Frequently Asked Questions
The process of purchase or sale of a vessel can be a complex undertaking. It usually involves the detailed and sometimes complex contracts, employment of Marine Surveyors, Engine Surveyors, Air-Conditioning and Refrigeration Technicians, Specialty Attorney's and Documentation Agents and more. This why it is so important to work with a professional yacht broker to assist you in the Purchase and Sale process. Please review some commonly asked questions regarding your purchase or sale of your vessel.
Most boat appraisals are determined by a licensed yacht surveyor. He computes a boat's value a few different ways, 1) by analyzing other comparable vessels currently for sale, 2) by analyzing comparable boats that have recently sold, and 3) by integrating these numbers with the "book value", usually defined by NADA, or BUC. While there is no clear science, the goal is to give the lending entity an understanding of the value of the boat, to ensure that they are not lending money on an asset that is grossly over-valued.
Brokers are familiar with all the paperwork requirements from the initial Offer to Purchase and Bill of Sale to licensing and registration; to paying tax, certificates of ownership, security agreements, and other documents needed to complete a sale. They also understand maritime and admiralty laws for the type of yachts they represent, as well as agency contracts, listing agreements, closing statements, deposit requirements and escrowed accounts to safeguard funds.
Brokers will help their buyer decide on a realistic figure to offer which will increase the chances of buying a yacht for a fair and reasonable price, and together with the necessary elements to protect interests. Once this is done, the broker will prepare a "Purchase and Sale Agreement "ready for the buyer to sign. This document will display the terms of the sale including obligations that you and the seller have agreed to, and when these obligations will be fulfilled. It will also include specific terms regarding protections on behalf of both the buyer and seller. The buyer will then make a good-faith deposit of 10 % of the agreed purchase price of the yacht and deposit the funds in the escrow account of the broker
A professional broker will listen closely to your requirements and will help you determine if the yacht you are considering is the right yacht, at the best value. Brokers can objectively tell you about the condition of the yacht before you decide whether or not to spend your time inspecting it. They will source and compare similar yachts on (and off) the market, the history of the yacht, how long it has been on the market, and the motivation of the seller. Anyone can look up asking prices on yachts, but it takes a professional broker to have an intimate knowledge of current market conditions, a familiarity of similar yachts, and information on recent sale prices and time on the market through industry resources not available to the public.
An escrow account is a legally designated safe and secure bank account that handles all funds related to your vessel purchase. A professional yacht broker will have a legal escrow account you can safely use for deposits, closing funds, sales tax payments, etc. Escrow funds are only released per written agreements, and closing statements, with principal's approval.
A buyer of a pre-owned yacht will usually request a sea trial and the services of a marine surveyor. Buyers pay for the surveys and for hauling the yacht out of the water for inspection. The Broker will usually attend the sea trial and marine survey with their buyer to help determine how to properly address any yacht survey issues and put the problems in context. Part of this includes; estimating time and cost of rectifying and where to obtain accurate quotes for items that are unfamiliar. The Insurance Company will usually require a copy of the survey prior to binding and insurance coverage on the vessel.
In a separate report called an engine survey the boat's engine power is reviewed and general detailed description is analyzed. This report includes but is not limited to: filters (fuel and oil), oil and fuel lines, exhaust systems, cooling systems, fresh and raw-water systems, emergency stop and alarm systems as well as transmission data. Compression testing is also included in the testing. The goal of an Engine survey is to determine the current condition of the engines and generators.