As promised in an earlier post, I wanted to describe the boat purchase process in general, and then give you specifics for my Air Ops purchase experience.
This description applies to purchasing sailing yachts. Many of the items apply to the purchase of power yachts as well, but this one is focused on sailboats. Also, I am not a surveyor – I haven’t even played one in a voice-over (yet). Nor am I a banker. Feel free to use this as you will, but I accept no liability for my personal views, expressed herein (ok, I am a lawyer / law professor…. but nothing herein should be construed as legal advice (told you!)).
I’ve distilled the general steps to purchasing a sailboat into 10 easy (?) steps:
- Deciding Which Type / Make / Model
- Searching and Searching and Searching….
- Going Aboard / Deciding
- Offer / Negotiations / Terms / Acceptance
- Sea Trial / Haulout / Survey
- Making lists of things to fix / change
- She is yours!!!!
1. Deciding Which Type / Make / Model
It helps to have sailed, a lot, in various conditions. And, ideally, to have spent days or weeks aboard many different sailboats.
The biggest question, in sailboats, is mono- vs multi-hull. There are proponents of each. Each is capable of round-the world or coastal sailing. Each type accommodates racers, cruisers, day-sailors and everyone in between. A lot depends on what type of sailing you will do. Most boats spend 80-90% of their time moored to a dock. If that is your case (which is fine – I love being aboard boats on the dock), you should know that marinas typically charge by the foot, and often double that for catamarans (they don’t tend to fit in standard dock areas). My advice on this first issue is sail everything you can. Test it out. Sail it. Lay on it. On top. Inside. When it’s hot. When it is cold. When big winds and waves are present. When it is calm. If you are being especially adventurous – offer to help fix things. Not only will the Captain love you (especially if you know a bit about fixing things), but it gives you a much better sense as to what contortions you have to go through to get to the tough-to-fix areas. And trust me – that’s where things tend to break.
There are some that don’t work as well, depending on your intended purpose. A light, fast, race boat does NOT make a good cruiser. Nor was it intended to. It is wonderful laying on a catamaran trampoline while cruising calm seas or while at anchor in a beautiful spot. It isn’t so much fun in rough, cold, nasty weather.
Once you have figured out how many hulls you want, length is the next big issue (😊). This is a case of bigger, NOT being better. Longer is not only more expensive to buy, but forces go up geometrically with size. Therefore, stresses do as well. And maintenance expenses. You need bigger sails. Hence, bigger rigging. And bigger winches. My suggestion – buy the smallest boat that will accommodate what you want to do. Once again, sailing different lengths will help you figure this out.
There are a great many very good sailboat manufacturers. Go through previous editions of sailing magazines. Blue Water Sailing (www.bwsailing.com) is a great resource if you are interested in that type of sailing. Practical Sailor (www.practical-sailor.com) is a great resource for every type of boat. There are many others. If, as I did, you want to get a blue water boat (one that can safely sail any ocean in the world, almost anywhere), then John Neal has a great resource (http://www.mahina.com/cruise.html) where he lists all boats he considers as blue water contenders, along with comments. John also offers a very reasonably priced boat consultation process, where he helps guide you. John and Amanda also offer a great offshore course on their Hallberg Rassy. I’ve spent hours on John’s website, flipping back and forth between it and Yachtworld listings of current boats for sale (www.yachtworld.com). Yachtworld lists most boats for sale, anywhere in the world. Some additional ones are on www.boats.com, but most are duplicates.
Once you have narrowed your search to a particular make, you will find that many manufacturers have multiple models. Some are better suited for your needs. I married this part with looking at Sail Boat data (www.sailboatdata.com) to see performance, safety, handling, capacity and other information. It helps to take the time to study the ratios on this site – they really help guide you toward the right type of boat for your sailing preferences. It also shows how many boats of a particular model were made, and when. Therefore, you can decide whether you want the first hull ever manufactured (NO!) once you know the hull number of the boat.
You might be starting to realize why it often takes people years to decide on a boat. In fact, some people never leave their armchairs, and are happy to continue to dream. That, too, is ok.
However, if you want to take the next step, look around the world. Don’t narrow your geography too much. It is possible that your ideal boat is in Venice (yup – that was a possibility!) or in the south of France (another) or the South Pacific (yup – there too). Just think of the wonderful search possibilities that opens up…. In any event, depending on the boat size, your buying competitors may come from anywhere in the world. The world may be the market, and therefore, set the price for your boat.
