Tips for Buying a Boat

From hiring a good broker to finding the right fit

fishing boat
We all envision the day when we can take ownership of our very own sport-fishing machine. Hiring a good broker, and following his advice, takes a lot of the hassle out of a boat purchase.Scott Kerrigan

I never understood how complicated boat buying could be until I became a broker/salesman 11 years ago, starting out under the wing of the longtime owner of Gold Key Yacht Group, Chuck Edwards. I met Edwards in 1997, when he was the broker for a couple of boat owners that I had worked for in the past. Not only did he do an excellent job guiding his clients through the purchases of their boats, but he kept personal and professional connections to the buyer after the fact, helping them through all aspects of ownership.

Over the years, I watched how he helped his clients move out of one boat and into another, with minimal complications. Along the way, he made a nice commission for himself, and he saved his clients a lot of money and a ton of hassle. While any captain can get lucky and win a tournament now and then, or have a good day of fishing here and there, it’s the consistently good ones that stand out. The same thing is true of brokers.

Since I’m well aware of the toll that a traveling captain’s job takes on both his body and his family life, I figured that becoming a yacht broker could offer a nice living and keep me connected to the game. Unfortunately, there really is only one way to learn this trade, and it’s very much like working the deck under a good captain — you have to learn it from a good teacher from the bottom up. Now, after working with Edwards for more than 16 years, I realize that it takes time to learn and understand the true art of working with clients and navigating the many boat options out there. It took the same amount of work to become a good fisherman as it did to understand the complex interaction between each buyer and his chosen boat. Just like anglers, species of fish and fishing grounds, every boat buyer, seller and boat are different.

fishing boat
No matter what size boat you intend to purchase, make sure you have an experienced captain put the vessel through its paces before you complete the sale.Scott Kerrigan

The Right Fit

During my career as a captain, it was easy to dismiss a suggestion about the next boat to buy, because I thought that my job only depended on catching fish and getting the boat to and from the fishing grounds in one piece. I focused on catching as many fish as possible. My mind-set at the time was that catching a bunch of fish and maintaining the boat properly meant good job security.

Over the years, however, I saw a lot of guys leave the joys of ownership behind, many of them because they did not understand what they were buying. After seeing owners come and go, it didn’t take long to understand that the closer an owner came to finding that right boat, regardless of whether it was within his budget or fit his long-term needs, the more likely he was to stay in the game and keep me working — no matter how many banner fishing days we had!

You can’t always find that perfect boat, but with a little homework and understanding of the pros and cons of what’s available, you can get pretty close. Remember, the joy of a great day of fishing disappears in a flurry of unnecessary bills when you purchase the wrong boat.

Obviously, it’s important to work within your budget when it comes to purchase price, but you also have to realize and understand the true maintenance and operating costs of the boat you choose. Operating costs vary widely; the more you run a boat, the more it will cost, and the larger the boat, the more expensive it will be to run. Boats also come with fixed costs that never stop coming, whether the boat ever leaves the dock or not. Insurance, dockage, crew and basic maintenance are all costs that you must consider. A lot of these costs are determined by the boat’s size, so you might want to keep that in mind when you’re considering adding another few feet to the build.

Once you’ve established your budget, your first step is figuring out whether to purchase a new production or custom-built boat, or whether to buy a used one. If you are a first-time buyer, establishing a relationship with an experienced yacht broker will help you narrow in on the right choice. A broker’s knowledge can greatly benefit the buyer, even if you are relatively experienced. An experienced owner or captain may know what they want and need, but they may not know exactly what’s available on the market today, since they’ve been fishing on the same boat for the last five to 10 years.

boat show
Boat shows are great places to see all of the different options in front of you in one spot. A lot of times, you don’t know what you want until you see it.Scott Kerrigan

Buying New

Why buy new? Although I spend most of my time in the used market, because that’s generally where the better deals are, I can’t knock anyone for buying a new one, or there would never be better, updated used boats for another buyer to move into. It’s just like buying a new car in that once you pull a new boat off the dock, the value can decrease by as much as 10 to 20 percent in the first year — depending on how well you negotiated the purchase price, of course.

However, a lot of advantages come with being the first owner. Although it’s not always the case, after a short shakedown period, you could expect a new boat to be basically trouble free for the first couple of years, since everything’s brand new. Also, when you purchase from a full-service area dealer, in most cases, they will provide more personalized service and a more rapid response when something does go wrong, especially when the boat is still under the new-boat warranty and owned by the original owner.

Another advantage comes when you start outfitting the boat to your specific needs. If the boat you choose isn’t a stock dealer boat, you can special order things like engine packages, layout, interior decor and other options. You can also choose your own electronics options.

The only real disadvantage of purchasing a new production boat is the rapid depreciation in value over the boat’s first few years, usually brought on by new model and engine introductions.

fishing boat engine
Whether building your own or buying used, it’s important to remember that every decision you make, from the engine package to the interior layout, will affect the market price when you eventually decide put the boat up for sale or trade it in.Scott Kerrigan

Buying Pre-Owned

An old joke from the used-car lot says that “there’s an ass for every seat.” Just as there are all kinds of boats, there are all kinds of buyers out there as well. Generally speaking, used-boat buyers are primarily focused on price, and not specifically worried about the boat’s color or the composition of the galley countertops. They should already expect to most likely have to live with a few less or a few more options than what was on their original wish list. It then becomes important to find the best deal for whatever boat you are interested in.

