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How To Buy a Boat

  • Home
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  • How To Buy a Boat
Boat & Yacht Etiquette
January 19, 2022
Understanding Boat Insurance
February 8, 2022

Walkthrough of the Boat Buying Process

Purchasing a boat is all about finding the right watercraft to suit your lifestyle needs.

If you’ve ever financed a new car or bought a house, the process of buying a yacht might seem familiar. However, there are some notable differences that new boat buyers and seasoned yachtsmen should keep in mind to make the process easier.

In This Article:
This guide highlights what to expect when buying a yacht, thoughtful questions you should ask, and how buying a used boat differs from purchasing a brand new vessel.

Use this information to help you prepare for your next purchase.

Looking to buy a pre-owned model? Let our checklist for buying a used boat steer you in the right direction.

  • What to expect in the boat-buying process including sales contracts, escrow, down payments, financing options, and insurance.
  • Questions to ask when buying a new boat.
  • Questions to ask when buying a used boat.
  • The differences between buying used vs. new, including information on brokers, aftermarket warranties, inspections and acceptance policies.
  • A used boat checklist to guide you through the process.

What to Expect

How Do You Plan to Use It?

Defining your mission statement, or how you plan to use your watercraft, is the first step in the boat-buying process.

"People buy these types of products because they have a vision for what they want their leisure time to be,” says William Morong, CEO of Yachting Solutions. “This is a vehicle to help them get there.”

William Morong

First Hand Research
First-time boat buyers tend to have preconceived notions about the boat they think they want and how they will use it. Before settling on a specific brand, model, size, or type of yacht, try to attend a few boat shows, view dealer demos, or go on a day charter to learn about the different boats available.

What Does Your Lifestyle Require?
You should also consider important factors like:

  • Activities: The types of activities you enjoy, such as watersports, coastal cruising, or off-shore fishing.
  • Size of Your Group: How many passengers you plan to have on board, including you, your family, and any guests.
  • Space You Need: Which size range and boat length offers the space you need.
  • Amenities:What amenities will make trips more comfortable and enjoyable for you and your family.
  • Seasonality: What times of the year you plan to use the boat, and how long your voyages will last.
  • Storage: Boat storage options, including boatyard or marina storage, plus indoor vs. outdoor storage.
  • Transport: How you plan to transport the boat, whether via trailer or a certified marine transportation company.

Value of a Good Broker

Once you’ve fully defined your mission statement, talk to a dealer or broker. Sometimes, the boat you're envisioning isn't the one you need to achieve your yachting goals. Whether you’re buying used or new, brokers and dealers can guide you through the process of purchasing a luxury boat that you, your family, and your friends can all enjoy.

It's important to remember that buying your first yacht is the best way to learn if a particular vessel is right for you.

“When buying your first boat, you’re probably not buying your last. Be thoughtful about how you are going to use the boat but, at the same time, [you should] buy a boat, use it and see what you like and what you don’t like.”

Robert Chace, Sales Director at Yachting Solutions.

Contracts & Escrow

What's in a Contract?
Sales contracts are legally binding, written agreements that outline all boat buying terms to protect the buyer's interest. Contracts spell out the buyer and seller’s obligations, a description of the boat, purchase price, deposits, boat condition, warranty, and the time frame of the sale.

Contingencies
You should also include certain contingencies in your contract to ensure that the sale hinges on buyer satisfaction.

Good Faith Deposits
Another important part of this purchase agreement is a good faith deposit. Boat buyers make this payment into an escrow account to show their commitment to purchasing their chosen watercraft. Good faith deposits protect the seller from having to pay more upon default of the sale and protect the buyer by ensuring that the boat cannot be sold to a higher bidder once their offer is accepted.

Deposits for Used Boats
For used boat sales, you’ll give your broker 10% of the purchase price, which then goes into their escrow account. If the boat you want to buy is in storage, you can agree to an escrow holdback that will pay for any repair needs that you discover upon inspection once the boat is available. Be sure to specify the issues and maintenance costs you're willing to cover in your sales contract.

Down Payment

Whether you’re buying a used boat or a new boat, most lenders require a down payment between 10 and 20%, depending on the selling price of the boat. Make sure you have this down payment ready at closing. As with any loan, the higher down payment you make, the lower your monthly rate is likely to be.

