BUC vs NADA vs Reality

Discussion in 'Newbie Lounge - NEW' started by TexasBryan, Oct 31, 2017.

  1. TexasBryan

    TexasBryan Member

    41
    Oct 12, 2017
    College Station, TX
    2001 Sedan Bridge 400
    Cummins 6CTA 8.3
    We recently started our first Sea Ray search and are finding that the boats in our area are priced considerably higher than the BUC and NADA suggested values. From the wording in some of the advertising, it's also very obvious that some of these boats have been listed for a year, or more!

    - Is it common practice for people to list boats for sale with a "dreamer" price?

    - Some of the asking prices are 50-100% more than BUC, which is higher than NADA. Is there some unwritten rule where a realistic offer on my part, much lower than the ask, is just an insult?

    - I'm under the impression that the banks and insurance companies work from BUC pricing and it's all on me if I pay way more. Is that a correct assumption?
     
  2. Ididntdoit

    Ididntdoit Well-Known Member

    Dec 5, 2007
    Newport, RI
    300 Sundancer
    5.0MPI Bravo III
    book type pricing just doesnt work for boats... not enough reported sales......as far as people asking "too much" most of the time its people upside down on their loan.....
     
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  3. KevinC

    KevinC Well-Known Member

    Feb 25, 2011
    Long Island, NY
    2004 340 Sundancer
    1988 Proline Center Console - 90hp Mariner/Mercury
    1969 Boston Whaler
    Twin 8.1 V-drives
    When I purchased my 340 last year my surveyor commented on how he was seeing boats selling above BUC and NADA - some substantially. While the true market value should be based on comparable sales this is not always the case here. Unfortunately the loan underwriters need a point of reference for assessing the loan and they rely on standardized published values.

    The problem here is that many times they can only offer financing up to a certain percentage (ie 80%) and this will affect the amount you need to put down if the boat is sold above book values. Think of it this way, if the market value is $100 the bank may only loan up to $80. Now if you agree to purchase the boat for $110 you would need to put down $30 instead of $20 for you get the maximum financing and not just $22 to get the 80% at $88.

    Sometimes the survey can include a reference to BUC value plus increases for certain option that may not be usual. In my case value was raised because of a bowthruster being installed. Unfortunately there a certain other values to the purchasor that can not be monetized into the value (ie local boat vs a boat needed to be shipped in). So again as an example a local boat that sells for $110 is the same cost as a boat that sells for $100 out of state but will cost $10 to ship to your home port.

    -Kevin
     
  4. Little Ducky

    Little Ducky Well-Known Member

    Jun 5, 2017
    Chattanooga TN/Dickson TN
    1998 SeaRay 290 Sundancer
    Twin EFI 5.0L w/Alpha 1 drives
    When I was comparing the prices this year before buying my 1998 290 DA I found prices all over the place when I 1st started looking ...... then I realized many had different options, layouts and some with and without generators.

    Everything pushed the price one way or another.

    Happy hunting
     
  5. bobeast

    bobeast Dance the Tide SILVER Sponsor

    607
    Oct 22, 2017
    Isleton, CA
    2002 310DA
    350 MPI w/V-drives
    Recently, an uncharacteristically candid broker. told me he advises his sellers to price the boat 5-10% above what they are expecting to get. I got a boat value report from BoatUS, for a particular boat, and it came in smack-dab in the middle of that range.
     
  6. TexasBryan

    TexasBryan Member

    41
    Oct 12, 2017
    College Station, TX
    2001 Sedan Bridge 400
    Cummins 6CTA 8.3
    Since we are getting close to a new calendar year, are we better-off waiting until 2018? When does another year of depreciation start to show-up in the pricing?
     
