12 Dec 2011
SuperyachtNews.com attends launch of new auction site
By Lulu Trask
SuperyachtNews.com was invited aboard the classic 1975 Camper & Nicholsons 33m Absolute Pleasure on 8 December to attend the launch of TheYachtAuction.com. Surrounded by the high-rise buildings of the capital city, in the urban oasis of the St. Katherine Docks, the founders of TheYachtAuction.com relayed the story of their new online venture.
The online auction company was formed by Allan Fordham with his son, James, broker Andy McDougall of Top Yachts, and John Bailey, CEO of the European arm of Manheim, the largest volume automobile auctioneer in the world. The Yacht Auction’s service is aimed at private buyers and sellers, brokers, and financial institutions. Allan Fordham said the venture was developed “from a broker’s point of view” and was designed for owners who have been “let down by people in the industry.”
Existing yacht auction companies, Fordham surmised, were “in our opinion, not doing it the right way. There should be a more transparent way of buying and selling a boat.” The company believes it removes the disadvantages sellers face in today’s market: undetermined sales period, ongoing costs for the seller, and overall running costs of maintaining an unwanted vessel. Fordham said he believed that today people are looking for “short transaction times, less complications, and cost-effective sales,” which they hope this tool will enable.
The auction process takes place on the website, which is accessible worldwide, and is compatible with the latest hand-held mobile platforms. James Fordham, who took the lead developing the site’s design and technology, said the website was designed “to be very similar to eBay”; bidders can also place telephone bids during the 24 hour auction period, which enables bidders to participate from all time zones.
For each yacht entered into an auction, the seller must pay a non-refundable relative registration fee, and a reserve price is agreed. The registration fee allows the seller to hold another auction within twelve months if the first does not result in a sale. If successful, the seller pays a completion fee to TheYachtAuction.com.
To ensure serious intent, pre-registered buyers must place a 5 per cent deposit on the guide price of the yacht they’re interested in, which can either be transferred to another yacht at auction if the bidder fails to win, or refunded within seven days of the auction’s end. If the buyer wins, the fee is deemed part of the deposit for the contract, and he/she must also pay a completion fee. The site’s terms and conditions form the agreement with the auction company, and were developed with the assistance of Hill Dickinson.
Buyers are encouraged to view the yachts prior to auction during a viewing period, while pre-registered buyers are invited to sea trials, to which they may bring their own surveyor, though every yacht will have its own sale conditions which means not all will be able to partake in sea trials.
Given that yachts are likely to sell for less than a broker’s asking price—the broker thus getting a smaller percentage of a smaller sale—the level of broker interaction with the online vehicle was something of particular interest to SuperyachtNews.com.
Fordham commented, “the major concern we had was, we don’t want to be against brokers,” but admitted that the current discrepancies between brokers’ selling prices and an owners’ desired prices had been the catalyst for the business. McDougall said he believed “yacht brokers will interact with our business model.” Brokers will receive fees when yachts are sold, and/or when a buyer is introduced and purchases a yacht. If the broker enters the buyer and the yacht then it’s “a double whammy for them,” he continued. With broker packs due to be sent out, Fordham sounded confident: “I’ve got 56 yachts on my brokerage,” and of them he said “I’ve got at least ten that for the cost of the registration fee [will] have a stint.”
The 33m motoryacht, Absolute Pleasure, is registered on the website, along with three others, and will auction on 22 February 2012, with a guide price of £2.695 million, and an opening bid of £100,000. By then, the company hopes to have a total of 30 yachts registered. But, is this a viable tool for the superyacht market? Fordham thought so: “speaking to some very serious brokerage dealers, and major manufacturers, they can see it being more for superyachts.”
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