Financing Options

Even if you have the cash to buy your boat now, financing has many benefits. You might be able to set sail in a more expensive dreamboat if you finance the vessel rather than buying it outright. Before purchasing a yacht, calculate the total price of the boat, maintenance, repairs, storage, insurance, and fuel. Financing can give you money to fall back on when covering these additional costs.

Lenders
Financing a yacht is like getting a loan on a new car or signing up for a mortgage. Once you determine the yacht you want to buy and have the purchase price, you can choose a lender. Lenders consider your credit score, debt to income ratio, job stability, and net worth to determine whether you qualify for a loan.

Someone looking to finance a used or new boat can try:

Financing Options

  • Financing through a boat dealer
  • Taking out a bank loan
  • Getting a loan from a lender specializing in marine financing
  • Dealers & Loans
    Dealers have plenty of experience setting up boat loans and can offer guidance to make the process of buying your new boat as easy as possible. However, if buying a used boat, you might want to get a personal loan from your bank for potential tax benefits and a lower interest rate. Meanwhile, a marine lender could help you arrange a lower down payment or create a monthly payment plan.

    Getting Boat Insurance

    Insuring your boat protects your investment and offsets the risk of operating a boat to protect you and your loved ones in the event of a boating accident. Many banks and marinas place insurance requirements on both buying a boat and storing it. To verify the boat insurance requirements in your state, contact the state marine board. Your insurance policy may include:

    Liability
    Pays for repairs to someone else’s property damage or medical bills in case of an accident.
    Uninsured Motorist
    Covers your injuries or passenger injuries caused by another boater without liability insurance.
    Collision or Comprehensive
    Serves as coverage for unexpected events such as theft or severe weather, as well as collision with another boat or object such as a dock.
    christopher-kemp

    Learn all boat insurance options with Christopher Kemp., Finance & Insurance Director, at Yachting Solutions.

    Understanding Boat Insurance

    What to Look for When Buying a Boat

    According to Morong, “Buyers don’t always understand what’s involved in the process of the transaction.” This lack of understanding can result in some missteps and unwelcome surprises during the process of buying a boat.

    Questions to Ask When Buying a New Boat
    Asking your dealer or broker the right questions can help you understand how to buy a boat and avoid making common mistakes.

    There’s a wide variety of new boats on the market, some more complex than others. And while impulse buys can sometimes lead you to the vessel of your dreams, you should still consider asking questions about a new boat before you buy it.

    The following list contains questions you should ask and what you need to know before buying a boat:

    What to Ask About

    What warranty does the boat have and how long is it for?
    Each new boat comes with its own protection plan, and knowing the exact terms and coverage guidelines for each warranty can help you decide between brands.
    How much maintenance does the boat typically require, and what does the upkeep entail?
    You can use a ball-park estimate on typical maintenance and repair costs to help decide on a boat that’s within your budget.
    What kind of fabrics and materials are on the boat?
    Your boat's interior and exterior design should be able to hold up during storage and withstand the conditions and climates you plan to travel through. High-quality materials tend to be more durable and longer-lasting, allowing you to get several seasons, many years, or even a lifetime of use out of your boat.
    What are the financing options?
    Once you learn about the financing options your dealer offers, you can compare them to a loan from a local bank or other financial institution to make sure you're getting the best possible deal.
    Am I able to take it for a sea trial?
    Taking a boat for a sea trial is exactly like test driving a car. You'll be able to take the vessel out on the water and get a feel for how it handles before you decide to buy it. If a seller refuses sea trials, you may want to consider buying a boat elsewhere.

    Differences in Buying Used vs New

    “I find that new boat and used boat buyers are generally predetermined,” says Morong.

    Some buyers want everything brand new, while others prefer paying a lower price for a used craft, vowing to fix it up, and never buying new again. In most cases, the decision between new vs. used depends on each boater's experience with the boat buying process.

    According to Chace, first-time boat buyers should lean toward buying something as new as possible.

    “You want to make your boating experience more enjoyable and as stress-free as possible,” he says.

    A new boat is less likely to have the issues that often come with a pre-owned model. Also, buying a new boat ensures that the craft gets proper care and maintenance from the beginning.

    Less Stress on the Water
    With new boats, there are usually no negative surprises. You don’t have immediate maintenance costs, newer designs are more efficient, and you can upgrade them to suit your unique style. On the other hand, used boats in good condition are lower-priced and offer a larger selection to choose from. Depending on what you're looking for, one may be a better option than the other.

