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Are boat auctions a good way to
find a great deal on a used boat? Having managed a few
boat auctions myself, I know a bit about their strengths
and weaknesses. If it's a real auction, there's no way
of knowing how the bidding will go. It may be heavy, in
which case it drives the price beyond reasonable; the lighter
the bidding, the better the chance of getting a low price.
The volume of bidding usually depends on the quality or
desirability of boats being offered.
Unless a boat is a really hot item such
as a Bertram, Hatteras or Viking, bidding on most boats is
likely to be rather sparse. On the other hand, boats that
are "oddballs," that
is, boats that are not popular or well known often go at very
low prices.
To begin with, one needs to understand
that the purpose of an auction is rarely to merely dispose
of assets. Its usual purpose is to attempt to obtain the highest
possible price, so the likelihood of a great deal is slim.
Secondly, most auctions I've seen aren't
true auctions but merely a secondary market with unusual selling
conditions. One of the best known boat auctions is National Liquidators
located in Ft. Lauderdale, a firm I've had many dealings with,
and from what I can see via an Internet search, the only one
of any standing. There are lots of wannabe "auctions" that
have a few boats.
The idea of auctioning a boat is not an
easy process due mainly to the difficulty of inspecting the
boat since smart buyers always get a survey after making an
offer. Obviously, an auction makes this difficult, if not
impossible. National Liquidator''s web
site says nothing about "surveys" but if you go
to the "services" section,
you'll see what amounts to the potential of getting a survey
accomplished. They do make it possible to do a survey but you'll
have to pay $6/ft. for haul out and $500 for sea trial in addition
to the surveyor's fee. I've
done quite a few pre auction surveys and have had little difficulty
other than being pushed into time constraints.
Back to the question of whether it's really an auction. My answer
is no, it's not. The reason is to be found in the description
of the bidding process:
"Yacht and boat auction offers are cut off and opened on Monday at 4:00pm Eastern Time. Bids are sorted and the high offer on each vessel is submitted to the bank, U.S. Marshal's
Service or vessel owner on Tuesday mornings. Responses typically occur
within 48 hours. The
seller, at its sole option, may accept or reject the offer or make a counter
offer."
Note the last sentence there. While the setting of minimum bids is commonplace, the option of the seller to reject a bid or make counter-offers is not. That last sentence negates all claim to being an auction, turning it into nothing more than an unusual boat market.
Nor is it unusual to find "auction" boats
listed on brokerage sites.
Does that mean there aren't good deals
to be had? No, it doesn't, and I can testify that I've seen
a few, particularly in times like these. But to find one will
take concentrated effort and a lot of time. For starters,
one has to be patient, and that's hard to do and also expensive
when you're a long way off. Repos are usually neglected boats
so the chance of finding a "turn key" boat is not
good; they've usually got problems, either large or small.
One way to handle this is to make a deal
with a surveyor who is nearby and pay him a reasonable fee
to go over and briefly inspect boats of interest that come
up, just to let you know if its junk or a gem. You'll probably have
to repeat this a number of times before finding something satisfactory, but
it will save time and expense. On the positive side is that since this is
not a live auction, it's not subject to the sort of irrational bid-up psychology
that goes on with live auctions. On a sealed bid basis, other bidders aren't
privy to other bids.
What are the chances that the seller counters
a bid? I don't know, but it
sure makes it hard for the auctioneer to claim he's having an
auction when the seller turns it into nothing more than the usual
selling process. However, it's reasonable to assume the odds
are greater when the "accepted" bid -
that is, the one to be countered - is close to the stated minimum.
Now, for the really big question: Are good
repo deals turning up? While I can't claim to have made a
serious study, I have done some comparisons.
'05 Sea Ray 360 SunD min bid $185k;Yachtworld
asking range $229 - $299
'05 Sea Ray 390 MY min bid $330k; YW asking range $299
- $419
'04 Meridian 490 min bid $292k; YW asking range $379 -
$439
'04 Formula 370 min bid $180k; YW asking range $150 - $199
'02 Riviera 40 min bid $275k; YW asking range $379 - $439
As you can see, the spread between minimum bid and lowest asking price at Yachtworld is not great. This indicates that while a lot of boats are for sale, there is still not a lot of distress.
What I see is mostly possible fair deals with a sprinkling
of possible good ones. I still think we're far more likely to see better
deals come March/April and later when there will be even more boat repos.
In summary, auctions are unpredictable; there are bargains
to be had, but they don't come easily. The key element is time. If you are diligent and willing to spend the time watching offerings an are patient enough to place numerous bids over a period of time, chances are you'll eventually hit the jackpot. On the other hand, it is very unlikely that you'll
get exactly what you want, and therein lies the cost of the discount. |
