Boat buying tips
Buying a voyaging boat, either sail or power can be challenging, especially for the first-time buyer. The bumps can be smoothed somewhat if you enter the process systematically.
Finding prospective vessels can involve a variety of sources from Web searches on www.yachtworld.com, www.cruisersforum.com, Seven Seas Cruising Association classifieds, to marinas within reasonable driving distance, to boating magazines and word of mouth.
We recently made offers on two vessels, paid for survey and haul-out both times, and walked away from both. The lessons learned were expensive, and in retrospect, we could have done a better job.
Even before making an offer on the vessel of your dreams, do a bit of homework first.
What use do you intend for the vessel: coastal passagemaking or full time voyaging? This can make a huge difference in taxes, use fees and registration fees. If the vessel will stay in your home state or in a state with high sales tax or personal property taxes, then you will have to pay up. But, if you are headed out to foreign waters, arrange to have the sale occur in a tax friendly state, such as Rhode Island, which has no sales tax, or North Carolina which exempts from sales tax the sale of vessels between individuals (sales through a broker or dealer are taxed). The tax and fee information for each state are on the Internet. Consider forming a Delaware corporation to own the vessel.
If the vessel is U.S. Coast Guard documented, it is easy enough to transfer the documentation into your name. Documenting a vessel for the first time requires a bit more work, but the process can be done without resorting to professional documentation services. Documentation is necessary if you are taking the vessel to a foreign port.
After you have narrowed the search down to a vessel and perhaps a state, call the vessel’s broker and ask how many of the particular vessels has he sold in recent times. An option is to retain a “buyer’s broker” who will find a vessel for you and split the selling broker’s commission.
You will want to find out as much about the vessel as you reasonably can before making an offer. Here are some talking points which can be addressed by telephone or via e-mail.
Ask how long the vessel has been on the market. If it has been listed for months, then inquire why it has not sold. We were told by one broker that everyone hated the upholstery. That was undoubtedly true, but it wasn’t the whole story, by far!
Ask about condition. Is the vessel currently in use, or laid up for the winter. Does it currently meet USCG regulations. (One vessel we surveyed did not have a holding tank — a major expense to add.) Ask if the vessel is owner-maintained. If not, then ask what yard does most of the maintenance. Ask for copies of invoices for service work for the last two or three years. Ask if there is a maintenance log for the vessel. A “no” answer should put you on guard.
Find out when the vessel was last surveyed, in or out of the water, and ask for a copy of the latest survey. I was provided a copy of the latest survey when we were headed out for a sea trial. The owner had purchased the vessel five years earlier with only an in-the-water survey. I had a sinking feeling that I knew how the day would end. Unfortunately I was right, as the vessel had terminal osmosis.
Has the vessel suffered fire, sinking, or hard grounding? A “yes” to any of these and you should consider looking elsewhere. Get this answer in writing.
Ask for the reason that the owner is selling the boat. From this you may learn something about the urgency of the sale, which may place you in a better bargaining position.
Osmosis is probably the most frequent deal breaker. If the broker states that the vessel has been treated for osmosis, ask for a copy of the work completed. If that is not available, scratch this vessel off of your list. If he states that the vessel is known to suffer osmosis, request a quote from the yard for the osmosis remediation. Call two or three yards for comparison prices, as they will vary widely.
If you proceed with this vessel, you may want to revise the purchase and sale agreement such that if the vessel is found to suffer osmosis, then the seller will pay for the haul out. At any rate, do the haul out first, before the surveyor spends any more time on the vessel.
The broker will provide a purchase and sale agreement for you to complete and sign. Included should be a list of the equipment included with the vessel (dinghy, outboard motor, spares, etc.) Read the fine print at least twice and do not hesitate to make changes or additions to the terms. Seek clarification of anything that you do not fully understand. All the broker or seller can do is accept your changes, modify them or refuse them! Strike out and initial anything that you do not agree to. One broker wanted $1,100 to handle the paperwork to transfer the USCG documentation and to register the dinghy. We settled on $700.
Making the offer
As the typical length of boat ownership is five to seven years, vessels currently on the market were purchased before the last recession, meaning that the owner paid much more than the current market will support. Although the boat market is starting to recover, it is still a buyer’s market, and reasonable prices can be obtained with intelligent bargaining. A suggested strategy is to offer around 25 percent less than the asking price. The seller will howl, but will counter your offer if he really wants to sell his boat.
Make your offer contingent on visual inspection, satisfactory survey and sea trial. Make sure that the purchase and sale agreement clearly states the terms of cancellation of the offer and how and when your deposit will be returned. You will have the opportunity to revise your offer or withdraw after the inspection, survey and sea trial.