     

    Questions to Ask When Buying a Used Boat

    Buying a pre-owned boat often involves more legwork than purchasing a brand new yacht. Make sure you’re working with a seller or broker who understands your needs and won't try to overcharge you or pressure you into choosing a new model that's outside of your price range.

    When buying used, some questions you might want to ask include:

    Why are you selling the boat?
    Many boat owners sell their current yachts because they want to upgrade to a larger vessel or downsize to something smaller. If the seller gives a vague or unclear reason for wanting to sell the boat, it could be a red flag denoting some mechanical issues or extensive damage that might cost you down the line.
    Is the boat still under warranty and is the warranty transferable?
    Finding out whether there’s a transferrable warranty on the boat could make your decision to buy easier. You should also ask about the type of warranty and what it covers before getting an extension.
    How many hours has the motor been used?
    Hours on a boat motor are like miles on a car. Ask the broker or seller what type of engine the boat has, and see how old the motor is compared to the boat itself. In most cases, the fewer hours on the engine, the better.
    How often did you service the boat?
    Make sure the previous owner performed routine maintenance and got the motor serviced after every 100-hour interval or at least once a year. Check for any gaps in the service record if the seller provides it. Or, get the VIN of the boat and motor and ask who serviced it so you can call the shop itself.
    How and where did you store the boat?
    Storing a boat in a garage or under a weatherproof cover protects it from the elements. Meanwhile, there may be engine wear or water damage if the seller stored the vessel in saltwater. Make sure the seller stored the boat properly.
    What problems has the boat had?
    Almost all used boats have some small issue or quirk. However, it's important to ensure that any problem with the craft is an easy fix that won't turn into a huge disaster in the future. Ask the previous owner about any issues they've noticed, and consider each one before deciding to buy.
    Has the boat or motor had any major repairs?
    The engine is often the greatest expense on a boat, so you'll want to make sure it won’t have reoccurring issues. Ask for repair records and, if possible, talk to the mechanic who serviced the boat.
    Are you the original owner?
    Knowing how many people have owned the boat before you offers insight into how well the previous owners took care of it. It can also tell you whether the warranty is still valid since most transferrable warranties only cover a second owner.
    Will you do a sea trial?
    If the owner lets you take the boat out on the water for a test drive, be prepared to make a deposit. However, if the seller tries to talk you out of it or doesn’t allow sea trials, it could be a sign that the boat is not as seaworthy as promised.
    How and where did you store the boat?
    Storing a boat in a garage or under a weatherproof cover protects it from the elements. Meanwhile, there may be engine wear or water damage if the seller stored the vessel in saltwater. Make sure the seller stored the boat properly.

    Using A Broker

    When buying a used boat, it's a good idea to go through a broker. Brokers are sales consultants that work like real estate agents; only they’re more involved in making sure you buy the best boat for your lifestyle.

    “What really makes the difference is finding a broker that you relate to and feel is knowledgeable enough to represent your interests,” says Morong.

    Brokers work on commission, typically charging 10% of the sale price. To find your ideal yacht, a good broker will ask questions about what type of boating you enjoy and where you like to travel. They also negotiate prices and contracts and handle the sales process until closing. Find a Certified Professional Yacht Broker (CPYB) online or ask for recommendations around a marina or boatyard.

    Warranty Extensions on Used Boats

    “New boats are brand new with a full factory warranty. You can feel comfortable buying the boat at its sales price. In a used transaction, it’s buyer beware,” says Morong.

    Some warranties are only transferable to the second owner, who receives the remaining time on the original coverage plan. Unlike a car, only individual parts of the boat are under manufacturer warranty, not the entire vessel.

    Aftermarket
    While the lifetime hull and deck warranties from most manufacturers are promising, these aren’t what typically fail, according to Morong. Plus, manufacturer warranties leave the boat owner with certain costs not covered under the contract. Therefore, you may want to consider aftermarket warranties when buying a used boat.

    Extended warranties are available through third-party administrators that you can find through your broker or dealership. Aftermarket warranties are service contracts that provide peace of mind while cruising the coast, traveling long distances, or storing your yacht. Generally, they cover both the repair costs and the labor.

