Phillip Berman is the president of The Multihull Company and a lifetime catamaran sailor and racer. He grew up racing Hobie Cats in California in the late 1960's and published his first book on catamaran racing at the age of seventeen. Called MULTIHULL RACING THE HOBIE CATS, it was published by Sea ...more
I needed advice, handholding, more advice, and yet still more handholding. I was clueless about marine financing, insurance, flagging, and import documentation rules. I thought it was like purchasing a house. Not so. I can honestly say that without your help, guidance, hand holding, daily calls, and e-mails, I would not be a boat owner today.
~ Carter J. Mills
Lagoon 410 S2
Thanks so much for your commitment and effort to find us the best boat for us in our price range.
~ Jeff and Tracey.
They made research and paperwork swift and effortless for me and the monies worked out in my favor.
~ Keith Miller
I must apologize for this tardy market report as I have been traveling almost constantly the past few months, with two visits to Asia, one to Australia, and a recent trip to France. I write this in-flight on my way home from a survey in Turkey. The reason for all this travel is pretty simple - as the American market softened because of the recession both buyers and sellers of yachts have increasingly turned their attention to a more global pool of buyers and sellers. The Multihull Company has kept pace with this new marketplace by monitoring regional as well as international trends, currency swings, taxation issues on a global scale, advising buyers and sellers of current valuations of yachts now influenced by sales thousands of miles away and more. It has required us to become a global organization with expertise in flagging, de-flagging, closing management, taxation and duty issues in foreign lands no matter how minor.
I had a five-hour stop-over in Istanbul yesterday, where I had a chance to visit what is known as the Grand Bazaar, one of the oldest trading markets in the world. Here you find hundreds of vendors selling rugs, watches, leather goods, textiles, you name it. It is an amazing, colorful place straight from the tales of Aladdin. I had decided to purchase my wife a leather bag at the bazaar, but had been warned that most vendors start about 50% higher in price than what they will finally accept. So the only way to know if you are getting a "good deal" is to find the same item and negotiate on it with several vendors. Well, honestly, it is rather exhausting, but as I think about it now it is actually far easier to establish the fair market value of a leather bag in Turkey than a used catamaran in today's global marketplace. You can walk from leather shop to leather shop pretty fast, and so long as you are comparing the same quality, it really only takes a few hours to establish the right price. If only it were that easy in the yacht business! I spent an entire day, for example, taking a ferry over to a small Greek island to personally inspect a boat we have for sale, take pictures of the yacht for our files and website, and drafting up a report on her condition. And still, there was more work to be done to determine her fair value.
Well, I digress. Suffice it to say that while the internet allows us to share pictures and information with ease, it cannot replace a critical personal inspection. This is why we go to great pains here at my company to establish the true condition of a yacht before we sell her, or before we consider her for a buyer, because condition is hugely important when purchasing a used catamaran. Unless we know the true condition of a yacht we will not even bother to discuss her value with either a buyer or a seller. This is why we have gradually assembled a group of trusted surveyors, brokers and marine industry experts to pre-inspect catamarans for us when we are unable to fly to inspect them ourselves. As I always tell my buying clients, "We first must establish condition, then we can establish price." I therefore never suggest that a buyer flies a long distance to inspect a yacht without first negotiating the price in contract negotiations. After all, if the seller does not agree with our valuation, there is not much point in flying to see his boat, let alone survey it. All that said, one man's 9 is another man's 7 when discussing the condition of a yacht, and therefore, lacking a scale all can agree upon, further problems arise when it comes time to placing a value on any yacht.
So where is the market now? And what can we expect in the near future? Here are my 35,000 foot speculations on trends for buyers and sellers going forward:
1. American buyers remain a bit more tepid than European, Australian, Canadian, South American and South African buyers. Due in part to the weakness of the dollar, and a far more difficult marine lending environment than in years past, many American buyers are either scaling down their budgets or delaying their purchases. Further, because the foreign buyers have been coming to our shores to purchase our cheaper dollar deals, brokerage inventory is thinner in North America than many buyers realize. While many buyers ardently hope the catamaran market is like the real estate market in Nevada or Florida - at the bottom - it is just isn't so.
2. All buyers are naturally and rightfully looking for the best deals they can get. We have found that when we can get a seller to price his boat competitively it will generally sell within four to six months. In fact, when well maintained owner-version cats are priced competitively we are now sometimes seeing multiple bidding situations, which never occurred a year ago. But the asking prices must be clear and away obvious good deals even to the most poorly educated internet self-shoppers.
3. The market at the lower end, cats priced under $180,000, has remained rather soft in the U.S., as these boats are a bit too small and low priced to entice a foreign buyer to cross oceans to buy one. Even if the dollar is 150 to the Euro, the buyer of a 38-foot cat that needs her in the Med is not going to buy one in Florida, even if it is $20,000 cheaper.
