The hidden sales market
Does everything really have a price? We explore the hidden sales market with Pierre Badin from West Nautical …
In a market that is often characterised by its privacy, is it any wonder that there is a hidden sales market with the potential to yield benefits for both buyers and sellers? SuperyachtNews speaks with the team at West Nautical about some of the nuances of this hidden marketplace.
“Today, clients can find out what is on the official second-hand market within a specific size range and type just as quickly as a broker could,” starts Pierre Badin, sales manager at West Nautical. “You can use any number of mainstream websites and resources to research the brokerage market. Of course, the client will not know all the technical aspects of the yachts in question or the history behind them, which is where a broker is still required to add value. But, in terms of finding the yachts, a broker is not strictly necessary.”
Badin broadly breaks clients down into two distinct types, those that have made several superyacht purchases and that are largely loyal to individual brokers because they have had positive previous experiences that have made them confident and comfortable in the purchasing process, and newcomers who typically like to do their own research and directly contact the broker that appears to be the central agent.
Pierre Badin, sales manager at West Nautical
“Of course, as brokers, we would like as many of the first type of client as possible. The best scenario for the client and the broker is to develop a long-lasting relationship,” continues Badin. “With the second type of client, sometimes they are actually contacting someone who is not the lawful CA because the websites can create a lot of confusion. On some websites, you might find the same superyacht advertised with different brokers. These clients might end up finding 10 yachts and contacting 10 different brokers, in fact, I have been through this process twice already this year. Regardless of how ineffective this type of sales process can be, I believe that there is a way that the top brokers can add value where others can’t, and that is by exploring the off-market yachts.”
The old adage holds that everything is for sale if the price is right and it would seem that the superyacht market is no different. However, the hidden sales market is dictated by more than just price alone. Naturally, astronomically large sums of money that are offered for superyachts far above their accepted market price will always be attractive to sellers whether or not the vessel is officially for sale or not. However, most brokers will tell you that such examples are few and far between, especially in a contemporary market where information is so freely available.
“The hidden sales market has proven to be an excellent sales tool. Sometimes you have clients that have been looking for superyachts for months and, in so doing, they are well aware of what is available. But, if you are able to bring something to them that meets their criteria and that they have never heard of, that is priceless,” explains Badin. “We signed a bill of sale on 17 June for a client that had been discussing options with a number of brokers, he had seen a dozen yachts with me and probably the same again with other brokers. Eventually, we found a yacht that was privately owned and completely off the market that was based in Montenegro.”
That a superyacht that was not officially for sale was sold for a fair price seems somewhat counterintuitive.
“In the hidden sales market, there are some cultural aspects to consider. In certain locations, such a Russia and the Middle East, clients are more guarded about publicly selling their yachts,” explains Badin.
It may be that the seller in question has fallen into financial difficulty, but is unwilling to lose face publicly or, alternatively, it may be that they do not want potential business rivals to be aware of their weakening position. Knowledge of geopolitics, therefore, is a vital weapon in the armoury of the broker who wishes to explore the hidden sales market and, in this sense, the hidden sales market may yield positive results for those clients who are looking for a good deal, especially within the context of the current seller’s market.
That being said, it may simply be that a prolific superyacht buyer is nearing the point in their typical purchasing cycle that they will begin to consider offers for their current asset as they consider their next buy. It may just be for confidentiality reasons and a general unwillingness to engage in any kind of public sales process. It could be that they are not keen sellers, but are open to good offers. Indeed, the reasons for not advertising a superyacht for sale are many and varied, the important thing to note is that the hidden sales market exists and is active to savvy brokers and buyers.
From the buyer’s perspective, there are other benefits to the hidden sales market beyond satisfying the desire to purchase a superyacht that meets the right buyer criteria, although admittedly this is clearly the main benefit. Without an advertised sales history, it will enable the buyer to retain more control over pricing than might otherwise have been achieved if the previous asking prices were made public.
“Not having previous asking prices made public is beneficial when you come to sell the yacht,” says Badin. “The first thing brokers do when we see a yacht for sale is to check the previous names and the sales history to ensure that the asking price today is not the same or higher. This is all information that we are going to use in a negotiation and the less information there is, the less buyers have at their disposal to affect the sales price.
“As a final point, as a broker, it is so much more exciting to go out there and meet with owners from the hidden sales market. Sometimes you might just have a feeling and when you get the feeling right and find the perfect vessel for a client, something that no one else knows about, it is great. Finding the right buyers for the right boat is far more exciting than working on something that is wide open and already on the table.”
It may be true that everything has a price, but the hidden sales market is not as crude as the expression might express. A large part of the challenge is finding vessels that meet the buyer’s criteria in order to ensure that they and their families will be able to enjoy the yacht for a number of years to come. Nevertheless, the hidden market exists and has the potential to confer benefits on both sellers and buyers when explored effectively.
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