Typically, a 10 percent deposit will be required with your offer, payable via bank transfer or personal check. Give yourself sufficient time to complete the inspection, survey and sea trial, as weather and availability of the surveyor may take longer than planned. Allow at least two weeks more for the closing.
Selecting the surveyor
A competent surveyor can best be located by asking boating friends for referrals or go on the BoatUS website and look up surveyors in your area that are approved by BoatUS insurance. Remember, you are paying the surveyor, and his loyalty should be to you.
Ideally, the surveyor should have recently surveyed the same make and model of boat, so look further if he has no knowledge.
If you are buying a sailboat, ask the surveyor if he will climb the mast to inspect the rigging and masthead. Many will not or perhaps they will inspect the masthead with binoculars or refer you to a rigging surveyor. There is no substitute for an up-close inspection.
You will want to take engine oil, transmission fluid and genset engine oil samples, so ask the surveyor if he provides this service. If he doesn’t, check with local auto parts stores, as some of the national chains offer oil sample kits and pre-paid oil analyses. In general the cost is around $75 per sample. More on this later.
Ask the surveyor if his rates (which are usually based on the overall length of the vessel) include the sea trial. If not, be sure to tie this down before he is engaged. Confirm that if the survey is halted before completion, his rate will be reduced. Ask him to send you an example survey report, which no competent surveyor will hesitate to do.
Arranging for insurance
Ask the broker for the current insurer of the vessel. Check with BoatUS, and the insurer of your house and automobiles. Ask your boating friends for referrals. You will want to initiate a request for insurance even before you make an offer.
Checklist for the survey
When making the offer, instruct the broker that the engine oil, transmission fluid and genset engine oil are not to be changed before the survey. New fluids will tell you almost nothing of the condition of the machinery. Be especially wary of a vessel if the fluids are fresh — there may be a good reason for changing before your inspection!
Bring a strong flashlight and camera with you. Allow yourself a day or at least a couple of hours aboard the vessel before the surveyor arrives. Begin with a view from the dock. Look for obvious signs of neglect. See how the vessel sits on its waterline: is the vessel listing, is the painted waterline parallel with the actual waterline?
If the vessel has teak decks, look for missing bungs, wet spots, spongy sections on the deck (gently jump up and down on any suspect spots!).
The vessel interior should be clean and fresh. If you are sensitive to tobacco smoke, now is the time to walk away from a smoky vessel, as you will never be able to clean it up!
Take a good look at the engine, especially the area beneath the engine. An old wisdom is “never buy a vessel with a dirty bilge.” A dirty bilge is always indicative of poor or deferred maintenance. See if fresh oil absorbent pads are placed below the engine, lift them and any catch pans to view the bilge spaces. This is not a deal-breaker, but it should put you on guard. Trust your instincts: does the vessel have a “good feel” to it? If not, it’s not likely to grow on you. Either go home now, or use the rest of the day to gain experience for the next inspection.
A cold start-up will tell you much more about the engine than starting from warm: does the engine start promptly, does it idle smoothly, what does the exhaust exhibit at startup: is it black, blue or white smoke and how long does it take to clear up? Is there an oil sheen on the water as it exits the exhaust outlet?
I recommend hauling the vessel before going on the sea trial for at least two reasons: if the bottom is foul, it can be pressure washed before the sea trial; and if serious defects are found, the process can be halted now and perhaps a part of the surveyor’s fee will be refunded — confirm this with the surveyor beforehand.
As the vessel is lifted from the water, serious osmosis will be readily apparent, and the survey need not go further. The occasional small osmotic blister indicates that trouble is on its way, and while osmosis can be cured, it is not inexpensive. A reduction in your offered price is in order.
Inspect the “zincs” (protective anodes) on the underwater metal parts (propeller, shaft, rudder, strut, etc.). The condition of these will be a good indication of the overall degree of care taken by the owner or maintainer.
The broker will accompany you and the surveyor on the sea trial during which the vessel will be operated at full throttle for a few minutes. Watch the engine oil pressure and coolant temperature, and assess noise and vibration levels. Ask yourself if you can live with the noise and vibration. Take a turn at the helm: operate at various speeds, make some turns, and operate the vessel in reverse. If it has a bow or stern thruster, try it out now. Sailboats, of course, should be sailed.
Take the fluid samples immediately upon return from the sea trial. The engine, transmission, and genset will be up to full operating temperature thus providing representative samples.
Estimates to remedy defects found during the survey, for overdue maintenance and for required or desired equipment should be obtained immediately. The better boatyards can give you budgetary prices on repairs, and they can usually obtain better prices on equipment.
Make a list of repairs and equipment needed, including labor and factor this into your revised offer.
Harry Hungate and his wife, Jane Lothrop, completed a 16-year circumnavigation on their Corbin 39 cutter, Cormorant. They are now living ashore in Jacksonville, Fla.