Why Hire a Surveyor?
The recreational boater has a variety of reasons to hire a surveyor. Why would a buyer want to hire a surveyor?
- To determine the condition. Yeah, she’s a beauty but can you see the warts through rose colored glasses?
- To appraise the value. It’s not what you can afford, but rather what is the vessel worth? This value will dictate the costs associated with items C and D below.
- Insurance. If you finance your yacht you will need insurance. If you don;t finance the boat you have some options.
- Financing. The terms of the loan such as loan amount, the interest rate, and length of loan are determined by bank policy and vessel value.
- To make your wife, girlfriend, husband, or boyfriend happy. Don;t forget a happy significant other makes for happy boating.
- All the above.
Of course, the correct answer is F, all the above. Let’s take a closer look at each reason in a little more detail.
Determining the condition.
She may be all dolled up and ready to go but looks can be deceiving. When you are considering hiring a surveyor, make sure they are listed with a nationally recognized society such as Society of Accredited Marine Surveyors (SAMS) or National Association of Marine Surveyors (NAMS). Both of these organizations promote strict ethics and training. Both organizations have an “up or out” policy. In other words, you need to move up in your credentials and stay current with continuous education.
What will the surveyor do to look behind all that make-up? The surveyor will perform a thorough visual examination of the hull and deck. They will perform percussion tests that reveal delamination. They will perform moisture testing to see if the fiberglass laminate or core is wet. Some surveyors can perform ultra-sonic thickness measurements on steel or aluminum vessels.
Once the hull and deck are checked, the surveyor will check out the boat’s systems such as the engine, the electrical, plumbing systems, and the navigation electronics. Once the condition is known, the surveyor will visit with the client and let them know what he found. This is where the rose colored glasses come off. Recently, I was hired to survey a 40+ year old boat. At the end of the survey, I sat down with the client over a cold glass of tea and went through the findings. His first comment was, “I looked at her twice before hiring you; I did not think she was that bad.” I told him for a 40+ year old boat she is in pretty good shape, but he needed to know what he was getting into if he bought her. The boat had been neglected for a number of years but was worth fixing up if he wanted to put forth the sweat.
Appraising the value
What is she worth? Am I offering too much? These are two of the many ways this question is asked. Remember boats are not investments, they are an expense. Like the old saying goes, “A boat is a hole in the water in which you pour money.” If the vessel is a production model boat, determining the value is relatively quick and easy. Determining the value can be tricky if the vessel is a one-of-a-kind, an antique, or a “collector” vessel.
A good surveyor will follow the Uniform Standards of Professional Appraisal Practice (USPAP). The three most common methods of vessel appraisal are the Business, Construction Cost, or Market. The Market method is used with production models of vessels. The Market method requires the surveyor to know the market conditions and what “like, kind and quality” vessels are selling for. The surveyor should have access to various subscriptions or databases such as Soldboats, ABOS, BUC, and NADA. Armed with this information and the condition of the vessel the surveyor can calculate a current market value for the vessel. The Market method process can take as little as two hours to a day to calculate.
A one-of-a-kind or an antique vessel appraisal will usually use the Construction Cost method. This process will take longer to perform. The surveyor must determine the construction method used to originally build the vessel. If he is familiar with the method and has knowledge of building cost he can calculate the market value. If he is not familiar with the method then, he will need to find boat builders who build with the same or similar method and work with them to determine the cost.
The collector vessel market is analogous to car collecting. The market drivers are reputation, scarcity, condition, but primarily the desire of a willing seller and willing buyer. There is little if any logic in the process of determining the value of a collector vessel. For example a 1970 vintage Bertram 31 with an original list price around $25,000 could sell for $130,000 to $150,000 in today’s market.