NADA and determining boat value

[robertsapp]

I'm bored and I thought I'd start a discussion to solicit opinions. We might be looking to buy a bigger boat in the future, and one of the things I struggle with is trying to determine a fair market value for boats I'm interested in. I'll often look up the NADA guide value, but when I tell the seller, "NADA says your boat is worth this much" (which is always about 25% to 40% less than they're asking), they generally get all angry and indignant, because their boat is made of spun gold, don't you know. I've actually had a seller's broker say "well yes, NADA is a guide, but we have access to this super secret database that tells us what boats are REALLY worth, and besides, you have to add 10% to that to pay my commission," as if his services to the seller represented some kind of value-added that I should be willing to overpay for.

But after about a year of watching various boats on Yachtworld, here's what I've noticed. Boats that are listed at or near their NADA value actually sell. Usually within a few weeks of listing. Boats that NADA says are overpriced just sit. And sit. And sit. And then get marked down. And then sit some more. And then have "Motivated Seller!!!" added to their listings. And six months later, they're still sitting, but now they're only 15% overvalued instead of 25%.

So I ask you - when you're looking at a boat, how do you figure out what it's really worth? And I know how relative everything is based on condition. But like I explained to a person who has a (overpriced) Beneteau 390 listed that's been sitting for six months now - Beneteau only made the hull. They bought 70% of the stuff that went into that boat, and it all wears out eventually. So there's no way a 20 year old boat is worth 80% of what it cost new, unless you've already replaced every last one of those parts already. It just isn't. And yes, he got very angry.

 

[Ross]

The fair market value is the price in money that a knowledgeable buyer will pay and a willing and knowledgeable seller will accept when the item has had a fair exposure to the market. Any two boats, cars or houses same age, use, size, builder can have vastly differing values for many reasons.

 

[KD3PC]

it is worth exactly what someone will pay for it.

NADA is not the least bit accurate for anything that does not sit on a trailer or say Bayliner. NADA is for cars, and they think they can "value" boats the same way they do cars. Does not correlate, at all.

Boat US has a valuation service that is pretty accurate, if you give them accurate details. Same with soldboats, but as the broker told you, that is available only to brokers, and it is only as good as the information brokers input.

Ross is dead on with his explanation.

Value is actually a poor choice of word to describe the boat price. Worth, may be a better choice...what is that boat, for sale, worth to me - a ready and willing buyer?

To the OP, you are correct though, that many boats are overpriced, which is pretty easy to discover - how long has it been on the market? That is the true price point....to get the bargain to cross over from "for sale" to "sold"

 

[robertsapp]

it is worth exactly what someone will pay for it.

NADA is for cars, and they think they can "value" boats the same way they do cars. Does not correlate, at all.

Why not? It would seem that the formula "Original Retail Price minus Age Based Depreciation, adjusted for condition" would seem equally valid.

 

[Don S/V ILLusion]

Why not? It would seem that the formula "Original Retail Price minus Age Based Depreciation, adjusted for condition" would seem equally valid.

I don't think they comprehend how to value/devalue a saturated deck core (e.g. roof), rudder (left front wing) or voids in the passenger door. Apples - oranges.

 

[KD3PC]

Why not? It would seem that the formula "Original Retail Price minus Age Based Depreciation, adjusted for condition" would seem equally valid.

so you are saying that a 20 year old Hinckley/Morris/Swan is worth the same as a similar length 20 year old Hun/Ben/Cat?.....I beg to differ, look at the prices of some of the higher end boats, enter their specs in to NADA/BUC/etc and see what value they return. My guess is very low price. NADA math can not account for the reputation of the builder...to them it is just an asset, or unit, or boat.

Sometimes the name will sell the boat. Based on boats I have seen, worked on or crewed on, I would buy a 20 year old Hinckley or Shannon all but sight unseen for the going price of a similar vintage Hun/Ben/Cat...and don't get me wrong I bought a 1999 Ben 36CC and owned a Sabre 38 (both great boats, btw) so I am not "against" production boats. Just that some boats are "worth" a lot more than most other boats, regardless of "value" applied by some algorithm.

the reality is that even the same year and make/model/length boat can vary widely - based on maintenance, condition, features, etc. You can see that in practice by looking at YW, and seeing then going to see the boats in person....you will quickly see a large $$ difference, and condition may or may not be why. NADA is not able to "see" the difference, nor does their math smooth out the reality a person can see.