  7. northshore

    northshore Well-Known Member SILVER Sponsor

    Jan 17, 2011
    Cleveland, OH
    1989 340 Sundancer
    Raymarine E90W Radar/Chartplotter
    Twin 454 Mercruiser 340's
  8. Gary B

    Gary B Member

    174
    May 20, 2015
    Long Island
    2007 52 Sedan Bridge
    Cummins QSM 11
    Some sellers may also be "upside down" with their boat loan. Depending on how old the boat is and if the owner put little down on a 15 or 20 year loan they can easily owe, much more than the boat is worth and may be asking close to what they owe. They could have also bought boat used and took out a long term loan
     
  9. fwebster

    fwebster Well-Known Member TECHNICAL Contributor PLATINUM Sponsor

    Oct 6, 2006
    Middle Tennessee ; Panama City Beach, FL
    1996 450DA
    3116 Caterpillars
    I have never found published price guides to be of much, if any, value in trying to establish a fair market value for a boat.

    - Price guides always lag the real market by weeks or even months

    - On some highly sought after models like the 450DA, there just aren't enough data points to make a price guide accurate. This forces the price guide publisher to "synthesize" or interpolate to achieve price for a missing data point.
    - The older the boat, the leas accurate a price guide will be because of the variability in condition. It isn't unusual for there to be a 50% swing in the selling prices on 2 different 20 year old boats of the same make and model. A decent 450DA with some deferred maintenance disclosed by the seller sold last spring for around $50,000. Another freshwater 450DA kept under a covered slip on the Tennessee River for $169,000 a few months later. Price guides at the time showed a range of $85K to $110K. How would you ever know what the fair market value is based on that guidance from price guides? It isn't like used cars where every boat salesman has a black book in their desk drawer and auction (wholesale) prices tightly control trade-in values.

    - NADA and BUC guides are really lender's guides and as such are usually low and not truly representative of fair market value. Besides, the normal commercial bank isn't interested in financing a 20 year old boat which caused the price guides to be even lower than fair market value.


    There is a website called soldboats.com that supposedly reports actual sold boat data. It is a subscription based part of yachtworld.com, whose data comes from real sales reported by brokers on boats they actually sell. You can sometimes get a friendly broker to research the soldboat.com data for you. However, some of the same limitations exist as to the number of boats sold and missing data points and the effect varying condition has on values. I have found the soldboat.com data to be pretty accurate if there are several comparable boats sold.

    Listing prices have absolutely nothing to do with what a boat really sells for so I wouldn't get in a sweat about not having guidance numbers. You obviously need to be aware of the market and what is available, but the real trick is to look at enough boats to make a quality decision on which one id the best one for you. From there, step into the batter's box and take a good swing at what you are willing to pay for the best one for you buy making an offer and writing a deposit check.

    Never worry about offending the seller. If he gets offended, then he is too emotionally tied to his boat to make a rational decision. Besides, if you are doing your homework, by the time you make an offer you have already softened the broker position by pointing out the added cost you will face for deferred maintenance and repairing the obvious defects on the boat, as well as the fact that there are similar boats on the market for less money and that you are already discussing them with their agents. Additionally, it is the broker's job to keep the seller in the game, not yours.

    Also, on dealer owned boats, emotion never enters into it. Their reasons for "taking an offer" are usually financial in nature.......get the boat off the floor plan to reduce debt service..... get the boat sold before the next quarter because lenders no longer let dealers keep a boat on open floor plan indefinitely; interest rates and equity requirements go up quarterly..........boats eat overhead $$ even if they are sitting still tied to a pole----insurance, slip revenue lost, bottom paint wear, divers to clean the bottom, wash/wax/polishing, etc. The trick with a dealer owned boat is to convince the deaaler that you are a serious buyer who is ready, willing and qualified to buy the boat.
     
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  10. JVM225

    JVM225 Well-Known Member

    Apr 8, 2008
    Farmingdale, NY
    2002 410 Sundancer, Monaco Edition.
    3126 Cats.
    That was my experience when I was shopping. I was amazed at just how much underwater some people were on their boats.
    Coincidentally, the boats owned by people that were underwater on them were usually lacking in maintenance and upgrades too.
     