    Surveyors and Inspections

    Professional inspections are crucial when buying a home, and buying a used boat requires the same due diligence. Your broker usually provides a list of professional, certified boat surveyors that they've worked with before. However, it's up to you to compare rates for each surveyor and schedule an inspection.

    Value of Surveyor
    A surveyor checks for issues with a vessel's water intrusion, electrical or plumbing, mechanical, and other related systems. Having the boat inspected protects buyers from discovering issues post-purchase that were undisclosed in the sales contract.

    “It’s your job as the buyer to find out what’s wrong with that boat,” says Chace, “so you need to hire people to do that.”

    When buying a used boat, you want to make the sales contract subject to a(n):

    • Appraisal
    • Mechanical Inspection
    • Engine Oil Samples
    • General Survey and Visual Inspection
    • Sea Trial

    It's important that the surveyor inspects the boat for specific damages as well as considering its overall condition. Some surveyors may lack the necessary certifications to inspect a particular engine or mechanical system, so you should consult the International Association of Marine Surveyors or the Society of Accredited Marine Surveyors to find a professional with the skills you need.

    Policies of Acceptance

    With a new boat, the choice is simple: will you buy the boat or not? However, with used boats, there are two different kinds of acceptance in the brokerage world. After you receive the results of inspections and take the boat for a sea trial, you can decide whether to accept the boat as-is or under certain conditions.

    Acceptance As-Is
    If you choose to accept the boat as is, it usually means that the inspection results were free of any major issues or repair needs. As such, you agree that you will not ask the seller to make any additional repairs or negotiate a new price.

    Conditional Acceptance
    Those who are unhappy with the survey results may choose to accept the boat under the condition that the seller makes specific repairs or reduce the price to compensate for the issues found during the inspection. If you choose this option, you will have to renegotiate the terms of sale.

    A potential buyer might decide not to buy a used boat if they cannot get the financing, feel uncomfortable about the survey results, or didn’t like how the boat felt during the sea trial. If you do not buy the boat, you'll receive a refund of your escrow money. However, you'll still need to cover the cost for the inspections, launching the boat for the trial, and docking it afterward.

    Buying A Boat Checklist

    Before buying a new boat, you'll want to be sure that it has all the amenities and features you're looking for. Make a list of everything you want, and let the dealer guide you through purchasing your new vessel. If you're in the market for a pre-owned craft, use this helpful checklist for buying a used boat to ensure that the process goes as smoothly as possible.

    Work with a Broker

    Choose a broker you trust who can help you find a boat that meets your needs and suits your vision.

    Find a Used Boat for Sale

    Once you've found one or more boats you like, ask questions about each vessel to learn important details about their location, service records, reason for sale, etc.

    Make an Offer and Deposit

    Make an offer on the boat you like best and ensure the sales contract is subject to sea trial and inspections. Have 10% of the sale price ready to put in escrow with your broker.

    Sea Trial

    When conducting a sea trial, have the seller show you all features of the boat. Ride long enough for the engine to warm up and see that all systems work including electrical, mechanical, plumbing and more.

    Survey & Inspection

    Set up all necessary inspections with certified marine surveyors who can provide in-depth information about the boat that you may not have noticed during the sea trial.

    Accept or Reject

    Depending on how comfortable you feel about moving forward with the purchase, you can accept the boat as is, reject it or conditionally accept the vessel pending survey results.

    Storage & Transportation

    If you've accepted the vessel, have storage and transportation for the boat arranged before closing and delivery.

    Insurance

    Decide what type of insurance you want on your used boat and ensure the boat has coverage prior to closing.

    Closing

    Once you accept the vessel, you can complete all paperwork and take possession of the boat. Have the title transferred to you as owner. This is also when you should make your down payment of 10-20%.

    Buying A Yacht or Boat You Love

    Buying a boat is a lengthy ordeal and a huge financial commitment. However, it's also an investment toward fun family vacations, coastal cruises with friends, or relaxing solo fishing trips. While the process can seem arduous, many first-time boat buyers find that it's all been worth it once they “get out there and get on the water,” according to Chace.

    Whether you're a first-time buyer or a returning customer, buying a boat is about following your vision and learning through trial and error what it takes to achieve it. Taking the boat buying process step-by-step with the right dealer or broker can help you find a yacht you love that will last you throughout all your waterborne journeys.

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