Conditional AOV Accepted

I'm shocked I tell ya...shocked.  Was starting to wonder if this day would come. We may soon be the new owners of a Leopard 38.  The current owner accepted our conditions to fix a couple things (replace a leaking transmission cooler and fix a slipping/late engaging transmission) and so we are finally heading into new boat buying territory...we've passed the AOV hurdle and it is on to closing.

Of course as I look out the window and watch the snow fall, I can't help but think of the past years' Corona commercials with the Christmas light decorated palm tree and think...soon.

So, while we work on wrapping up a bunch of odds and ends in preparation for closing on the our boat, I'll leave you with some videos of what increasingly looks like will be our future home afloat...

Sorry if there are some distortions in the videos...YouTube's "fixer" tried it's best to compensate for my rather shaky cell phone video (yeah, it must be the phone...couldn't possibly be me).

The port hull accommodations starting in the forward berth.


From the port hull across the bridge deck to the starboard hull


The starboard hull accommodations starting in the separate shower and moving to the forward berth with private half bath.

The cockpit and swim platform on the back of the boat.

Acceptance Of Vessel

The Acceptance Of Vessel, or AOV, date is an important one in the boat buying contract thing.  This is the point by which the conditions listed in the original contract should be met and the buyer informs the seller that they will accept the vessel and complete the contract as-is, will conditionally accept the vessel based on findings from the personal inspection/survey/sea trial (basically a renegotiation option), or reject the vessel and cancel the contract (without loss of the deposit).  It is where we are now with the current boat we have under contract.

On the first boat we had under contract, we rejected the vessel.  We knew that boat would have been a bit of a project boat going in, but the large number of expensive items found (including structural issues) made it more of a project than I, as a first time buyer, was willing to tackle.

The second boat we had under contract, we submitted a conditional acceptance of vessel on at this stage.  During the survey, over $32K worth of issues were found that we did not anticipate (the total list of stuff to fix was between $60K and $70K) .  We asked for a credit at time of closing to cover 50% of the unanticipated items (many of them were broken systems that should have been disclosed ahead of time when we asked if there were any known issues with the boat). The seller wasn't willing to meet us half-way and the previously agreed upon price was higher than we were willing to pay for a boat that needed all that work, so the conditional acceptance of vessel became a rejection of vessel at that time.

With the current boat there were about $12K worth of items we did not anticipate (and a total of $42K). There are only a couple issues that I would consider critical (water leaking into the boat is considered critical...right?) and would like to have them fixed, so we are again submitting a conditional acceptance of vessel asking that the items be fixed.  It isn't a big or expensive list (maybe 15% of the unanticipated stuff) but I want the boat ready to be moved when we close so it is critical to us. We are submitting the Conditional AOV today.

Hopefully this seller will see that this is more than fair and we will finally have our boat.

Hey Buddy, How Much for That Boat?

In the process of shopping for our future home afloat, this is a very common question on my mind. Of course, the real question I grapple with is "What is that boat worth?" Being a novice boat buyer, I entered into this process not really knowing much about the market.  Having gone through two contracts as well as a couple other offers and a lot of market analysis, I figured it was time for a "what I've learned thus far" on the subject.

Now before you go thinking what I write below is gospel, remember that we only started looking at boats in earnest in April (that's about 6 months ago folks). Also remember that we are shopping for used live-aboard catamarans in the sub $200,000 (US) category. And some of this is rather obvious, but I've found that with all the info swirling around on one's mind, sometimes even the obvious statements are worth mention.

The first thing that I've learned is that every used boat is unique.  They may have looked the same when they rolled off the assembly line, but they were probably unique by the time they were sold and certainly are by the time they are re-sold one or more times. Comparing live-aboard boats is a lot like comparing furnished houses combined with cars.  Each one has unique furnishings and touches, included equipment, as well as different levels of wear...and then they have engines and batteries and other vehicle aspects too.  This makes attempting to determine a reasonable value for a boat a very difficult task. I think most brokers, be it house or boat, learn the standard capitalist answer to the above question...you know...the "it's worth whatever someone is willing to pay for it" answer.  That's great in your college Capitalism 101 course, but doesn't really give you much of a place to start when looking at boats. 

A near "bristol" condition FP Tobago.

