Together with Ian Sherwood, broker for over 9 years currently working at Burgess yachts, we bring you the top insight tips on HOW TO BUY A YACHT.
Burgess yachts is one of the biggest brokerage houses in the world. They sell between 30-40 vessels per year! Is not only the number of vessels per year, is also the fact that they sell the biggest and highest valued transactions which are completely unrivaled in the industry.
Whilst they may attract headlines for some high profile yacht sales, they are actually a full service yacht company (not only sales but also management and even insurance)
The initial brief
In order for the broker to really understand your needs, he almost needs to psychoanalyze you to truly understand what makes you tick and find ‘the perfect yacht FOR YOU’, it may not be the perfect yacht for someone else, or not even the perfect deal for the broker, but he will bend over backwards to find you ‘the one’.
Ian tells us that ‘Understanding the client is vital but it can be a difficult subject for some people to discuss. The budget is probably the first topic that can be awkward, how much are they willing to spend and the broker has to understand if this is firm or whether there might be a little room to maneuver for the right opportunity. Additionally, I want to know more about the dimensions. If I am told a size, what is the reason for that? Something practical like the dimensions of an existing berth or is it a personal preference or even to allow for a certain feature’.
Sometimes the background information gives you the best picture to move forward. How does the client use their current yacht? Where do they like to cruise and with whom? Can you pick up on the interior style and taste from the current boat to help focus your yacht search.
There are sometimes cultural differences that may also be a factor about why a client is focused or guarded about what they are looking for. But the key is to know what is the trigger point. Some will be brand or region specific as a key factor, others will be driven by price or perceived value.
Buy pre-owned or build a new custom yacht?
After the broker has practically psycho-analyzed you, he will then be able to asses whether there is any yacht available in the market that matches your requests or if it is better to consider building a custom new yacht.
Production vs. full custom
Once you know what you want, it becomes a lot easier to find something that matches those goals. Another important thing you need to ask is whether you’re happy with a production yacht, or do you want to go for a custom yacht. The prices of both differ significantly, and so does their suitability for you.
Production yachts are mass-produced and assembled by factories like Sunseeker, and they start around $100,000 to $5 million. Semi-custom or fully custom yachts are considerably more expensive. A semi-custom yacht averages about $25 million, while a fully custom boat can reach $150 million.
What is more important for you? time or money? this will preclude new yachts from being part of the shortlist.
Traditionally many clients who choose to build a new custom project have previously owned yachts and with this experience they have a clearer list of requirements and can define what it is they want. But a younger demographic of owners that have often accumulated wealth rapidly are bucking this trend and will often commence their yachting experiences by building a new yacht.
Whilst a brand new yacht is often seen as aspirational it is still a sector that is volatile to market pressures. Lengthy waiting periods, rising costs and shipyard capacities are all factors that encourage clients to look at existing yachts in the brokerage market.
THE YACHT SALES PROCESS
OK, you found your dream yacht, now what?!
Once we have a price agreed, we now need the legal teams to create the offer document and although it is based on a standard document, the US and Europe have slightly different templates, it will be tailored to the exact circumstances of this yacht.
A great piece of advice that was given to me early in my brokerage career is to learn where the boundaries are of my role. There is no point in me trying to advise a client on ownership structures or VAT issues for example as there are people far better qualified to do so. So a key aspect of yacht broking is building relationships with industry specialists that can support clients and solve potential obstacle during the sale process.
The Sea- Trial
The first major event will be the buyer’s sea trial. The aim is for the buyer to confirm that they like the yacht and it meets their expectations before they progress any further. It is essentially a snapshot of life onboard when they are the owner. A recent sea trial for a client of mine spent more time at anchor and swimming/having lunch than actually moving, but that is what the client wanted and they subsequently purchased the yacht. The most obvious gauge for me is whether the client is smiling or not during this stage.
Assuming the “test drive” has been a successful then usually the survey will begin. This is the most common example of where a broker can get it wrong. It’s vital that the buyer has the chance for an independent team to assess the yacht condition and her systems and so my role at this point is to remain impartial. I will often be asked to recommend a surveyor or even a lawyer at the beginning of the process and my answer is always to give 3 or 4 options of suitable candidates and then let the client choose, my input has to be to facilitate and not influence the process at this point.
There will be occasions when the yacht dictates who is suitable for the shortlist. In 2019 I sold the most beautiful vintage motor yacht and then it is a very different survey to one which would be required for a modern day fast aluminium high performance yacht, so the survey team have to be fit for purpose. For larger yachts the process may take a team of surveyors 4 or 5 days to complete the inspection and how much detail depends on the client’s instructions. Everything from oil samples and a borescoping the engines all the way to testing the TV system is working in the guest cabins will be conducted and then a report is written for the buyer’s records.
The punching bag moment
If there is any dispute or point of interest raised in the survey, then this needs to be worked through with the owner’s team and then the way forward will be determined. Occasionally this will involve extending the timeframe for the deal to allow for a repair to be undertaken or even amending the overall price of the sale if a significant issue has been discovered. This is when the broker will demonstrate their worth to the client, working as an intermediary and finding a resolution. One of my colleagues in Monaco describes us as needing to be the “punchbag” during this phase. It requires a calm head to mediate and it can be quite a difficult period as emotions are often running high at this point.
The ‘key’ handover
Once the findings from the survey are accepted then it is just the administrative preparation ahead of the sale being concluded. On the actual day there are likely to be two events running simultaneously, a closing meeting with the legal team for each side and then the activities on the yacht. Onboard, documents will be checked for the final time and if the crew are being replaced then this changeover will also occur. Whilst onshore the lawyers will have a protocol written so that we work down the list and tick off the items in sequence, culminating with the release of money from an escrow account and exchange of documents to reflect that the yacht ownership has now changed hands.
and voila!! That is how you buy a yacht! simple right? 🙂
If you want to buy a yacht, contact Ian Sherwood for professional advice, and I’ll guarantee you, he will not only find the best yacht for you but also you will certainly enjoy the process!