, 10 day vacations or longer can be taken where your only limitation is time you can take off to cruise etc etc.

The point is while people sell is different in every case and why people buy a certain style and design is equally as varied. The boating you do today may not be the boating you do in the future but the one thing that remains is no other lifestyle offers the freedom and joy that I’ve found on a boat. Most people either get it or don’t on the first boat they buy and if you “get it” then you’re a boater for life and welcome to the club.

The Buying Process (its more like a house than car)

July 9, 2011

The process of buying a boat in the brokerage market is much more akin to a real estate transaction than to that of an auto transaction. With that said we are more often than not dealing with buyers who expect to drive it home the same day they sea trial or the next day. For a variety of reasons that is not advisable and often not possible.

It is easy to understand why people want to take delivery ASAP. It’s a boat purchase and you want to be out using it immediately. It’s the same reason almost every person for a boat who makes a scheduled appt shows up 30 minutes early. Its exciting and something you want to do. I would venture a guess most people are not early for a dentist appt or meeting with their tax accountant.

The process however sometimes needs a slower approach instead of full speed ahead to taking the boat home. You’ve come in to buy a boat and in this case lets use a 2002 Regal 3860 as an example. You fall in love and have your sales guy write-up an offer and fork over a deposit check of $7500. At the time of contract we try to establish some dates knowing that the process takes time, we have other deals in front of it that need to close, and we are aware of the scheduling of outside people who need to be accounted for. Many times the only focus for the buyer is “if we survey Wed and I like it I want to close and take it home Wed or Thu.”  There are a number of factors that make that a transaction ripe with potential for disappointment and undo stress on you as well as the seller and Knot 10. Here’s why:

1) Assuming you’re taking a loan on the 3860 and insuring the boat the survey process is akin to a home inspection. All systems will be tested, monitored, and the boat will be run for sea trial to see how all systems perform at sea. Much like a home inspection your surveyor who you pay $20/ft needs 2-3 days to type your report and possibly wait for oil samples to be returned. Pressuring the surveyor to get it out the next day is unfair and assumes he only has 1 client a week when in reality they are doing 4-5 a week which means lots of people waiting for reports yet you want yours back the next day. The bank will not issue your closing approval until the survey report is issued nor in most cases will you be able to get an insurance binder without a survey. This is one key distinction from walking into your Chevy dealer and rolling home in that freshly purchased auto.

2) In most cases the survey that comes back has a number of items that need to be addressed. These are 5, 10, 15 year old machines and they operate in a damp environment so things need fixing and addressing. The rush to take delivery without adequate time to address issues only places pressure on you to make poor decisions or falls on mechanics and brokers to cut corners fixing things quickly as opposed to properly because a buyer wants the boat yesterday. This purchase is one you will have for many years so taking an extra 3-5 days to get it right should be but is often not the mindset.

3) In a brokerage transaction there are 3 sides to the  transaction that make it distinct from an auto and closer to real estate. We have buyer, broker, and SELLER. Consider the seller who in many cases has things in storage that go with the boat, personal items on the boat, money that needs to be shifted around to pay off a loan etc and the  overall need to analyze contracts and survey reports when asked for additional money to fix issues or hire a mechanic if agreeing to address issues that came up from survey. This is a major reason the process takes time as sellers have to be accounted for in the process and as much as they want the boat to go away may live 2 hours from the boat and not be able to take time off of work in the same timeframe as a buyer who just wants it TODAY.

4) The final hurdle that needs to also be factored in is the amount of paperwork required to close a boat transaction in the brokerage world. In most cases the boat has had 1-3 owners before you and title work needs to be ordered, secured, and processed appropriately so that you can title the boat. Official documents need to go out to be signed and notorized, they need to come back before funding from bank can  occur etc etc. Having done a few of these (I was fired from this task and no longer allowed any part of it) the amount of paperwork and calculating the payoffs and disbursements is time-consuming and takes focus. Buyers who want to settle the same day or day after don’t account for the fact it means we have to calculate the numbers and draw up bills of sale pre survey. Then after survey if there is a financial change to the numbers have to redo every bit of paperwork. Miss any step in the process and you may make a major mistake that ties up the ability of a boat to be titled or causes funds to be miscalculated for settlement etc. If you saw how much time goes into the background title and then consider we close about 12-15 boats a month rushing one that wants to be done that day is where it gets crazy, fuses get short and mistakes can happen.

So I ask any of you who have bought a home to think back about that process and how long it took. You probably can recall the process being 6-8 weeks in most cases. You had a home inspection, waited for hashing out those issues, moved into the final mortgage approval process, and then waited 2-3 weeks for the title and closing process to be ready and completed. The process in buying a brokerage boat is very similar yet we are asked to compress this process into 1 day. As a buyer sometimes its key to take a bit longer approach and remember this is a major purchase that you are going to enjoy with friends and family for years to come.