How To Steal A Luxury Yacht… Everyone loves a bargain. This is especially true for buying luxury yachts. Whether you are haggling over a beautiful hand-carved wood piece at a bazaar in Nepal or buying real estate, that satisfaction that comes with buying below market value is something to which we can all relate.
The Yacht Deals Are Out There
The yacht deals are out there. Luxury yacht sales are not exactly an efficient market. While general values can be readily determined, there are plenty of circumstances that will allow you to get a real bargain. It is quite possible to buy a luxury yacht, mega yacht or superyacht, keep and enjoy her for a couple of years, then sell her for a nice little profit.
Just this past week a motor yacht owner needed to move a vessel and ordered it sold “to the best offer received by the end of the year”. I can tell you this was more a message to those that had already expressed an interest in her, rather than an invitation for a new inquiry. If that advertisement was your first exposure to the vessel, you already missed the deal.
The Yacht Hunt is Different.
The mission to find a bargain on a yacht is a bit different from finding the perfect luxury yacht. For the latter, price is still a big factor in the decision making process of course, but it is usually more about fulfilling a dream, a vision, getting the perfect buy yacht. There is more emotion and passion involved. Every client is different, and sometimes the vision takes precedence over total price paid. In this mission, I advise clients to view as many yachts as possible. Spend a little time on each mentally ‘trying them on’ and reducing the list to a first, second, and sometimes a third choice, then the negotiating begins. With bargain hunting, the goal might be to enjoy a yacht for a couple of years and then sell her and recoup all spent (wouldn’t everyone love a free yacht?). Or the goal may be purely business; to get a yacht for charter and minimize that capital expense. Whatever the reason, we start with a longer list of yacht possibilities and start to work them down.
Going fishing…for a Yacht!
In order to find a deal, it takes a bit of effort. There are ways to minimize this effort, and we will get into those a little further on in this article.
• If you want to catch a big fish, you actually have to go fishing!
• You need to go to the water.
• You need to go at the right time, when the fish are more likely to bite.
• You need to bring the right tackle. Rod & reel, tackle box, the appropriate bait, the right lures for the targeted game fish.
And at some point, you will actually need to put your line in the water. You cannot catch a fish by watching from the shore, speculating on whether the fish will bite or not, watching the success (or lack thereof) of other people fishing. You need to get your line wet.
A Yacht Broker Is Just Like a Fishing Guide.
Your yacht broker is like the trusted fishing guide. He will do the heavy lifting, arrange for the boat, bring the right tackle, and take you to the right spots at the right time. Develop a good relationship with a buyer’s broker and use him to minimize the effort. But unlike a guide, your broker is only paid when you buy a yacht. Since he shares commissions the seller has already committed to the deal, he doesn’t cost you anything. A good yacht broker will actually save you large sums of money in the negotiating process.
The Great Yacht Deal Comes From Strength
This is how you get the great yacht deal just before the fire sale is announced. You need to get a low but serious offer in. By serious I mean a solid, written contract with a 10% deposit in escrow (easy to wire, and quickly wired back if the offer if the deal is not made), a fairly quick close, and minimal contingencies. Maybe the fire sale is a few months off, but being perceived as no-nonsense and willing to execute quickly is very powerful. Of course this offer won’t be accepted. Maybe it’s countered, maybe not. If they counter, we should counter with a small increment just to keep up the appearance of willingness to play. Beyond that, it’s time to walk away and move on to the next.
Much of this to follow is negotiating 101 and might be recognized as such by many reading this. Some is particular to yacht buying. There are egos and pride tied up in a yacht and the key is to navigate the deal without stepping on any of these landmines. ‘Actions speak louder than words’ should not be dismissed as an outdated cliché. Actions will become a primary mode of communication in the negotiation. Influences and advantages in the deal must be recognized and developed- like prized lures in your tackle box.
Walking away politely is a very powerful action- as is doing what you say you will do. Many times a few weeks, or even a few days later, I have gotten a call from the seller’s agent wishing to take the last deal offered. One time I received a call from the seller’s banker! He was livid that he had been kept in the dark about our offer and he arranged for deal to take place at the bargain price. Nobody wants to announce a fire-sale on a prized possession. You want to be positioned to get an even better deal- discretely.
A Yacht Listing Agent Works For The Seller. Period.
A listing agent works for the seller. Period. Let me say that again. A listing agent works for the seller. Period. Did you get that? Was it clear?
That is where his loyalty lies and his mission is to get the highest amount for the seller. Having someone on your side of the table is important. There are other key advantages.
