Jason Dunbar was losing sleep. His friend owned the 106-foot Broward Altitude Adjustment II and wanted Dunbar, a broker with Luke Brown Yachts, to sell it. Dunbar knew the statistics on Browards: One sells, on average, every 66 days in America. Others had already sold for the year. The sale was likely to take longer than his friend wanted.
The factor of time suddenly became key to the sales equation. While some owners make price the key factor in a sale, hanging onto a yacht for years—and paying the carrying costs until they find a buyer—Dunbar’s friend most valued time. That’s why Dunbar became one of the first brokers to work with Boathouse Auctions, an online service that launched in October.
The site’s creator, Jack Mahoney, says he got the idea from a friend who does online auctions of high-end homes. The concept of an upcoming auction date, he says, creates urgency in the minds of buyers sitting on the sidelines, waiting for an owner to drop the price.
“We’re making an event out of something,” he says. “We solve the problem of time.”
For the Broward—a boat that usually finds buyers, and thus makes for a good bet at auction—it worked. Because of the pre-auction buzz, a buyer came forward with an offer ahead of the sale date. Dunbar and Boathouse Auctions each took a commission, and both the buyer and seller, Dunbar says, felt like they got a deal; the owner saved time, and the buyer saved money.
“We sold it for about 5 percent below fair market value,” Dunbar says. “But, he may have eaten that 5 percent up in the normal bell curve of time. So if I look at how long, on average, it takes to sell a boat right now in America, it may have been a wash.”
How the Auction Process Works
- A sales broker brings the yacht to the attention of Boathouse Auctions. (The auction house will not work directly with yacht owners.)
- Promotions go online and a date is set for the yacht’s sale at auction.
- Boathouse Auctions takes a 5 percent commission, on top of the broker’s commission. If the yacht sells prior to the auction date, then the seller pays the extra 5 percent to the auction house. If the yacht sells at auction, then the buyer pays the extra 5 percent to the auction house.
Sales So Far
As of early May, Boathouse Auctions had listed three yachts for auction. Two of them—a 106-foot Broward and an 86-foot Stephens—generated so much interest that the yachts sold prior to the auctions taking place.