Features June 2001 Issue

Special Boatbuying Section:
What’s She Worth?

A ‘test’ of BUC and NADA price guides suggests you can arrive at a more accurate price without spending big bucks on these books.

Figuring out the proper market price of a used boat can be tricky, whether you’re selling or buying. 

It’s not too different from pricing a car, a house, or any other big-ticket item. The proper market price for a given make, model, and age of boat is, of course, the highest price that the market will bear. However, this price may vary widely depending on the boat’s location, condition, “curb appeal,” and builder’s reputation. And just as with a car or a house, unless you’re knowledgeable about all the factors involved, you’re almost sure to leave money on the table, whether you’re buying or selling. In the boat buying and selling game, knowledge is power.

So how do you determine an accurate market price (or more precisely, the correct range of market prices, since boat pricing is an inexact science) for a boat of a given make, model and age? There are three general methods:

Use a boat broker, and rely on his advice on pricing, whether you’re selling or buying.

Make an informed estimate of price on your own, using classified ads and other information as points of reference.

Use price guidebooks, such as the BUC book or the NADA Blue Book.None of these methods is perfect. Each has its benefits as well as its shortcomings. Each method is discussed below.

Rely on a Boat Broker?
If you’re buying a boat through a broker, you should assess the market on your own before negotiations begin, since the broker by his very role is a natural advocate of the seller, not the buyer. But even if you’re planning to sell a boat through a broker, you may want to make an informed estimate of price on your own—as outlined below—rather than simply accepting the broker’s suggested offering price. It’s one way to assure yourself that the broker has your best interests at heart, and that your boat won’t linger unsold for months due to overpricing.

As part of our research for this article, we visited with several highly experienced brokers at the last St. Petersburg Sailboat Show.

For starters, we asked Ed Massey, head of Ed Massey Yacht Sales, a five-broker office in Palmetto, Florida, to tell us how he prices a used boat. He said: “We might use both BUC and NADA price guides in determining the value of used boats, since they’re sometimes different from each other. But each time we want to look at valuing a boat that somebody wants to list with us, or if we’re considering a trade-in boat, we need at least three or four reference sources. So we go on the Internet and do a BUC.com search, a YachtWorld.com search, a BoatTrader.com search, and others.

“There’s no information on what boats would have sold for, only on what the asking price is. We’re an industry of very little after-sales reporting. So you have to take a universe of input, and some practical know-ledge and some common sense.

“We’ll do the several searches, and then all of the brokers in our office, who are all quite long on experience, will sit in a group and talk about the boat—its current appeal in the market, what its historic trend is to our best knowledge. Then we start pegging a price.”

We also talked to Jopie Helsen, head man at another brokerage firm, Sailor’s Wharf in St. Pete. His information was similar to Massey’s, but he said: “The pricing in each region is different, so we look at how many boats of a particular model are out there. For example, we might say that for the particular boat model a customer wants, there are only four in the whole United States for sale at this time, and such-and-such is the asking price, and the boat the customer wants fits right in.

“But it may happen instead that just in the southeast there might be 30 boats of a certain model for sale, and then it gets a little tricky. Then we call up a number of listing brokers. We find that even competing brokers don’t mind sharing information with us. We ask them questions like what do they think their boats will sell for, what’s the last offer, what was turned down, and how long have they been on the market.”

We asked Helsen whether there was a more-or-less standard or typical percentage between asking price and expected selling price, and how closely he thought the BUC guidebook listed prices related to actual selling prices.

He responded that it depended at least to some extent on the state of the economy. “Back in the early ’90s,” he said, “it was a buyers’ market, and boats were selling for 15% to 20% below the BUC prices.

“But now, the economy is good, and it’s a seller’s market. Selling prices are very close to asking prices, sometimes only 1% or 1-1/2% below, and most boats are within 5% of the asking price. Good clean boats are selling higher right now than the BUC listings. Fixer-uppers are not. People just don’t want to be hassled; they don’t want to take the time to fix up a boat.”

Like most of the other brokers we talked to, Helsen tends to not bother with smaller and older boats. “We try not to deal with boats under $50,000, because our advertising and everything else is geared heavily toward the bigger boats,” he told us. “However, if we have customers that we’ve dealt with before, we will deal with them. So we have listings that go down to, maybe, $30,000. But we don’t go after them.”

Make Your Own Informed Estimate?
You can use classified boat ads to establish the market price for the particular make and model you plan to buy or sell. But for purposes of market valuation, not all classified ads are equally useful.

