www.kp44.org — The official website of the Peterson Cutter Owner's Group
by Richard Meeks
s/v Villekulla - Formosa 46
Seattle March 2002
First of all, I must disclose that I'm a
broker with Windworks Sailing Center in Seattle (OK, so that's a plug). Here is some fact and some strongly founded opinion.
For a long time BucValueŽ was effectively the multiple listing system for brokered boats. They had
a hegemony on the industry in terms of listing and valuing boats, so they
established a fairly large database of SOLD boat prices. Part of the
requirement for brokers to list with them is to provide the actual sold prices of listed
boats. Also included are other things such as the survey valuation
and insurance valuations. From this, from current economic trends in
different areas of the country, from estimating other trends such as
depreciation, and no doubt from other predictive sources of information, BUC has
been able to make pretty accurate predictions of what a used boat would
probably fetch on the market in different parts of the country, and how
to adjust that price for the condition of the vessel. Keep in mind
that the real market value of anything is what people are actually
willing and prepared and intending to pay for it. The best predictor is
what people are actually paying for the item currently.
BUC publishes their conclusions of these
valuations quarterly in the BUC book. It is expensive to subscribe to
get these publications so the general public typically has not had
access, except for those knowledgeable and motivated enough to go the local
library, if that library subscribed. BUC was, and is, the yachting
industry standard "blue book". NADA also publishes one, but
has had a much smaller database of to make its predictions from, so the marine
industry has relied most heavily on BUC. That translates to mean lending
institutions, insurance companies, brokers, and surveyors. You might
notice the logic here in that the very sources of data for BUC are also
using it to place the values in the first place, so it is circular feedback
phenomenon. BUC has had, and continues to have a very strong effect on
market values, it both reflects them and strongly influences them. This
is what you are now accessing from their web site.
Over the last two or three years BUC's
database has rapidly shrunk due to competition from internet services such as,
but not limited to, Yachtworld. Right now, as I understand it, BUC has
about 100 active broker members inputting data. I know that Yachtworld
has 1500. BUC has diminished over the last couple of years (we no
longer subscribe or rely on them for example) because it is not as
easy or effective to use them to list boats. I know that almost without
exception, boats listed on BUC also get listed on Yachtworld. There
are many, many more boats on Yachtworld and other sources than on BUC.
You can easily see what I mean, by going to each site and looking for your
dream boat. BUC is now only looking at a small part of the real
This effects the validity of BUC's
valuations in a huge way. They are significantly off most of the time
now, from what the real market is doing. If I go into Yachtworld to look
at SOLD prices, what I find consistently varies in a SIGNIFICANT way from BUC.
(You can only access that information from Yachtworld if you pay the
subscription which means basically if you are in the business.) However,
lending institutions, insurance companies, some surveyors, some brokers, and
some consumers still rely heavily on BUC to make valuations, consequently it
still has a strong influence. BUC just isn't really very accurate
anymore. NADA is even more inaccurate, and has little influence because
it seldom used.
Practical Sailor did their own research a
few months ago and came to the above conclusion that brokers have been aware
of for some time. They also had some interesting observations concerning
brokers' integrity and the value of brokerage services, as well as some
excellent advice on how to avoid getting ripped off. If you are a boat
owner and don't subscribe, you are making a mistake. As an owner, my
subscription has paid for itself many, times over, year after year. And, no I don't get any commissions from PS, I'm just a fan.
When you do value something via the
BUC site, take it with a lump of salt. Don't be surprised if the
boat prices you actually find on the market vary substantially from what BUC
predicts. The most accurate way to start to make a valuation, is to
look at what asking prices actually are, and find a broker who will share with
you the sold price information from Yachtworld currently, and from other
such databases in the future. Making a valuation is partly
interpretation of statistical data, partly being actively familiar with what
is on the market, partly intuition, partly luck, and largely trial and error.
You put your boat on the market for a price, if it doesn't sell for a while
and you want it to, you lower the price. So what should you pay for a
boat? That depends on what it is worth to YOU. It is even more
difficult to predict what it will be worth to someone else later when you
decide to sell, although that certainly should be a concern when you buy.
Incidentally, there are competitors to
Yachtworld, and at least two other strong contenders for a multiple listing
system are currently being developed and promoted. Things will be
I would like to add that it is a fallacy
that brokers generally try to get sellers to inflate their prices in
order to get more in commissions. More often it is the other way
around. The professional and ethical motivation is to match boats
as quickly and efficiently from people who don't want them, to people who do.
The self-serving motivation for a smart broker is to sell as many boats as
quickly and efficiently as possible at fair prices. This means we are
usually encouraging sellers to lower the price, while at the same time looking
out for their interests in trying to secure the best FAIR price.
The smart ones among us are also sensitive to return business, so it doesn't
make sense to hard sell someone who will later feel like they got screwed.
But just like buying anything else, including boats for sale by owner, beware
of being schmoozed and manipulated by exaggerated claims -"Caveat
Emptor". Brokering is very time consuming and hard work, with
no guarantee of a paycheck or even a job, often dealing with people who expect
you to do for them for nothing, and often dealing with people who assume you
are dishonest and out to rip them off from the get-go. Not many brokers
get rich from it, most of us struggle and drop out, and large numbers (maybe
most?) of us only do it out of our passion for boats and boating and
people. I'm not whining - thim's jes the facks. I love it.
If you do your homework, I believe you
will usually find comparable prices on comparable boats for
sale by owner vs. for sale by broker. Sellers will sometimes try to keep
the price up to compensate for the commission, and that has some influence,
but essentially the market place doesn't care two hoots about the commission; therefore,
either the boat doesn't sell, or the price comes down. Conclusion: the seller
pays for the broker's service. Is it worth it? For some -
yes, for some - no.
Hope this helps.
Richard Meeks, broker than most
s/v Villekulla - Formosa 46