We tend to start like we do with houses, looking at comparable sales or "comps" as they are usually called in real estate.  Seems reasonable, but there are a couple problems with it.  First, there are far fewer boats of a given type than there are houses in a neighborhood, so a comp list of recent sales often must go back years instead of weeks or months as you would for a house.  Another issue is the wide variance in condition and equipment. Obviously a former charter boat with minimal 1990's electronic equipment (often not working), original sails and upholstery, etc. would be a far different value than a non-chartered boat of the same age where the owner has updated the equipment and interior as tastes and technologies have changed.  And yet another differentiator is location. If you are lucky enough to find a number of "comps" it is not likely they were sold in the same area in which you are looking. Boats in less tropical climates tend to age better than those subjected to the tropical sun, and this impacts the value.  Boats located in hard to get to remote locations or places people don't really want to spend as much time in tend to sell for less just as boats in hot boating markets or where the supply is limited relative to demand fetch a higher price.

Leopard in fair condition when we saw it.

So, you collect what data you can and try to come up with an average.  What the average boat, in average condition, with average equipment should cost...approximately. As a software engineer with a minor in mathematics, I prefer looking at hard numbers. In my many attempts to figure all of this out, here are some rough guidelines I've found seem to hold true...at least for the catamarans in the price range I've been looking at sold in the United States (this excludes boats in "restorable/salvage" condition, see definition below).

• Boats sell for about 12% less than they are listed on average.
• Boats used in charter take about a 10% hit in price.
• Location can make a 10% difference in price 
• US non-tropical locations near the top
• Remote (harder to get to) tropical locations near the bottom
• The condition of a boat can make about a 30% difference in price (not including salvage).
• 3 years seems to be a reasonable time frame when collecting "comps".
• There is little difference in price between older and newer versions of a given model, prices are mostly based on condition.
• Buying a boat with the equipment you want is cheaper than buying a cheaper boat and adding all the equipment yourself.

As condition has such a large impact on price, it also helps to have a common definition of the condition of a boat.  The following seems to be a pretty "standard" definition of several surveyors and surveyor organizations.

• Excellent/Bristol Condition: A vessel that is maintained in mint condition or "Bristol fashion" – usually better that factory new, loaded with extras (very rare).
• Above Average Condition: A vessel that has had above average care and maintenance and is equipped with extra electrical, electronic, and other gear.
• Average Condition: A vessel that is ready for sale (or ready to sail) requiring no additional work and normally equipped for her size.
• Fair Condition: A vessel that requires typical recurring maintenance to prepare for sale.
• Poor Condition: A vessel that requires substantial yard work (in excess of normal maintenance items) and is devoid of extras.
• Restorable/Salvage Condition: A vessel where enough of the hull and engine exists to restore the boat to usable condition.

So, with this information you can start to get an idea of what you might end up paying for a given catamaran when all is said and done.  Here's an example using a fictitious catamaran:

• You are looking at a 1995 WidgetCat (I told you it was fictitious) in above average condition and started it's life as a charter boat (engines both have 5000 hours).  They are asking $190,000
• Assuming you don't have comps available, you look at the available listings:
• 1993 WidgetCat $220,000
• 1994 WidgetCat $180,000
• 1996 WidgetCat $200,000
• The average asking price is $200,000 so the average sold price is probably around $176,000.
• Since the specific boat is a former charter, expect 10% less than the average.
• Since the specific boat is in above average condition, expect 7.5% more (30% range gives 7.5% per step with average being the starting point).
• So, the final sales price for this 1995 WidgetCat should be about 2.5% below average (10-7.5) or about $171600.

Obviously this works a little better the more accurate data you have, for instance actual sold comps instead of average asking price.  But, hopefully it will give you some idea of where to start.

This isn't any sort of guarantee, and for every rule there is an exception. Also remember I'm of very limited experience in this area...so take this for what it's worth (and for what you paid for this advice :-) ). And, as I stated earlier, every boat is unique.  All of this calculation of averages and estimates are just that, averages and estimates.  I guess the Capitalism 101 answer is ultimately correct...but I hope this helps folks figure out where to start the negotiations.

 So, what do you think?  For those that have purchased boats, does this sound like what you found?  For those just starting to look, does this help any? Anyone out there want to comment on differences with the monohull market or different price ranges? Am I just an engineer trying to apply some order and logic where there obviously isn't any?