YMMV

 

[TLW]

Boat dealers who subscribe to NADA fill out a monthly form listing boats sold and selling price. Sometimes they forget, sometimes they lie, etc. All that being said, NADA prices generally appear to be very low compared to the more market savvy BUC book. You have only to look at the "options" listed in the NADA guide to realize they haven't a clue (or a clew.) They list items they think they would like to have if they had that great "fishin' boat" they saw somewhere, but have no idea what a furled is, or why it would add any value. Never heard of travelers, back-stay adjusters, vangs, etc.

The big problem with this is inland banks (and others) that are familiar with NADA as a daily tool, have an unrealistic idea of boat values, and want to finance it as if it were a motorcycle. Often won't finance a boat over 6 years old, etc.

You have to search out institutions that are really "in the business."

Most of you are familiar with boats.com which is a "listing" site. Surveyors, dealers, etc. have access to "SOLDboats.com which tells them what boats ACTUALLY sold for. The other problem is finding a credible list of "comparables."

 

[Ross]

I have a completely refitted 30 foot Islander that is completely custom inside. It sleeps two! I can accommodate four for a sit down meal and I can provide drinks for six to eight. It has only the most basic electrical and electronics needed on a modern boat. It has been surveyed and approved for open ocean sailing. How much is it worth? Far more than any one would pay for it. What is the fair market value? probably less than 15k.

 

[CCHer]

When I went to sell my C310 last year the broker got actual sold prices for similar boats through the subscription service not available to us mortals. We priced it accordingly and had her sold in a month.

 

[robertsapp]

I don't think they comprehend how to value/devalue a saturated deck core (e.g. roof), rudder (left front wing) or voids in the passenger door. Apples - oranges.

When I look up NADA boat values, it lists two prices, average retail and low retail. The average retail is basically for boats in good overall condition with only normal wear and tear and which only need minor mechanical or cosmetic work. The low retail is for a boat with excessive cosmetic or mechanical damage which may or may not be in working order. Within the limits of what a web site can provide, this seems like a pretty reasonable spread to work with. I think most of us who aren't purchaing our first boats can approximate where on that scale the boat we're looking at would sit.

Again, however, take for example the Hunter 376 I just looked at last weekend. I would have definitely pegged it as "needs significant cosmetic and mechanical work." It was is poor enough shape that I wasn't even interested in poking around on board. But it was listed for about $20K more than NADA says it would have been worth at average retail. I predict it will be one of those boats that sits on the market for a year or two, finally sells after multiple price reductions, and then generates anecdotes about how it takes two years to sell a boat in this market.

 

[robertsapp]

so you are saying that a 20 year old Hinckley/Morris/Swan is worth the same as a similar length 20 year old Hun/Ben/Cat

Now I'll freely admit that I'm no expert on this, but I'm pretty sure I read somewhere that Hinkleys, Morris's and Swans cost a bit more when new than a similar size Hunter or Beneteau. And I have a suspicion that they might just use a better grade of hardward and equipment when fitting them out, which means they would most likely be more durable, which would lenghten the depreciation curve. So no, nothing I've said implies that a 20 year old Oyster is worth the same thing as a 20 year old Catalina. Just like the forumula predicts that a five year old Rolls is worth more than a five year old Chevy. So I ask again - if it works for cars, why doesn't it work for boats? (I have some definite views on why people THINK it doesn't work for boats, but I'll wait to see if anyone else has a similar idea).

Obviously the number derived is just a guide, which has to be individually adjusted for the condition and circumstances of each particular boat. But like I mentioned in another thread recently, my wholly unscientific survey has lead me to believe that boats that are listed at their NADA value sell very quickly. Boats that are considerably marked up above that value sit on the market for a long time, usually only sell after several price reductions, and probably lead to the belief that it takes a year or two to sell a boat in this market.

 

[Don S/V ILLusion]

How about answering your q from this perspective:
I've sold two boats in the last 10 years. In both cases, the NADA quoted value was wrong by 20 - 35% compared with actual sale price.
Both sold for almost exactly what we found to be the market price by looking at actual reported sale prices.

My experience based on the above is that the NADA book is only useful for holding the window open while you throw it out.

