Buying Brokerage
Not all boat show attendees are looking for brand-new craft. Some are seeking a pre-loved vessel: a boat that fits an owner’s desires like a new model, but that has some engine hours, maybe modest use and even some extended warranties. Perhaps the first (or second) owner has already addressed some of the inevitable punch-list items. Maybe the ideal boat is a classic. No matter what, the price per foot of a brokerage boat versus a new one of the same length overall will be measurably less — but price point is just one consideration. The smart buyer needs to perform due diligence and understand the whole market.
“Owners who place their boats in a show are often motivated sellers,” says Andrew Cilla, president of Luke Brown Yachts, noting there is a cost attached to placing a boat in a show. In general, owners with boats on the brokerage market have varying levels of motivation. So if an owner has it on display in the show, they are likely ready to deal.
HMY‘s marketing director, Rob Bowman, concurs, adding that having so much product within walking distance is a great opportunity for buyers. Still, he encourages clients to do solid research prior to a show. “Preparation is key,” he says. “Read reviews. Know who you are going to see at the show.” Enlisting the services of a buyer’s broker, he says, can be helpful when whittling your options to a manageable number, which can help you wade through the buying process with less stress.
Cilla says brokerage vessels allow owners to get into larger yachts at a more modest cost. “You can’t get a new 78-foot boat for $2 million, but you could get a five-year-old one,” he says. Shopping brokerage also allows buyers to find yachts that they like, but that do not exist in the new-boat section of the show, or that may no longer be in production with a builder.
Don’t be too influenced by used-boat upgrades, both Cilla and Bowman say. “Look at the bones of the boat,” Cilla says. If those are solid, you can upgrade small stuff later. “Nothing is free,” he adds. “If you have a brokerage boat with the latest and greatest electronics and new decor, you’re probably going to pay 70 to 80 cents on the dollar for it.” Bowman agrees: “Things like [replacing] electronics aren’t a lot, in the scheme of things.”
Once you find the perfect brokerage boat, down payments are about 20 percent of the vessel cost. Financing requires a credit application, financial statement and tax returns. Terms can go 20 years. At press time, the 20-year rate was 4.25 percent. Lenders can finance electronics and gear too.
By The Numbers
The first time i went to the Fort Lauderdale International Boat Show 17 years ago, it took me five days to get the lay of the land and see everything. The show is just that massive. While I’ve figured out shortcuts over the years, the event has grown in size and scope. And its impact in South Florida square footage is rivaled only by the number of boats and spectators this nautical juggernaut attracts.
The show encompasses seven locations and 3 million square feet of space.
1,500 Boats On Display.
Advertisement1,000 exhibitors from 30 countries were represented in 2015.
Total product on display is valued at more than $4 billion.
During the first two days of the 2015 show, attendance was up 10 percent compared with 2014.
Advertisement
Friendly Advice
You’ve arrived. The brokerage section of the show goes on and on. Brand flags are waving, competing for your attention. For sale signs are everywhere. Where do you start?
Know Before You Go
A show might feature only one or two hulls of a model. View others before or after the show to get a full market picture.
The Buyer’s Broker
Brokers aren’t just for sellers. Consider using one to help navigate everything from yacht viewing to survey to closing.
Full Disclosure
If you are walking onto a vessel at a show and are already working with a broker, it’s a courtesy to let the broker at the show know.