For example, the broker ads tend to be on the high side compared with sale-by-owner ads, perhaps partly because there’s a commission that must be deducted from the seller’s net proceeds. For the same reason, broker ads are often (though not always) confined to boats starting at $25,000 or $30,000, leaving the cheaper boats to be sold privately.

For another example, the ads in national or international magazines like Cruising World, Yachting, and SAIL all must be submitted a month or more ahead of when they’ll actually appear. Therefore the lag time between placing an ad and selling a boat via these mags is usually long. So for small or moderately sized vessels, try using the Internet to check current asking prices.

The Internet works well if you’re trying to establish the market price of, say, a Catalina 30. That popular design is sailed on both coasts from Canada to Mexico, and there are a goodly number for sale in almost every area of the US. For such craft, look in regional boating newspapers, like Soundings on the East Coast or Latitude 38 on the West Coast, which generally have a large volume of ads for boats “for sale by owner.” Both offer ads in their hard-copy editions as well as on their websites— (www.soundingsonline.com and www.latitude38.com).

Prices for a given make, model, and year can vary widely. To avoid undue confusion in assessing which prices represent the “real” market for whatever make and model you’re buying or selling, we recommend that you construct a chart similar to Fig. 1, “Prices for Used Catalina 30s.” This chart is based on all the prices for used Catalinas we could find on the Internet in late December, 2000.

In making your chart, look at all model years, not just the particular year you’re interested in. That gives you the opportunity to spot trends you might not otherwise notice, such as how fast your brand’s prices decline due to the depreciation that comes with aging. It’s safe to ignore any small differences in ads related to equipment such as a roller furling jib, VHF, GPS, or depthsounder. However, do distinguish between gasoline and diesel-powered vessels. Gasoline-powered auxiliaries in sailboats are in wide disfavor these days.

How can such a chart help you? Say you want to determine the market price for a used Catalina 30, built in model year 1996. From Fig. 1, you can see that there are no 1996 models advertised at the moment. There are a couple of 1997 models, though their asking prices ($72,000 and $74,000) seem too high, given that (a) a brand-new 2001 boat show boat, four years newer, can be bought for about $75,000, and (b) depreciation reduces the value of this size and type of boat by about $3,000 to $4,000 every year.

The circled dots on the chart are asking prices, and the diamonds are average selling prices. The diamonds are inserted along a smooth path, based on the idea that selling prices may be as much as 10% or more below asking prices. Having constructed the chart, you can then deduce that the selling price range for a 1996 Catalina 30 would appear to be around $59,000… if one were available. A boat in rare “mint” condition might be more, and a beaten-up one might be considerably less.

This method of estimating market price may work for the Catalina 30, but what can you do when you can’t find enough classified ads for the boat make and model you have in mind?

For example, if you’re in Florida looking for a Marshall 18 catboat, you may not find any advertised locally, since the boat is very popular in the northeast, but not particularly so in Florida. But even then, Soundings probably isn’t the best place to look. For vessels like the Marshall 18, a “cult boat” highly prized by a relatively small group of aficionados, the best place to look is the classified ads published by the Catboat Association, in their quarterly newsletter and online (www.catboats.org). Many other one-design class associations and owner groups list used boats (including other “cult boats”) for sale on the Internet.

For another example, if your boat had a relatively short manufacturing run and is no longer built, but you know the new-boat price for a year when she was built, you can construct a price guide for used boats even when there are no current ads.

Let’s use an example of a Pearson 39, a boat originally introduced in 1969, then completely reconfigured and reintroduced in 1986. Pearson went out of business shortly thereafter, but production continued on and off well into the 1990s under Cal-Pearson, a new company that bought the molds for the Pearson 39. But in the late 1990s, production stopped, probably for the last time.

Let’s say you want to buy one of these Pearson 39s. You would like the 1986 or 1987 model, most of which came standard with two heads and a 45-hp Westerbeke diesel, but you’ll settle for the 1988, 1989, or 1990 model with one head and a 33-hp Yanmar diesel if necessary. What price should you be prepared to pay?

You can establish a used-boat price by starting with an actual new-boat price, if you happen to have one, say from an old boat-show brochure. For example: The new-boat price from Cal-Pearson for the 1997 model year (in May 1997) was $174,900 without sails or make-ready; with these items and some electronics, we’d estimate that a typical new-boat sailaway price would be about 10% higher, or about $192,000 for the 1997 model.