There are other factors. Buying a boat that has been sailed solely on the Great Lakes can be a great idea. They only sail part of the year. The water is fresh (saltwater is hard on everything). They get hauled out every year for storage and maintenance. On the other hand, they are sometimes a bit tricky (not impossible) to transport to where you want to sail. A boat in the tropics, on the other hand, may be exactly where you want your vacation home, but I guarantee that the sun (UV) heat, humidity and saltwater all take their tolls.
3. Going Aboard / Deciding
This is usually the really fun part. Make appointments with brokers. Go see boats. Rinse. Repeat. Some brokers will not reply. Forget about them and move on. I found that most brokers are really good sailors (why else would they be in the business) and, if they have been around awhile, are very open and honest (if you get the other feeling – run). They get most of their business from word-of-mouth and repeat customers, so it really doesn’t pay to try to pull one over on someone. Also, you can get your own buy-side broker. At no cost, at least to you. Most sell-side brokers aren’t too happy with this, because their commission gets split, but they may get a faster sale.
Take a look. Then look more carefully. Take lots of pictures, because you will forget. Or not notice. And pictures will help remember dates and which boat, because, if you are like me, after awhile they will blur together. This will also give you a good idea of what you might want to put on your new boat. Take a seat. Sit quietly for awhile and imagine what you will do, when you are in that spot. Then shift spots. Pretend to cook. Then imagine doing it while heeling. Take a deep breath. Not just to relax. You are also sniffing for bad smells. In the marine environment, standing water / mold are not uncommon, but also not good. A very well-maintained boat will have neither.
If you can, go back for a second look.
4. Offer / Negotiations / Terms / Acceptance
For me, this part is fun. (Ok, I am a professional negotiator – I get that this is likely the least favourite part for most people). Before visiting the boat, you will have checked out other asking prices. Something I didn’t know is that brokers pay for a subscription to a “sold” prices service that they use. This is where your buy-side broker may be of great assistance.
If the boat is priced reasonably, and you really want her, make a fair offer. I know of sellers, and people in other deals that I’ve done, who are so offended by the first low-ball offer that they will not bother with anything else from that prospective buyer. Show some respect. Most sailors bought this boat and poured years of themselves into it. In many ways, it is harder to part with a boat than a house. The boat has successfully carried the owners SAFELY though perils. They have whispered to each other on late night passages. They have rested together while at anchor. Sometimes they have fought. But parting is usually sweet sorrow for the seller. Even if there is something you don’t particularly love about the boat, don’t miss the opportunity to be quiet about it. This negotiation dance is often terminated for things other than $. Being empathetic helps, or at least reduces potential non-$ hurdles.
Make a reasonable offer, setting a fairly tight timeframe for a decision. Also, list all key conditions. The most prevalent are – a satisfactory combination of Sea Trial and Marine Survey. Perhaps a rigging inspection. And maybe a mechanical inspection by an engine specialist for the auxiliary, generator and transmission. These are obviously the big $ items. If you will need financing, add that in, too.
There are many books written on the negotiation process. Often (since I have taught this), I find that many are premised on a one-time transaction. That is a totally different dynamic than where you will have an ongoing relationship. While buying a sailboat from an owner may seem like a one-time deal, be aware that you will most likely want to ask questions after the sale is complete. How do you do….? When was the last time you did this….? Why is xyz set up this way….? Having a good relationship post-sale really makes life easier.
