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Aerial photo of yachts at a quay (Photo by Bugsy Gedlek)

Today brokers will only sell yachts to qualified buyers, who will often use specialised finance deals.

When buying a yacht, there are dozens of factors that need to be taken into account in order to effectively negotiate the purchase and closing process. Along the way, experts will assist the yacht buyer in every facet of the endeavour and in doing so will ask a lot of questions. Here, they share why these questions matter.

Getting started

‘Sometimes a buyer knows right from the start the exact boat he or she wants and it is just a matter of finding it,’ says broker Wes Sanford of Northrop & Johnson. ‘Typically [though], buyers need some guidance to refine their searches: power or sail, new or used, style of boat, length of boat, construction of the hull and so on.’

After the obvious question about the type of yacht, the next question is about the purchase budget, which also serves as an opportunity for the broker to educate the client about variables that affect the value of boats.

‘I will also ask the owner about his or her operating budget,’ says Sanford. ‘I have to factor in the annual expenses of each boat to make sure I show clients boats that will meet their target expenses. There can be significant variations in operating costs, even within an identical size range.’

Once a fiscal foundation has been established, the next question is how does the owner plan to use the boat? Activities, geographic plans, amenities, toys, level of service all factor into this.

‘For example, if a client says to me, “I want to do lots of fishing and diving in the Bahamas,” then I know we are looking for a shallow-draft boat with a cockpit and swim platform,’ says Sanford. ‘If a client tells me he wants formal service and a meticulously maintained boat, I know that the crew quarters needs to accommodate enough crew for that level of service.’

The final piece of the puzzle before the fun begins is determining the timeline. Some buyers are willing to wait for the right boat, this means they can consider building a boat or holding out until just the right boat comes along.

If a buyer is looking to get a boat right away, then the broker may have to guide that buyer through making some compromises to expedite the process.

Show me the money

Financing adds another layer of queries. Lisa Verbit’s specialty at Bank of America’s Marine Division is financing for boats valued over $1.4 million. She explains, ‘The first question I am going to ask is, “What boat are you buying?” I’ll want to know the build, the year, the size. This is essential information I need in determining my ability to finance the purchase.

‘Next, I am going to ask for the purchase price of the yacht and how much of that price they want to finance,’ she says. Although Verbit says there are some exceptions, a 70 to 75 per cent limit for financing is typical.

‘Once I know these details, I ask when they plan to take delivery,’ says Verbit. The date of delivery sets the expectations for turnaround and tells Verbit how quickly the terms need to come together. She cautions buyers, ‘With a short window, I have less flexibility, so we like to see a reasonable timeframe to determine the best terms.’

Before a loan can be approved, Verbit says there are ‘customer requirements.’ Everyone involved in the sale and closing process ultimately wants the same thing: a happy client. She borrows a line from Jerry Maguire and says, ‘I need you to help me help you.’

To make the process run smoothly, she needs a complete financial package that includes the ability to identify the ownership entities and flag state – something typically worked out with a maritime attorney.

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