What is Cash Worth?

[WannaBSeaRayOwners]

We're looking to buy a boat in the $40-50K price range soon. Most of those that we are interested in are listed with brokers. Knowing they leave room to negotiate in their list prices (seems to be about 5-7% talking to some locals here in SE Michigan), is it higher than that if we were to have cash? If so, how much higher?

 

[tdschafer]

I'm not exactly sure because every situation is different. If someone is financed to the gills they will obviously not have much wiggle room. If they owe little but, are in a crisis as so many are these days(Even our CSR brothers) then the cash is king.
What I will tell you is that it greatly improves your bargaining power as I understand financing this day tends to be tough for some. I usually use 10% as a round number. In this economy cash in hand is worth a flock in the bush!!

 

[Cincy Aquaholic]

Not sure why there'd be much difference if you had cash or were having to finance it. I doubt the seller cares where they get their money from. They are going to get "cash" whether its a bank check or your suitcase full of money. Sure, maybe cash is a little more compelling than telling the seller, "ok, i'll buy it but I have to go get approved for the loan first" rather than saying, "ok, here's your money." But why would you go shop for a boat that you can't afford and approved for?? So, hopefully, for the seller's sake that's not an issue.

 

[floriduramax1]

Not sure why there'd be much difference if you had cash or were having to finance it. I doubt the seller cares where they get their money from. They are going to get "cash" whether its a bank check or your suitcase full of money. Sure, maybe cash is a little more compelling than telling the seller, "ok, i'll buy it but I have to go get approved for the loan first" rather than saying, "ok, here's your money." But why would you go shop for a boat that you can't afford and approved for?? So, hopefully, for the seller's sake that's not an issue.

I disagree totally! "Dead Presidents" speak loudly! Especially with these new rules about cash! There are some awesome "cash" deals out there!

 

[WannaBSeaRayOwners]

I disagree totally! "Dead Presidents" speak loudly! Especially with these new rules about cash! There are some awesome "cash" deals out there!

What are you referring to with "these new rules about cash"? And how would one find cash deals?

Separate question, would a dealer-owned boat that they took on trade have more or less room for negotiation than a boat that's just being brokered? Seems like they'd be more compelled to get rid of the overhead if it's dealer-owned, but I've been wrong many times...

 

[Tonka Boater]

Cash does speak louder than financing....a deal is much less likely to fall apart if the buyer is paying cash. Loans are harder to get these days and even if the buyer is approved for the loan the bank can change their mind any time before handing over the check.

 

[tdschafer]

And let's not forget the "surveyed value" that the vessel must meet for the deal to be approved. When I bought my boat I paid cash to a private seller. After we completed the deal and became friends I stated that he could have sat on the boat and easily pocketed significant more money. When asked why he took my deal he said simply "Cash in hand"! He was purchasing a bigger boat and saving $$ on that. He did not want to wait around then get someone financed etc etc. I had cash and was ready to roll. This was put right down on the next boat saving him financing $$ so it was a win -win.
As I stated earlier though:"I'm not exactly sure because every situation is different."

 

[thomas]

Cash does speak louder than financing....a deal is much less likely to fall apart if the buyer is paying cash. Loans are harder to get these days and even if the buyer is approved for the loan the bank can change their mind any time before handing over the check.

Being a dealer/broker I agree 100%. Over the last several years we have lost deals because of the banks.

 

[skolbe]

My friend looked at a boat - that someone had a made an offer and was trying to finance - they couldn't find a bank to finance the deal - my friend offered 5% less than that deal and told him he would close immediately take it or leave it. The seller took the deal - because the seller needed the boat sold. I don't think you will know on a boat until you start talking to the seller and determining their motivation for selling.

 

[fwebster]

Cash doesn't necessarily translate into a sales cheaper price.

The world has changed and the marine industry changed again after the bad loan issues of 2008. After 2008, a lot of boats hit the market where the buyer had a real need to sell. Loans were hard to get so cash did talk. But now, brokered inventory is pretty clean of "forced sale" boats the broker/dealers have either left the business or figured out how to manage their inventory and cash flow. Supply and demand are about balanced again.

If that is true and you are shopping at larger brokers or dealers, then cash buys a boat quicker, but not necessarily cheaper. Being a cash buyer means you are "qualified" and your deal will be quick, uncomplicated, and will not contain a contingency for financing. The larger broker or dealer probably has a business manager on the payroll who arranges financing with their lenders and the dealership gets a discount of several basis points when he arranges financing. Therefore, the dealer most likely makes more net profit on a financed deal than on a cash deal.

A cash buyer can certainly get a better buy, but he will have to do his homework and find a boat whose seller needs the boat sold bad enough and quick enough to take less $ from a cash buyer than waiting for a credit buyer to jump thru a lender's hoops.

There is also a frustration factor for anyone trying to sell a boat......our Sea Ray dealer had a 50 hour 340DA that was absolutely perfect. It had a water intrusion issue and they replaced both engines with new motors from Mercruiser, so the boat had full mechanical warranties. They sold that boat 6 times to buyers that could not get financing. Everyone got frustrated and the dealer almost gave the boat away. You will never find out "the story" behind a used boat without getting your hands dirty, traveling to see the boat in person, meeting the broker/dealer in person, etc. Checking "compare" on yachtworld.com won't get you the information needed to give your cash the leverege it deserves.

The story behind every boat for sale is different .........make that work for you by doing your homework.

 

[Whitenights]

I think the older the boat, the more cash talks, for all the reasons stated so far. I certainly will not have much luck getting a buyer for my 21 year old boat if they need to finance it. Unless they do a home equity type loan.

 

[Carver370]

In my experience, all cash means is you are qualified to buy the boat immediately.

That doesn't usually translate into a lower sales price, and myself or the owner don't care whether the check they get for the boat comes from a private bank account or a certified loan check. Either way they end up getting "cash" for their boat.

I actually had a call the other day about a boat and while in negotiations about pricing the buyer asked "what is the cash deal price?" Thats simple, the asking price minus negotiations, financed or straight cash.

 

[fc3]

Well, If it's Canadian dollars cash, that would speak a bit louder.

Our good buddies Bush, Osama and Bernanke have made the US dollar about as valuable as used toilet paper.

 

[MonacoMike]

There are no rules that apply to this question. I like Frank's reply and advise to investigate everything you can about a boat you wish to purchase. The price in any transaction is based on the market, time, timing, situational issues.

My first advise is listen listen, listen. Most people love to hear themselves talk, they can tell you much. Who? Try the seller, broker, mechanic, yard jockey, and anyone with knowledge of the boat or people involved just listen.

Try to ask subtly about other offers, how long for sale, changes or upgrades while it's been for sale, and if a recent survey has been done.

These answers will give you insight into what cash might do in your individual situation

MM