Guide to Buying a Boat in Florida
How to Buy a Boat in Florida
Boat buying can be a frustrating and confusing process. What’s a good boat and what isn’t? What’s the right boat for you? What’s the right price? Do you buy new or used? How do you make sure you don’t get into a legal hassle? Here is a brief step by step guideline on what to expect.
1. How Much?
First decide how much you want to spend or can afford.
Most people pull a number out of the air, without the benefit of professional advice. An accurate source of information is to talk with a marine lender, even if your desire is to pay cash for the boat. A marine lender will go over your financial situation and advise you how much a bank would be willing to lend to you. You can then use this information to set a budget. Armed with this information, you can target your search for potential boats based on a price range that is realistic. You may also find that financing makes much more sense than paying cash. You may find, as many of our clients did, that the boat of your dream is more affordable than you first thought.
GUIDE TO BOAT LOAN BASICS
2. Type of Vessel
Next, determine what type of vessel you plan to purchase – size, draft, type, etc. This is a challenging process and requires a great deal of research and soul searching to zero in on selecting the right boat that matches your plans and budget. Do you really need a bluewater boat if you are only going to be a weekend cruiser? In making the best decision, there is so much to consider. An experienced yacht broker can help you sort through these questions and find the right yacht at the right price. Keep in mind that whatever you buy, someday you will sell. Be certain to consider resale value
The next big decision is new or used? Newer is better simply because maintenance and repairs increases with age. Also, the newer the boat, the more advanced the design and construction. Your choice will be for a given price is to go older and bigger or newer and smaller. Many of the newer boats have more room in a smaller size than some older boats. Everything is a trade off and their isn’t a right or wrong answer. Only you will know what is right for you.
Nothing in the purchase process can substitute just sitting on a potential boat and feeling it. Boat buying is a visceral process. If you are strictly going by logic, purchasing a boat makes no financial sense. Hopefully the joy. excitement and adventure of owning a boat creates priceless memories.
GUIDE TO BUYING A NEW OR USED BOAT
Determine how you want your yacht equipped – electronics, dinghy, davits, generator, air conditioning, etc. You need to set at least your minimum requirements remembering that additional equipment will add to the price of the vessel.
4. The Yacht Broker
You can avoid legal hassles, save time and money by selecting a qualified yacht broker.
Not all brokers are created equally. With thousands of yacht brokers and hundreds of yacht brokerages to chose from, how do you select a good broker and company? How can you feel confident that they have the knowledge, skill and desire to work hard for you?
The selection process has become easier for you. Find a broker that has earned the title of being a Certified Professional Yacht Broker (CPYB). This is proof that a broker has the knowledge, commitment and ethics to earn the highest accreditation awarded in the industry. Less than 100 have achieved this status in Florida. Working with a CPYB is your assurance that you will receive ethical and professional advice and your interest will always be protected.
Preferred Yachts is also a member of several of the premier yacht brokerage organizations. The International Yacht Broker Association (IYBA), Yacht Brokerage Association of America (YBAA) and the US Superyacht Society (USYS) provide professional standards and procedures we follow. These organizations provide numerous seminars each year we attends which enhances our knowledge and professionalism to better service you. Another important benefit to you is the IYBA standardized purchase and listing agreements created. Both these forms are exceptionally well written and fair to all parties.
5. The Offer
After finding a yacht that you like, place an initial bid on the vessel. In making this bid consider the asking price of the yacht vs. published values, comparable recent sales condition of the yacht and items that you wish to add should you purchase it, how long the yacht has been on the market and the owner’s situation, if known. Remember that the first bid must be accompanied by a check or wire transfer of funds representing ten (10%) percent of the bid amount made out to the brokerage’s escrow account. Generally, the buyer will not be asked to place additional funds in escrow if the final sale price exceeds the initial bid price, which it usually does. If your purchase depends on financing, make sure your initial bid reflects this. It is helpful to obtain pre-approval of financing because the seller will want to minimize the time his vessel is off the market and will want to limit the time allowed for financing to be accomplished. There are a number of sources specializing in marine financing. We will be able to furnish you with a list of these to contact.
6. Survey and Sea Trial
Selecting a qualified surveyor is one of most important activity in the purchase process and not all surveyors are created equal. The findings from the survey will determine whether to go ahead and purchase, walk away or renegotiate. Plus this information affects all subsequent events – insurance rates, repair and/or inventory additions, trouble-free cruising and possible future value of the yacht.
So, how do you find a good surveyor?
Your broker may recommend competent surveyors, but should NEVER select one for you. It’s simply a conflict of interest and unethical.
We do not recommend finding a surveyor by using Google to search for marine surveyors. Several surveyors appear on the first page of a Google search because they pay to be there and not because they are good, Good surveyors do not have to resort to this tactic because they are busy. The ones that do are usually new or unqualified.
Make certain the surveyor is fully accredited member of SAMS or NAMS and not just an apprentice. Additionally, he may want to have the surveyor furnish several references for contact. It is helpful, also, to have the surveyor send or FAX a resume of background experience to determine his qualifications to survey the yacht under consideration.
The survey and sea trial (trial run) takes a day. The surveyor arrives early and initiates the survey by a cold check of the engine followed by a thorough check of all systems – electrical, electronic, plumbing, stoves, etc. and a close inspection of the yacht both below decks and topside. He inventories everything (which should be matched with the specifications on the yacht you should receive from your broker). Following this, the engine is started and the yacht motored to a marine yard where she is hauled for bottom inspection. The yacht will then be “splashed” and then taken for a run to determine condition of rudder control, steering and the “feel” of the yacht under power or sail. During the run back to the original starting point following the sail, or during the motoring to the marine yard, the surveyor will run up the engine to her maximum RPM’s careful checking for impeller run out, engine smoke or overheating and engine and shaft alignment and engine mount positioning and wear. After docking following the trial the surveyor will review his findings with the buyer (and seller if possible) and follow-up this oral discussion with a full written survey which usually arrives either by FAX or mail two to three days later. The buyer usually has forty eight hours following receipt of the written survey to accept or reject the yacht. If the buyer signs a rejection, then the down payment is returned. If the buyer signs an acceptance and then subsequently rejects the yacht, the down payment is forfeited.
7. Acceptance of Vessel
Following the Acceptance of Vessel – Once the yacht is accepted the broker, at the buyer’s direction, the closing agent will begin the final preparations to purchase the yacht at the date called for in the initial Purchase Agreement. This person will check liens, prepare Bills of Sale, etc. At the close all these papers will be presented to the buyer and seller for proper notarized signatures. These papers, often called `running papers’ should be aboard the vessel at all times.
All funds due and must be cleared in full at time closing. It is important that the buyer deposit funds either through Wire Transfer or Certified check to the broker’s escrow account well in advance of the closing date.
Buyer will officially take possession of the vessel following closing. Arrangements should be made regarding the vessel’s dockage and boat insurance prior to the close. Unless prior arrangements have been made, the seller is not responsible for dockage following closing.
9. Sales Tax
Following the survey, the buyer will need to arrange for insurance with the coverage effective the day of close. If no Florida State Sales Tax is to be collected and forwarded, then the out-of-state buyer is required to sign a tax waiver attesting that the yacht will be removed from Florida waters within 90 days. You can stay up to 180 days by paying $425 for an extended cruising permit prior to the end of the first 90 days.