  11. JVM225

    JVM225 Well-Known Member

    Apr 8, 2008
    Farmingdale, NY
    2002 410 Sundancer, Monaco Edition.
    3126 Cats.
    Having bought a dealer owned boat last December, I agree with Frank’s last paragraph completely.
    Had they not sold me the boat they would have likely owned it for at least another 4-6months and that would have cost them plenty so I was able to negotiate what I thought was a very fair deal.
    The one thing I will add as a result of my fairly recent boat shopping experience is that it’s best as a buyer not to pay too much attention to listed prices of used boats because there are too many variables involved. I think it’s better to know what boat you are looking for, research that model completely and decide what level of condition you are willing to accept, and then determine what that boat would be worth to you.
    Once you find the right boat you’re going to come across as a serious buyer and you’re more likely to negotiate a fair deal.
    I think serious buyers are just looking for a fair deal. People looking for a steal are usually not serious buyers.
    I looked at a lot of boats and only made serious offers on two.
    The first was through a broker and the deal went south after I agreed to a negotiated price and then the seller decided he wanted more after I wrote a deposit check and before he signed the contract. I told the broker the seller could stick the boat where the sun don’t shine and even if he came back down to the agreed price I still didn’t want to do business with him.
    BTW: that boat is still for sale 18 months later and I’ll bet the seller regrets trying to squeeze me for the extra 5k since he has probably spent way more than that on yard bills, docking, and interest on his loan that he was already under water on.
    The second boat I made a serious offer on was the one I bought. I knew what it was worth to me, told the dealer that number in the form of an offer, and explained how I arrived at it. After a little back and forth we made the deal at my number. I think the dealer gave a little more than he normally would have because he didn’t want to own the boat long term, and the amount of the offer, my knowledge of that model and demeanor let him know I was a serious buyer.
     
    FootballFan likes this.
  12. KevinC

    KevinC Well-Known Member

    Feb 25, 2011
    Long Island, NY
    2004 340 Sundancer
    1988 Proline Center Console - 90hp Mariner/Mercury
    1969 Boston Whaler
    Twin 8.1 V-drives
    A fair price will reflect many things that might not be taken into consideration of book value. I purchased my boat from MarineMax and while I paid what I considered was a fair price (probably slightly to the high side of the market but for a boat in great condition that I did not want to walk away from) the benefits I received in the deal more than offset any additional amounts paid. In my case it was a local purchase which offset any travel costs associated with finding a boat out of state as well as transportation costs back. There was also a considerable amount of pre-delivery maintenance that was done as part of the deal that I would more than likely have had to absorb in private sale. Additionally in NYS we have to pay sales tax so my trade-in reduced my tax cost. There were many other things that went into the deal to boost it's value to me but all in all it was a win-win and I also have a good relationship with the dealership.

    Unfortunately "book" values cannot uniformly transfer intangible values. Ultimately the market value of the boat at the time of sale is what buyer and seller agree on. Bank underwriters cannot simply rely on this so they need to look to outside sources to understand their exposure.

    -Kevin
     
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  13. JVM225

    JVM225 Well-Known Member

    Apr 8, 2008
    Farmingdale, NY
    2002 410 Sundancer, Monaco Edition.
    3126 Cats.
    I got mine from Marine Max too and paid what I think is a fair price for a great boat especially considering all the things they took care of before delivery. Nearly a year after closing on her and finishing my first season I can say there were no surprises.
     
  14. NorCal Boater

    NorCal Boater Well-Known Member SILVER Sponsor

    Jan 24, 2008
    Covington, LA
    Cobalt CM23
    GM SB 383" Stroker" Alpha Gen I
    The last boat I purchased was an older 52' CPMY. The broker-listed price was $129,900. We offered $115,000 planning to negotiate. The seller accepted the offer stating, "Don't hurt me at survey." Survey came back with $21,000 of needed items and repairs. We asked the seller for all $21k again, figuring we would be negotiating. Again, he gave it all. Turned out the owner was 3 states away, had the boat listed for 6 months and didn't want to see it again. Ours was the first offer.