While new-boat dealers typically focus on selling new product, some do offer a limited inventory of trade-in boats for sale. A big advantage of buying used is that the depreciation rate typically slows down after three to five years.

Once you’ve chosen the right make and model, the buyer should start looking for the best-equipped example on the market with the most desirable options and the least amount of wear and tear. A late-model boat with just 2,000 hours may sound like a good deal, until you find out that the owner deferred a lot of the maintenance. Also, a boat that sits without being run may still have been exposed to salt air while sitting behind the owner’s house on the Intracoastal Waterway, decaying from the inside out. That is when the help of good boat and engine surveyors comes into play.

Custom

One might think that building a custom boat would be the best and easiest way to go, but again, that’s not always the case. Most builders take between 14 months and two years to build a 60-footer, and some boats 65 feet or larger may take up to three years to complete. To be fair, the wait is usually well worth it.

Most of the time, going the custom-boat route is for buyers whose needs and requirements become more specific over time, usually after they have owned and fished production boats. They may require extra fuel for extended range or have a specific performance requirement like speed and handling or desire unique salon and cabin layouts.

Since production boats are built in large quantities, most new-boat manufacturers offer “new models” every few years, in order to create excitement for the upcoming model year, which can bring down the resale values of the models produced earlier, especially if the new changes offer better performance or improved layout options.

Custom boats, on the other hand, are built in limited quantities, and many have specific design and style features that create the classic and timeless custom-boat look that is specific to each custom-boat builder, and each builder’s style rarely changes.

Merritt and Rybovich are two good examples of builders whose design styles have remained virtually unchanged in decades, and in many cases, custom boats like these retain a higher resale value because of brand desirability and the limited production and higher-quality construction methods. Always remember, if you overcustomize your build, you narrow the market appeal when you try to sell it. However, if you build your custom boat with the most desirable engine package, layout and options, it will draw more interest and more money at resale.

fishing boat
A traveling sport-fisher requires different systems than a boat built solely for pleasure cruising.Scott Kerrigan

Finance

Before you decide to buy a boat, you need to know how you are going to pay for it. If you can write a check for the full amount, it helps to expedite a deal and really works in your favor. There’s nothing better than going to the table with pre-agreed terms and a big check for a fast closing.

If you plan to finance your purchase, working out the details with your lender for pre-approval before you make an offer works to your advantage as well. That also helps you get a grip on your budget, which helps your broker come up with terms for the purchase. Yacht financing in today’s financial environment can be difficult unless you have a high net worth and substantial verifiable income. Many dealerships have an in-house finance and insurance department that can assist in financing, as well as outside sources that specialize in marine lending.

Here’s a word of advice: When financing, put as much down as possible. While lenders may only require 20 percent down, it’s best to try to put closer to 50 percent down and finance the difference. You’ll probably get a better rate and a much lower payment. Also, when that day comes that you want to (or have to) sell the boat, usually for less than you owe the bank factoring in depreciation, the loss that you take might be a little easier to swallow.

Unfortunately, if you are selling for financial reasons, then you are possibly looking at bringing a large check to the closing table to pay off the loan, and in many cases that’s not possible. So your only options are to keep making payments forever, or give it back to the bank.

Financing a boat or yacht purchase is a big decision that should be fully explored, including the estimated cost of the total operational and maintenance budget.

fishing boat
A quick run-through of the mostly unseen ship’s systems can give you a pretty good idea of whether or not the builder shares, or exceeds, your attention to detail.Scott Kerrigan

Registration

Once purchased, you need to register the vessel, and once again, there are several options to choose from, including U.S. Coast Guard documentation, foreign flag registry, or a state title and/or registration.

There are many reasons why an owner might choose to register or flag in a different country. Foreign-flagged vessels primarily offer the owners an additional layer of liability insulation, and in some cases, certain corporations get tax benefits. Larger vessels financed by U.S. banks are required to be documented by the U.S. Coast Guard, in order to register and record the ship’s mortgage. Every state has its own set of laws, rules and registration requirements that have to be followed in order to operate the boat legally in its territory. A buyer should consult with a yacht documentation specialist or the vessel registration office for the state where he plans to operate the boat. Once again, hiring a specialist will save you loads of heartache and money in the long term.

Even if you are a longtime boat owner with years of experience, you will benefit from working with an experienced yacht broker, because active brokers are working with the latest boats and equipment on the market daily. Now that I spend half my time in boat sales and the other half fishing, I have found that buying a boat is a team effort, not unlike what goes into a crew putting together a great fishing trip. The buyer, captain, surveyors and broker all have to work together to get the job done. Designs, models and technologies change faster every year, just like fishing methods, styles and equipment, and a good broker stays on top of them all.