 

[bffatcat]

boat values

I have a 1975 pearson 26w Last year I had the boat completely reconditioned by a reputable yard last year. The boat has 3 new sails Recent roller furl etc I wouldnt sell it for what NADA says its worth This is all academic because the boat is not for sale

 

[robertsapp]

Here's the type of thing I'm seeing today (not ten years ago, today). Take a look at this listing:
http://www.yachtworld.com/boats/1991/Beneteau-390-Oceanis-2572219/Punta-Gorda/FL/United-States
Looks like a pretty nice boat. Could be just what my wife and I are interested in. I could see taking a long weekend and driving down to take a look at it. But when I first spotted it back in December or January, he had it on Sailboatlistings for $79K. I contacted him and said "You know, NADA value for this boat is only $58K." If he'd said "well, let's talk," there would have probably been a road trip in our immediate future. But instead he copped an attitude and said I was crazy and there's no way he'd take less than $70K for the boat, because any less than that, he'd just keep it.

So now it's what, seven, maybe eight months later. Now it's on Yachtworld, listed through a broker. It was originally listed for $79K. Now he's a "motivated seller," and the boat is listed for $69K. So let's do the math. Someone is going to offer him $65K, and he'll most likely take it, because he really wants to sell the boat and it's been on the market for a while. There will be a few survey issues that he'll have to fix (because what boat doesn't have SOMETHING wrong with it) which will cost him a grand, maybe two. Then when it closes, the broker will get 10%. So if he's lucky and everything goes well, this guy might clear $56K maybe $57K. Hmmm, can't help but notice that that's exactly what I would have been willing to consider offering him last year. But now he's had eight more months of insurance payments, power bills to run the A/C, possibly moorage, etc.

This is just one of about two dozen boats I currently have in my Boats I'm Watching folder. So I dunno, maybe NADA is worthless, but is there any doubt that this boat would have been long gone if he'd listed it for $58K originally?

 

[Ross]

Probably could have sold it as is where is for 55K

 

[Randy Rohrbeck]

Here's the type of thing I'm seeing today (not ten years ago, today). Take a look at this listing:
http://www.yachtworld.com/boats/1991/Beneteau-390-Oceanis-2572219/Punta-Gorda/FL/United-States
Looks like a pretty nice boat. Could be just what my wife and I are interested in. I could see taking a long weekend and driving down to take a look at it. But when I first spotted it back in December or January, he had it on Sailboatlistings for $79K. I contacted him and said "You know, NADA value for this boat is only $58K." If he'd said "well, let's talk," there would have probably been a road trip in our immediate future. But instead he copped an attitude and said I was crazy and there's no way he'd take less than $70K for the boat, because any less than that, he'd just keep it.

So now it's what, seven, maybe eight months later. Now it's on Yachtworld, listed through a broker. It was originally listed for $79K. Now he's a "motivated seller," and the boat is listed for $69K. So let's do the math. Someone is going to offer him $65K, and he'll most likely take it, because he really wants to sell the boat and it's been on the market for a while. There will be a few survey issues that he'll have to fix (because what boat doesn't have SOMETHING wrong with it) which will cost him a grand, maybe two. Then when it closes, the broker will get 10%. So if he's lucky and everything goes well, this guy might clear $56K maybe $57K. Hmmm, can't help but notice that that's exactly what I would have been willing to consider offering him last year. But now he's had eight more months of insurance payments, power bills to run the A/C, possibly moorage, etc.

This is just one of about two dozen boats I currently have in my Boats I'm Watching folder. So I dunno, maybe NADA is worthless, but is there any doubt that this boat would have been long gone if he'd listed it for $58K originally?

The other side of your argument is that you've been trying to buy a boat for a year using the NADA pricing and are still looking.

Would you sell your current boat for what NADA says it's worth?

 

[BarryL]

Hey,

IMHO the problem with NADA is there just aren't enough boats sold each month to really get accurate prices.

Take some boats I am familiar with, like C&C 110, Tartan 3500 and Sabre 362. I don't know how many boats were built but it is probably less than 500 for each of them. Of those, how many sell each month? I don't think enough sell for NADA to accurately price them.

According to NADA a 2002 C&C is worth 75K, a 94 Tartan 3500 is at $55K, and the Sabre is $72K. I have NEVER seen a boat listed for anything close to those prices. C&C's usually list for $120K, Tartans for $100 and Sabres for well over $100. I just don't see any decent boats for selling for NADA prices. Now it does seem that it takes 6 months to a year for boats to sell, and I do see the prices dropping over time but I also see that when a Tartan gets priced under $100K they sell quickly.

