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We
hear this statement a lot, but the reality rarely lives
up to the claim.
Typical Situation: After signing
a contract, a client arrives in town from out of state
for a survey. He was told by the buyer that the
engines were recently overhauled. Upon completion of the
survey, the buyer is told by the surveyor that there is
no evidence of recent overhauls. The engines are rusty,
there's no sign of a bolt having been turned. Maybe there's
some sign of recent spray paint activity of the hit and
miss variety.
Or worse yet, the purported overhaul
consisted of a cylinder head overhaul, or
repair of some other unfortunate condition.
Possibly the "overhaul" consisted
of nothing more than repair of a faulty condition, thus
raising more questions than it answers. Was it an overheat
condition? Was all the damage repaired, or is there some
remaining? Is it a cover up for yet a larger problem?
The buyer is at best very disappointed,
at worst quite angry at the broker or seller for misrepresenting
the condition of the engines. He walks away in a huff
after having traveling many miles, spent a lot of money,
and wasted his time.
This happens so often that I thought
I'd address the issue and maybe save you some grief.
Rule Number One: There is no such
thing as an overhauled engine until such has been proven.
Rule Number Two: It can't be proven
unless the seller is willing to provide detailed invoices
by a reputable repairer that actually represent what was
done.
Rule Number Three: Hour
meter readings mean nothing. We just ran into a case where
the engines were represented as being recently overhauled
when the only thing the owner did was to install new hour
meters. That was what was being passed off as overhauls!
Yes, that constitutes fraud. But unfortunately, too many
people are willing to engage in that sort of misrepresentation.
If a seller has had legitimate overhauls
done on the engines or any other major machinery, he should
be more than happy to provide you with a copy of the invoice.
Wouldn't you? But if there is some reluctance to get them
to you, or some stalling, then chances are you are being
lied to. And to make a deal on a boat under these circumstances
is courting disappointment.
If a seller or broker is representing
machinery as recently overhauled, be sure to get the invoices.
If the seller is reluctant to provide them, then either
take a walk, or be prepared to receive bad news.
Most reputable brokers won't make these
representations without themselves verifying the facts.
Legally, they can be held liable if the claims are false.
Quite a few brokers that we know will ask for copies of
the bills themselves before sticking their necks out with
such an advertising claim. That should tell you something
about how perplexing this issue can be.
When You Do Get Invoices: When
was the last time you saw a $10,000 invoice with no details
included? A reliable document is one that contains an
extensive parts list that tells you exactly what was done.
Bills that contain only lump sums, lacking in parts list,
or are hand written on blank forms without an imprinted
company name, or other such irregularities should be viewed
with suspicion.
Recent Overhaul Affects Sale Price
As you know, $50,000 invested in refurbishing any part
of a boat won't increase market value directly proportional
to that amount. Fresh engine overhauls, of the variety
that can be documented by invoices, will raise the price
significantly. About 10-15% on average, though this can
go higher depending on desirability of the vessel, and
it's age. Conversely, a pair of clapped out engines will
reduce the price proportionally by the cost of overhauling.
Part II: What Does an Overhaul Entail?
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