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

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.

 

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