Barry

 

[Maine Sail]

My experience based on the above is that the NADA book is only useful for holding the window open while you throw it out.

+1 !!! Soldboats.com is the industry pricing guide/datsabase. You often hear that brokers "fudge" sale prices on Soldboats.com, and this can/could potentially happen. I have many friends though who are brokers and they will not do this because you can and will be kicked out of Soldboats.com/Yachtworld for lying about sale prices. They do self police and if they suspect a broker is not being honest they can and do investigate. Every boat I have sold has been accurately reported, I have checked.

Banks also use the data from Soldboats.com along with the surveyors evaluation to determine the ability to loan on a particular boat. I don't know a marine lender who uses NADA for sailboats? Perhaps there is one?

None of the boats I have ever sold personally went for anywhere near NADA, they sold fast, including three Catalina's, and most sold darn close to Soldboats.com data, including all three Catalina's which sold for more than Soldboats.com comps/avg..

 

[Maine Sail]

According to NADA a 94 Tartan 3500 is at $55K, and the Sabre is $72K.

Where?? I'll write a check today for either boat at those prices....... NADA = GIGO (garbage in, garbage out) when it comes to sailboats....

 

[Maine Sail]

This is just one of about two dozen boats I currently have in my Boats I'm Watching folder. So I dunno, maybe NADA is worthless, but is there any doubt that this boat would have been long gone if he'd listed it for $58K originally?

Boats that sit on the market for long periods of time are usually there for one reason CONDITION. Though sometimes owners just list them to satisfy a spouse and the price is reflective of that. Boats that sit are not usually a value and wind up costing multiples more than a boat in tip to condition. Sometimes they sit because they are an odd-ball one off.

Boats maintained in tip top shape, or what I call 2 percenters, (the top 2% of boats) often sell in hours or days for top value but this is still a steal! There are always buyers who know boats and only want that pristine well maintained immaculate vessel because they know it is a steal and tremendous value.

I have a customer with cash trying to buy a boat right now and he has looked at over 60 boats all JUNK. There is just too much junk on the market. He is willing to pay well over Soldboats.com avg because he knows that when he finds it it will represent a bargain over the same sister-ship that sells at the bottom of the heap.

Tim R. sold hi beautiful Ericson with one mention of it being for sale on Sailnet in a forum post. This beautiful boat never even hit the market, he did not pay a broker and it sold for more than the Soldboats.com average and multiples more than NADA. The replacement boat, a Caliber 40 LRC, was also purchased without it ever hitting the public market. It too is a 2 percenter.... Good boats move, bad boats sit....

I have a number of customers who've recently purchased used boats. One a Sabre, good boats. However he went for the least expensive Sabre he could find, a HUGE mistake..:cussing:

The one I tried to talk him into had a re-built engine, new sails, new canvas, re-wired, brand new electronics (three months old including radar), Espar heat, high output alternator, new interior cushions, beautifully shiny gelcoat, new standing rigging and all bright work professionally stripped and re-finished in preparation just for selling it. Deck hardware had also been recently rebedded and it had bone dry decks.. The bottom had been fully stripped and barrier coated three years prior. You could eat out of the bilge. The price "premium" for all this was going to cost him 6K more upfront. Just 6K more.....

He opted for the beater "value boat" at an agreed price of 28k and now has approx 75K into a boat that is still worth maybe 32-34k on a good day... This is a net loss to him, over the other boat, of nearly 50k. His boat is still not anywhere as nice as the one he did not buy and I doubt if it ever could be.

He kicks himself every day, especially the days I am billing him for to fix everything that was "deferred maintenance"... Oh I also work for the guy who bought the good one, a seasoned sailor and very smart buyer. This 2 percenter was a private sale also and never hit the open market.. The boat has needed very, very little work. A few hundred dollars.....

My personal opinion is that bottom line price should never be the #1 determining factor when buying a used sailboat though it very, very often is. CONDITION, CONDITION, CONDITION!!!!!! Try to think and project out what will your total cost be three to four years from now. This type of thought process should always be a strong consideration.

Course in my professional opinion, please buy the beaters it keeps me working....