Using figures from Fig. 2, “Consumer Price Index (CPI-U),” we can calculate an estimated price in inflated (year 2000) dollars:

172.2 (CPI-U in 2000)/160.5 (CPI-U in 1997) x $192,000 = $206,000 in today’s dollars.

If we accept $206,000 as being a good estimate of today’s theoretical new-boat price, then we can use Fig. 3, “Average Asking Prices of Cruising Sailboats as a Percent of New Price,” to estimate how much used Pearson 39s should be selling for. This set of data was constructed using a variety of asking prices for various types of sailboats. The steps in using this system are as follows:

1. Decide what category your type of boat is: “low end,” “mid-range,” or high end.” For example, we would call Hunter and Catalina “low end,” Pearson and Sabre “mid-range,” and Hinckley and Alden “high end.” The better the quality, the slower the rate of depreciation.

2. Find the value for “percent of new price” from the table. For the model years we mentioned, the “mid-range” values would be: 1986 = 48%; 1987 = 51%; 1988 = 54%; 1989 = 57%, and 1990 = 60.5%.

3. Convert these percentages to dollar values by multiplying by the new price in current dollars. You’ll get the following figures:

1986: 48% x $206,000 = $98,800
1987: 51% x $206,000 = $105,100
1988: 54% x $206,000 = $111,200
1989: 57% x $206,000 = $117,400
1990: 60.5% x $206,000 = $125,000

By checking ads in Soundings, the Pearson owners’ website, and other sites on the Internet, you may note that these calculated prices appear to be close to recent asking prices. For example, in November and December, 2000, we found:

Year - Type - Asking Price - State
1987 Pearson 39 $99,000 FL
1987 Pearson 39 $115,000 NJ
1987 Pearson 39 $125,000 MD
1988 Pearson 39 $135,000 MD
1988 Pearson 39 $125,000 MD
1988 Pearson 39 $117,000 MD
1989 Pearson 39 $115,000 MA
1990 Pearson 39 $129,000 RI

Use Price Guidebooks?
It used to be that you could check market price for boats in any of three paperback price guidebooks. The ABOS/Intertec Blue Book is apparently no longer published, but there are two companies still in business reporting market prices for both power and sailboats. They are BUC International Corp. and National Appraisal Guides Inc. NADA stands for National Automobile Dealers Association. Both these firms offer price listings in two formats: (a) pricey hard-copy data in book form and (b) free data on computer via the Internet.

Both BUC and NADA guides are used by many boat brokers to aid in establishing market values, by some dealers to help determine trade-in and resale values, and by some banks and insurance companies to decide whether a boat is valued too high.

Both BUC and NADA are probably too expensive to subscribe to if you’re only interested in finding market values for one or a few boats. The BUC Used Boat Price Guides costs $183 annually for a three-volume set covering all years, or less if only some years are wanted. The NADA book, published three times a year, also lists new and used prices for cars, trucks, motorcycles, RVs, and manufactured housing. It costs $160 a year for a two-volume set covering all years, less if only some years are wanted.

Many public libraries subscribe to one or the other service, or both.

BoatU.S. also has a website that provides quotes, but you have to fill out a lengthy questionnaire in which you share detailed information about yourself (annual income, age, etc.), submit your request (one boat model and year at a time), and wait for a response. With this system, you’re relying solely on the reputation of BoatU.S. to give you numbers that you hope are accurate. They don’t tell you the source of their pricing data, and they don’t tell you what, if anything, they do with the demographic data they get from you.

Are these price guides accurate? The BUC books say they are “statistically authenticated.” The NADA books are even less specific about accuracy, saying only that “the range of values listed in this guide are derived from the marketplace.”

Both publications claim to have field advisors, who, they intimate, feed them a constant flow of sales data on specific boats. BUC says it has a network of cooperating dealers, brokers, and surveyors throughout the USA and Canada who mail in “boat sales reports” to BUC every six months. NADA has a “Boat Dealer Advisory Board,” the members of which they list in their books in an appendix, and who they thank “for all your expertise in your areas and all the help you have given us to get even closer in today’s changing market.” How faithful and accurate these informants are is questionable, based on the number of flaws we found in a small sample in the data from both. We think that at best the BUC Book is a handy but expensive way to give a very rough idea of boat value, and it can be misleading in many cases. The NADA book is so far off the mark that we don’t recommend its use at all. For details, see below.

