During the Fort Lauderdale International Boat Show, Superyacht Buyer met up with America’s leading brokers to discuss the attraction that US buyers have developed for European shipyards, leading to an exodus of these usually loyal buyers away from their home market.
Is this a reaction to the design quality and innovation offered by the likes of Feadship and Lürssen, or is it a simple game of economics with the Dollar still strong against the Euro?
The question we posed to Northrop & Johnson brokers Kevin Merrigan and Wes Sanford was…
‘Has the US buyer become more educated in buying the right yacht, or are they just looking for the best deal?’
Kevin Merrigan, CEO, Northrop & Johnson
People have forgotten that Americans account for 60-70 per cent of buyers of large yachts. US buyers are hugely sophisticated. I have buyers who don’t want to buy and sellers who don’t want to sell. We deal with business and financial masters. Sellers like to bring their intelligence into our world and set the price at what they feel it should be set at, and some just want to test the market to see if someone comes in at their price.
There are different types of buyers. There are some who are in yachting because they love it, so they want a high-quality pedigree and are less concerned with pricing than they are with quality. And there are buyers who are more flexible with the quality and more influenced by whether it’s of true value.
A huge issue is the holding cost of the yacht. If you don’t price it correctly then two years later you’re still paying for it. One of the biggest issues we have is that of sellers who hang on too long. The boat ends up selling for 30-40 per cent less than it could have if they had accepted the initial offer. You think you can hold out and find another buyer, but with so few transactions every year that buyer may not be out there.
The days of knowing someone from the yacht club and them being your client for life are over. We have to prove ourselves every day and we’re upping our game every day to stay ahead. That’s how we conduct ourselves. If a broker is not efficient with support, communication or website information, and you don’t understand the marketplace, what value are you bringing to the table?
Wes Sanford, Sales Broker, Northrop & Johnson
The natural inclination is for a seller to start too high and for the buyer it’s to start too low, then hopefully you can find some middle ground. To one guy, a 130ft Westport will be worth €8.5 million, but to somebody else it will be worth €10 million. It’s a different market value depending on who is buying it. You can take two buyers, both after the exact same Feadships in the same month, and you’ll have one buyer who will pay €40 million and another who will pay €50 million. What’s the boat worth? The seller wants the boat for €50 million and the buyer wants it for €40 million.
There is a range of pricing because the boats have different values to different people. If the seller’s range and the buyer’s range overlap then you have a deal, but if they don’t overlap then the boat can be on the market for years. I encourage sellers to be receptive to offers and not be offended because the offer is what it’s worth to a buyer on that particular day.
We are transparent with pricing to our clients, but we reserve selling prices as a competitive advantage in order to be more effective as brokers. We geta lot of information from the boats we sell, so I don’t want to give that advantage to the new brokers on the block. But being transparent is obviously of great importance.