4. The market between $200,000 and $600,000 has most definitely picked up in the U.S. as the middle-to-upper middle-class American buyer is re-entering the market and looking for that ideal live-aboard or voyaging cat. They are getting some competition here, however, from foreign buyers who are also looking for that super deal and who can take advantage of our weak dollar. Buyers that assume the catamaran market is not global are making a severe mistake.
5. The market over $1 million has remained strong for the past year as such boats are easily delivered anywhere in the world and these high-net worth buyers will simply go after the best deals they can find.
6. An increasing number of buyers, in part because they are bargain hunters, are self-shopping on the internet, hoping they can "snag" a deal if they work at it hard enough. What has crippled them horribly is they have little idea what a given catamaran is really worth due to the breakdown of reported sold boat figures globally, and also due to the dynamics of the market which are changing very fast. The buyers are further crippled because they have a very hard time understanding what a given boat is worth in the condition it is in. And that too is hard to ascertain from pictures on the internet. Such buyers tend to assume that if they can buy X listed boat for 30% off asking, they must be getting a good deal, but the hard reality is that unless you can establish a basic retail price for anything you really cannot ascertain a good deal from a bad. Some cats are listed at a truly excellent price, while others are listed at wildly speculative prices that should elicit a 30% off asking offer - or lower. How much a seller discounts his boat off asking price is not at all relevant. What is relevant is the relevancy of his asking price to begin with.
7. Because buyers are not particularly versed in what a catamaran is worth, surveyors are also in a difficult situation as they too have no clear idea what X cat is worth in her condition, configuration, location, and for her brand. This produces havoc for the buyers who are relying on them for valuations, and leads at times to buyers rejecting boats they probably should have bought, or, conversely, accepting boats they should not have bought.
1. The good news for sellers is that buyers are definitely back in the market, especially for desirable, well branded, owner version cats that are priced properly.
2. The bad news is many sellers appear to be getting very little or poor advice from brokers on pricing because their brokers are not selling enough cats to advise them confidently on what they should really sells for. I find this to be an especially serious problem for many European sellers because they tend to want to count their costs and bills and tell the brokers what to sell for, rather than discussing carefully with their broker what the boat should sell for. Sadly, fact is, most smaller and non-specialist brokers do not know themselves, so a lot of boats remain on the market far too long at prices that will never allow them to sell. The only hope for many European sellers is that the Euro will fall sharply so that they may again begin to attract a global buying pool. I remain convinced that the most vital thing a good broker can do for a buyer or a seller is help to educate them on pricing. And over the past year that has not been easy at all, even for the best and most active of brokers.
3. New boat sales slumped horribly last year, but are really starting to come back, although many builders are offering strong discounts to encourage buyers to purchase unsold inventory that has built up.
1. I believe the market has turned a small corner and we will find that it has hit the floor on brokerage prices for clean, late model, well branded cats. I do not, however, anticipate a large uptick in sales or buyers in the year ahead. It is neither a bear nor a bull market right now as regards cat sales. But it is a much healthier market than last year.
2. There was a great deal of talk about the debt situation in Greece that produced a strong downward pull on the Euro, and it is hard yet to determine where the Euro will move in relation to the dollar. I do think that if the Euro weakens a bit more, we may start to see some better deals again on brokerage boats in Europe and the French Caribbean, not only because of currency, but because most of these boats were so horribly overpriced that all the buyers in the world avoided them. The sellers are far more ready now to negotiate down their prices after their boats have sat unsold for so long, and this, together with currency benefit, may have an impact on the market in the months ahead. This could present a good situation for non-European buyers to get some nice cats sold in Pounds or Euros. But the difficulty to buying boats in Europe - the re-flagging issues, lease and VAT issues, financing issues, ascertaining condition issues, all make purchasing boats in Europe or the French islands far more complicated and taxing for both buyer brokers and their clients.
I am growing increasingly concerned about firms I am seeing who have purchased tooling and brand names from bankrupt builders. These folks are claiming that they are building fantastic yachts in remote locations in Asia, South America or South Africa and so on. And they may well be, but please be very careful to verify the financial solidity of the builder. Be careful about putting down non-refundable deposits and finally, do not buy a boat from a new builder until you see a model that was actually built from the shipyard that is building your yacht. Please remember that it is well worth your money to hire a marine surveyor to oversee the build of your boat to make sure it adheres to accepted codes and standards. Boat building is a very difficult and trying profession one which requires great skill and attention to detail. I am afraid I have had too many calls lately from people who thought they could navigate these shores alone and have lost millions in some cases as a result.
Well, enjoy your sailing, and do not hesitate to contact me or any of our brokers if you have a question or a need. We try very hard to provide you with a clear understanding of the market as it moves and expands. The bedrock of my company is that we speak the truth because I believe that the growth and very health of our company rests on its ethics and the integrity of its brokers.
These are stand up people, who make a stand up product. I would buy from them again in a heartbeat.
~ Jay Clark, Dolphin 460
I just wanted you to know that your level of service and the high degree of customer satisfaction have made owning my Dolphin a great experience.
~ Daniel Zlotnick, Dolphin