    My point in that story is don't let the price scare you away from something you like. Make the ridiculous offer. All they can do is say no or throw a counter offer back at you. If they get pissed at a low-ball offer....tough noogies. There are just way too many boats available for a seller to get butt-hurt over an offer. Don't be afraid to walk if you don't like the offer and foremost, don't get emotional about the boat.

    Enjoy the search.

    Shawn
     
  15. ttmott

    ttmott Well-Known Member GOLD Sponsor

    Apr 3, 2012
    Space Coast Florida
    2006 52 Sedan Bridge
    Cummins QSM11
    And the same boat in the Northeast or Western US will be a different listed price than in the Southeast...
     
  16. CaptRonn

    CaptRonn Active Member

    252
    May 25, 2016
    Houston
    1999 Sea Ray 400 Sedan Bridge
    Mercruiser Horizon 8.1 MPI
    Bottom line: A boat (or anything else) is only worth what someone is willing to pay for it.

    Sellers can ask whatever they want, but the reality is what a buyer will pay.
     
  17. ttmott

    ttmott Well-Known Member GOLD Sponsor

    Apr 3, 2012
    Space Coast Florida
    2006 52 Sedan Bridge
    Cummins QSM11
    Yes, however it is simple supply and demand that sets trend and consequently an established market price. The issue becomes where there is not adequate supply or demand which will constitute an erratic market or unusual things like the Miata effect. This becomes difficult for lending and insurance to establish reasonability to value. To Frank's point, only several 450DA's on the market does not constitute a trend and a market.
     
  18. JVM225

    JVM225 Well-Known Member

    Apr 8, 2008
    Farmingdale, NY
    2002 410 Sundancer, Monaco Edition.
    3126 Cats.
    Although it may seem like there are a lot of boats on the market, that may not always be the case. It all depends on what you’re looking for and what you expect to get out of the boat.
    True, when you look at online listings you’ll come up with dozens of boats of popular models. There were lots of 380 and 410 Sundancers listed when I was looking.
    The problem was that there weren’t a whole lot of nicely maintained ones and most of them were on the market for a pretty long time.
    If you were looking for a bargain (steal) and were willing to put a bunch of money and time bringing it back to where it should be then there were a lot of boats to choose from. All you had to do is find the seller that was willing to acknowledge that their boat needed some love and would price it accordingly.
    That school of thought works well for many people and is the right way to go for them. I have a friend that views things that way with everything he buys and it often serves him well.
    On the other hand, if you were looking to spend a little more for a fairly priced (not a steal) well maintained turnkey boat that you could start enjoying right away then there was a lot less to choose from.
    I fell in to the second category.
    I’m not saying that there are more people out there that don’t maintain their boats than do.
    What I am saying is that there is more of a market for well maintained turnkey boats and they sell faster so there are always less of them to choose from.
    I think this is more true the bigger the boat because most people shopping for bigger boats have had boats before and know what’s really involved in bringing a boat back to where it needs to be and they just don’t want to deal with it.
    That was my position.
    My advice to people who are seriously looking at used boats is to make serious offers. If you really want the boat, you don’t want to loose it over a few dollars.
    True story: I decided to sell my old boat while shopping for this one. My friend had some interest in it but was looking for a bargain because that’s the way he has always bought boats (and cars), and never minded putting time in to them. He figured that if I didn’t sell it by the time I found my next boat I would lower the price and he would score a great boat. I listed the boat at a reasonable price and sold it less than 18 hours later to the first person who came to see it. It was a truly turn key boat with maintenance records and absolutely everything working as it should. The guy who bought it had been looking for a turn key boat for more than a year.
    My friend still regrets not making me a serious offer.
     

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