Once you reach a deal on all aspects ($, conditions-precedent, timing for closing, timing for clearing the agreed-upon conditions, …), you will be expected to sign and send the broker a deposit. While this varies, depending on the area of the world, a 10% deposit, to be held in trust (escrow) by the broker in the broker’s trust account, is quite common. Take note of the jurisdiction of the transaction. It may not be where the boat is physically located. A seller from the USA, may be selling a boat, located in Mexico, to a Canadian. Trust me on this – you don’t want to become a Conflict of Laws study problem for future law students… Often you can pick a transaction jurisdiction that where laws and courts are well-established. Or, better yet, put in an arbitration clause, subject to the rules of (pick one – the American Arbitration Association, the International Court of Arbitration in Paris, the London Court of International Arbitration….). Then you might get me as the arbitrator, if there is a dispute. 😊
5. Sea Trial / Haulout / Survey
Ok. The deal is done. Well. Almost. Now it is time to address those pesky conditions-precedent. A sea trial means just what it sounds like. Let’s go for a sail! Sometimes it is just with the broker. Ideally the owner comes along to explain things on the fly (see the part about relationships, above…). Test out everything you can. Engine. Sails. Generator…. See how she feels. Take the wheel (I recommend letting the existing owners or the broker get her off the dock and back in, for liability reasons, and to further teach you – all boats are different). Then take her to the lift for the haulout. This is critical, since the surveyor needs to see that all of the underwater parts are there, in good working order. He or she will then “sound” the hull – tap it every few inches with an amber hammer – to detect any delamination (another potentially expensive problem). Generally, the surveyor will be with you on the sea trial, at the haulout, and often well beyond. A proper survey can take the full day, depending on the boat. The mechanical inspection is often on another day, perhaps combined with the rigging inspection. During the mechanical inspection, oil samples are usually taken and sent off for analysis. This may indicate metals in the oil (wear) or at least will give you a base-line for future inspections.
Guess who pays for this? You do. All of it. The surveyor(s), the haulout, the rigging inspection, the mechanical one…. Why should you do this, you ask? Well, for one thing, if you want anything other than liability-only insurance, the insurer will require a good survey, by someone accredited with a recognized marine survey organization. This is especially true of the general survey and the rigging one. Insurance companies, these days, generally refuse to give broad insurance coverage for standing rigging beyond 10-15 years. Also, you are likely paying a fair bit, so you would, ideally, like to know that the key parts are working. And that the boat will float, at least for awhile. If the deal falls through, it may be possible to recoup some of these costs by providing a copy of the documents to the owner, for use with the next buyer. It generally takes a few days to get the written reports, but most surveyors will give you impressions as they go. In the formal survey, they will also list their view of a fair purchase price and the likely replacement value of the boat. For this reason, I generally do not tell the surveyor what the deal price is. I would rather they are not influenced by this, even subconsciously.
This is a tough area, especially in these COVID-19 days. First, you are asking someone to finance something that is mobile. You can easily take it to a jurisdiction where they have trouble finding it, if you stop paying. For some weird reason, these folks, who likely have never been aboard a sailboat, tend to think they may sink. Odd. As a result, the market for financing is fairly limited. Once again, it depends on where you live (residence), where the transaction is taking place, and where you intend to register the boat. Sometimes, these are 3 different places. While some of the large banks do financing, you may be better off using a marine finance specialist broker. They will know who is currently extending boat financing. Sometimes, better than the person working at your local bank branch. Trust me on this one…. Be prepared to pay more that you would for home financing. Also, be prepared that it will be harder to finance older boats. Cash is always good, even if created from thin air by getting a second house mortgage or a secured or unsecured line of credit.
Some boat owners don’t have any. Life is full of choices. Just be aware that, if you go this route, most marinas won’t let you dock for anything other than fuel. No moorage for you! At least they will require liability-only proof of coverage. If you want to get coverage for the boat and contents, in case it doesn’t make it back to land, or bumps into something along the way, expect to pay more, expect to be limited in where you can go at certain times of year (think hurricanes, cyclones…) and to pay based upon where you are sailing. You may also have to prove that you have a decent sailing resume, perhaps in combination with recognized sailing courses.
Closing should be a relatively painless process. Sign some docs. Wire some money. Get some certificates. Register those with the appropriate authorities (varies by location). The broker will have someone to walk you through this. Figure out how to get the keys and how to get to her.
9. Making lists of things to fix / change
In reality, this is probably going through your head from the moment before you step aboard the first time. Think of this as a rolling list. You may never finish (mainly because you will keep adding to it). Just try to keep the rate of add-ons less than the rate of things completed. Keep that list too. Write it down, along with costs. It will help in the future. And, it also feels good to cross things off!
10. She is yours!!!!
The big day comes. Get keys. Get marina pass. Oh yeah. Pay your marina fees, as the new owner. And climb aboard. Make a toast. Life has begun…..
Purchasing Air Ops
Once I started writing this blog, I realized that the purchase details for Air Ops will have to wait for another (shorter) post. More to follow….