Never go into a yacht negotiation with on-the-spot decision-making power. Any good negotiator knows to defer to a ‘higher power’. “I need to present that to the board” or “Let’s see what the committee thinks” are the best responses in a business negotiation. Never get painted into a corner before all the implications are considered. I watched a deal fall apart after the seller and buyer met directly. It was a fairly complex deal involving a trade. The seller offered a solution without thinking through all the details. The buyer smiled, agreed, extended his hand and they shook on it. The seller’s broker had a look on his face like that of the attorney whose client just blurted out damning testimony in the courtroom. Of course, when it came time to put the deal on paper and clarify the terms they had verbally negotiated, it was clear both parties had walked away from the handshake with very different interpretations of what was agreed.
The Magic Number
There is a certain amount of candid disclosure that takes place between yacht brokers in this industry. A good buyer’s broker will use this to your advantage without revealing any of your position. Many broker-to-broker phone calls begin with “Hey, on that 45 meter Trinity Yacht, what’s the magic number?”, and so begins what the seller’s broker perceives as a joint effort to bring the buyer and seller to that ‘magic number’. A good buyer’s broker doesn’t care about closing a deal quick. He looks forward to getting the best deal, whether it is this one or the next. He looks forward the referrals and repeat business that comes from a job well done. My goal is to always shoot for well below that so-called ‘magic number’.
Let your yacht broker do the heavy lifting. Getting aboard a yacht is a key action that signals serious intent. Send him or let him arrange for a captain to get aboard. The seller’s team need not know who, other than your buyer’s agent, is actually is actually attending the showing. Your team will convey any observed deficiencies and will take a large number of photos that show the actual condition.
Quick Yacht Closing
In establishing powers and influences, the promise of a quick close is powerful and will often get the price down. You should have already established reliability in doing what you say you will do. Driving home the promise of a quick, drama-free close will be important.
Leave the Vessel Condition Out Of Negotiating?
This is an important one. Pointing out deficiencies, age, condition, or comparisons to other motor yachts is counterproductive. It only sets up a counter-argument in the seller’s mind. When presenting a low offer, I always make sure to communicate that the offer does not reflect the value of the yacht: “She is a fine yacht, but this is just all my client has to work with. He likes this yacht so much, we just thought we would start here. If we can’t make a deal, we understand and thank you for your time”. I like to include this in the written contract. Praise and compliments serve multiple purposes. It sets the stage for pleasant interactions. You disarm and gain respect. And you and your broker will be much more welcome at the negotiating table, and much more likely to have re-engagement after the walk away. It also sets you up for another bite at the apple . . .
The Yacht Survey
Always, ALWAYS, use a good marine surveyor, and I highly recommend you use a separate engine surveyor as well. A powerful negotiating tactic is to reword the survey and sea trial contingency to be subject to ‘accept or reject only’. When getting the price well below the seller’s expectations, he will then worry about being required to repair or compensate for deficiencies found on survey- this in addition to a very low price. We always include a disclosure clause, requiring the seller to disclose known defects, but the unknown may be a worry. If indeed deficiencies are evident, here is where a second walk-away is very powerful. You have already established that you do what you say you will do. Taking the stance that the ‘totality of the survey findings report has far exceeded expectations’ will often get another concession. If no deficiencies were mentioned in the negotiations, and none (or few) were disclosed, then rejection is a real possibility in the seller’s mind. The seller, and perhaps others with financial interests, have mentally accepted that the yacht has sold. At this late stage in the game, you will likely get a substantial concession.
Have A Yacht Purchase Game Plan
Having a yacht purchase game plan and sticking to it is paramount. Just like an investment strategy, know your entry and your exit before you start. Keep emotion out of it. Leave any indecision behind. Set a formula to use ahead of time and make a well-informed decision. Perhaps a percentage of the estimated retail value as a total cost of purchase, plus any repair work needed. Have that in mind before the offer is placed. Again, in the middle of the survey, keep emotion out of it. You can’t ‘fall in love’ with a luxury yacht and lose the focus, which is buying below market. It deficiencies are found and the cost of repairs plus purchase exceed your threshold for a bargain- walk away.
You Are In a Position Of Power.
The seller and his broker are now aware of the deficiencies and, ethically, must disclose them to any future buyer. Having your team and finances in place is important too. The ability to act fast and close fast on a yacht will save you money.
Check out Hundreds Of New Yachting Articles Updated Daily On the 4Yacht Blog
4Yacht is a Professional Yacht Broker Located In Fort Lauderdale Florida and specializes in Yachts, Mega Yachts, And SuperYachts.. Visit our website today to discover YOUR next yacht https://www.4yacht.com