By Gene A. Magnetti
What is most important for serious sellers is to affect a sale of their boat in the shortest possible time at the best possible price. Since prices are fixed through the relationship of supply and demand, the only market leverage factors sellers have in today’s economy are price and the condition of the boat. Shoppers turn into buyers when they find a price advantage on what they consider a desirable boat. Desirable boats are presented in a way that shows off their good condition to the best possible advantage.
Most people are confused about prices. They seem to think that prices are set by what they paid to acquire their boat less a fixed depreciation factor. As explained by economist Henry Hazlet, “What a commodity has cost to produce in the past cannot determine its value. That will depend on the present relationship of supply and demand.”
The second factor is the condition and presentation of the boat. The seller’s objective is to present his boat in a manner that distinguishes it from other similar boats. This moves the boat out of the “commodity” pool of every offered boat to a special category of a “one of a kind” offering that is superior to the others.
Most buyers judge condition by the way the boat is presented to them. If the boat is dirty or if the interior is unkempt, they will move on to another. Sellers need to take the initiative to have the boat cleaned and organized inside and out, with personal belongings removed from the cabin and storage areas.
As a seller, it is critical that you work with your broker to research and determine a selling price that will show an advantage to prospective buyers. It is also extremely important to make sure the boat is clean, staged and presented in the most favorable light.
By taking care of these two critical factors, you will sell your boat in the shortest possible time, obtain the best price possible consistent with present market conditions, and reduce your risk of holding your boat unnecessarily for a lengthy time.
Your broker is your resource and consultant on the question of pricing. The broker will research prices of boats that have actually sold in the past year or so. But since these prices used in deliberation are of the past, they can only be a guide. The problem of the seller is to anticipate the future price at which his boat will sell.
A good broker will work with you to include in your calculation the seasonal timing of your offering, whether it is in the beginning of the season, the middle, or when the boating season is over. A buyer may be willing to pay more at the beginning of the season than at the end, or even out of season. The broker will also conduct a full survey of currently offered boats like yours. This will give you an understanding of your direct competition.
Buyers in today’s marketplace are looking for a price advantage. Desirable boats that are offered for less than the average price of comparable boats will get much more attention and will sell faster than higher priced offerings.
One other mistake of some sellers is to assume that buyers are only narrowly considering a purchase of their particular year/make/model of boat. In actuality, buyers are free to consider boats outside of these constraints. A buyer is seeking that combination of price advantage, condition and make/model/year that provide the basis of a favorable exchange that he is willing to make.
Furthermore, buyers have other choices on which to spend their money completely outside of the boat market. As an example, they may decide that doing an addition on their home, or a classic car acquisition is a better use of their funds. So, it is a mistake to think of a price a buyer is willing to pay in isolation of any of the virtually unlimited choices available to him. Each exists in relation to all of the other alternative and competing choices.
So, by not considering the almost unlimited choices of buyers, a seller may price himself out of the market in the erroneous notion that his boat is worth more than anyone is willing to pay for it. A look at the aging inventory of some offered boats at Yachtworld.com will give an illustration of this principle.
Austrian economist Ludwig von Mises observed that in a market economy the consumers are sovereign. It is the actions of consumers…of preferring a to b…which determine the prices on the market.
To get the best price in the shortest possible time, you need to price the boat with consideration of current supply and demand, not acquisition cost. A good way to do that is to work with your broker to obtain the market research needed and refine the offering price while presenting the boat in the best possible light. If a seller offers a desirable boat in better condition and at a price advantage to other sellers, offerings, he will succeed.
Gene A. Magnetti is a Managing Broker at Springline Yacht Sales in Mamaroneck, NY, proudly representing new yachts from Blue Jacket, Island Packet and Marlow-Hunter and select brokerage boats.