Confirmation of 66m Ester III’s sale last week, after less than four months on the market, is an excellent example of an intelligent seller bringing a top quality product onto the market at a respectable price and generating a quick, hassle-free sale. He’s probably received upwards of an 80 per cent return on his investment, on the proviso that the selling price was near the final asking price, €79.5 million, and swerved a toilsome duration of heavy-hearted ownership.
But, what could have happened with this listing had a different approach to the market been taken? I can’t help but think that this is one of three scenarios that could have rolled out before our very eyes when this yacht came onto the market…
Alternative scenario 1
Suppose the yacht – a late 2014 Lürssen build at 66m in length and 1,527gross tons, with a lavish Reymond Langton interior – came onto the market at €95 million; not too much of a far cry. Irrespective, the yacht is now overpriced, probably because the seller listened to the broker who pitched an unachievable asking price to sign the CA, but, fortunately, the seller’s expectations were at that level anyway because his yacht is the best in its class, of course.
There’s an initial flurry of interest – perhaps an offer or two at a lower pricing level – but ‘is it value for money?’ and ‘is the seller serious?’, asks a small pool of billionaire business tycoons and financial wizards, who are now circling the bait.
Happy as Larry with the attention the yacht’s receiving in the first few months, the seller is content with turning away offers and waiting for the bulls-eye, even though the offers are at the price the yacht should have been listed at originally. In the meantime, he continues to make the most of the boat with his family; it’ll probably be sold soon anyway.
Fast-forward three years, the yacht is still on the market; the seller is fed up with the boat and chomping at the bit to get it sold and the worried broker, who has paid €700,000 on yacht marketing, is conveying an element of desperation to the market and he may soon be waving goodbye to the listing and his commission.
The boat has now been reduced to €75 million – the price it should have been originally – but the yacht’s age and wear-and-tear, amplified by the odd charter here and there, can no longer justify this premium price either.
Despite the yacht being overvalued originally, the seller sees the €20 million in price reductions as money down the drain, and to make matters worse, he’s spent €15 million running the thing and a few million on maintenance work and her five-year class survey. His only consolation now is that he's offsetting a little through charter.
Finally, three-and-a-half years down the line, pay day comes; the seller accepts an offer for €65 million, only a €25 million loss from the €90 million build cost, which is not a bad result. However, the loss through the pricing corrections is almost doubled by the amount he’s spent on running the yacht over those years. ‘Is ownership for me, or do I charter now?’ the seller ponders.
Alternative scenario 2
An exceptional circumstance. The yacht comes onto the market at €95 million. The initial flurry of interest comes to fruition; it just so happens that one of the few hundred billionaires in the world has been looking for that exact yacht. The timing is impeccable and the seller and his broker can’t believe their luck. The buyer negotiates the price down marginally but the deal is done. The buyer is as happy as the seller and the brokers, but realises that this emotional investment may take its toll financially in a few years’ time.