Tests of BUC and NADA
To see if BUC and NADA gave useful price information, we “tested” their data against classified ads on three boat models that are popular enough to produce a relatively large volume of classifieds. All three of these popular models have been in production for 23 -38 years, and continue to be produced to this day, so we were able to look at a wide range of ages.

The three boats we chose were the Marshall 18 (introduced in 1962), the J/24 (1977), and the Catalina 30 (in 1974). The Marshall 18 and J/24 have undergone very little change in design over the years, though certainly the older boats tend to lose value due to both wear and tear and outmoded electronics and gear. The Catalina has gone through several facelifts, but most of its basic parameters (major factors in determining a boat’s manufacturing cost if not price) have not varied significantly over the years.

Figures 4, 5, and 6 show graphs of market price vs. model year for our sample of three boats.

All three of the graphs show two things clearly. First, the high and low retail price estimates given by NADA are moderately to severely below the estimates published by BUC. Second, both BUC and NADA estimates tend to be lower—in some cases much lower—than asking prices in the marketplace, as reported in classified ads.

We haven’t delved into why NADA should be so much lower than both BUC and the classified data, for the same boat brands and models, though we think it is something that NADA should be concerned about.

Clearly, for our three-boat sample at least, most asking prices per classified ads are above what both BUC and NADA infer they should be, even after considering that actual selling prices might be 10% lower than asking prices. Note that both BUC and NADA purport to give selling prices, not asking prices. In the case of the Marshall 18 (Fig. 4), asking prices are far higher—from 10% to more than 100% of the “high retail” BUC-projected selling price, and even higher than that compared to the NADA price. Why? One might suppose that the advertisers are overly optimistic, except that three out of the eight Marshall 18s for sale were sold, indicating that sellers’ expectations seem to have been reasonable. Our guess is that the discrepancy is due to BUC and NADA analysts not realizing that the Marshall 18 is a “cult boat,” for which demand exceeds supply, causing prices to stay high.

The J/24 shows an entirely different phenomenon. Judging by classified ads (including ads in the J/24 class website), few boats under 10 years old are for sale, making the market thin and holding prices up. When J/24s get to be about 12 years old, it appears from Fig. 5 that more owners are in the mood to sell, and by the time their vessels have reached age 20, the market is glutted. Even then, the asking prices are typically 20% to more than 100% higher than the BUC numbers, and even further away from the NADA estimates.

How many of the advertised boats actually get sold is another question. J/24s and boats like it generally get sold privately. For one thing, there’s a built-in network of J-boat owners who are generally happy to spread the word through class newsletters and word-of-mouth when a boat comes to market (and that, incidentally, may have limited the number of classifieds we were able to find). Also, even if there were no network, used J/24s are generally too low-priced to attract the attention of brokers, whose small commissions would not be worth the time and ad dollars they’d have to spend.

Another strange phenomenon we noticed, especially on the charts for the Marshall 18 and the Catalina 30 (Fig. 6), are the discontinuities in price for various years. For example, for the Marshall 18, there are no NADA price data for 1995 or before 1971, and no BUC price data for 1975, 1967, or before 1965. In the BUC Book, the price for a 1965 model is higher than for a 1966 model, and the BUC “high retail” price jumps by about 20% from the 1979 model to the 1980 model, and then is reduced by almost as much in the 1981 model, though the low retail prices for these years display a smooth curve. There are other similar discontinuities for other years, and to some extent with the other sample boats.

Based on this sample look at three target boats, plus the brokers’ comments on how the state of the economy can affect prices, it appears that NADA data, and, to a lesser extent, BUC data, are flawed when it comes to standard, brokered boats like the Catalina 30. They’re more significantly flawed where “cult boats” and others that are sold by non-traditional means—like owner’s groups and class organization websites—are concerned. Dealers and brokers have always taken such data with a grain of salt, but today the dose is up to several grains.

Conclusion
You should be able to make a good price estimate on your own without the use of guidebooks, by examining classified ads and/or historical price data. You won’t be able to zero in on an “exactly right” market price, since it’s possible to find two widely different selling prices for virtually identical boats. But if you use the procedures we’ve described, your results should be in the mid-range of realistic asking prices.

Contacts- BUC Research, 1314 NE 17th Ct., Ft. Lauderdale FL 33305; 954/565-6715. NADA Appraisal Guides, PO Box 7800, Costa Mesa CA 92628; 800/966-6232.

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