You can’t earn money any faster than when you are negotiating. Whether its a house, boat or car, the price you are able to shave off the asking price is money in your pocket. Most people find negotiating stressful and experience massive butterflies in their stomach. So do I. But with a little prep and a cool attitude, you can get what you want, for a price that is less than you ever dreamt of. Here are some strategies that will save you thousands of dollars next time you are getting ready to buy a boat.
Step 1: Boat Value
Before you start any negotiation you have to do your research and find out what the comparables are. This is not only to reassure you that your eventual offer is fair market value but this research will be as a tool in presenting the offer. More on that later. Typically when I am searching for comparables I start with my local area. For this I use sites such as Craigslist and UsedEverywhere. Print out all the boats that are of the same year and model and highlight the differences. Next, expand your search by going to bigger sites like YachtWorld and BoatJournal.
Once you have printed all of the comparables and highlighted the differences, you can start to figure out what the boat is worth. This is very simple:
- Start with the price of the closest comparable.
- Immediately subtract between 5% to 20% off the asking price. Less if its a private deal. More if its a dealership.
- Does it need cleanup? Is there mold or mildew? Do you need new cushions, headliner or upholstery? Is there growth on the bottom?
Subtract the cost of both the time and material that will be required to make the boat acceptable to you.
- Does it need mechanical work? Subtract $100 per hour for all mechanical work that needs to be done.
- Does it need transport? Subtract $150 per hour for movers.
- What shape is the trailer in? Does it need new brakes, springs or tires? Call a local boat dealer and ask for a ball point figure. Subtract again.
- Does the comparable have extra equipment such as a hot water heater, holding tank or anchor? Go online to find the used price and subtract again.
Step 2: Pick your Negotiation Strategy
You now know the true market value of your future boat. This is where the fun begins, or the part that makes you queasy. Regardless of how you feel before and during the negotiations, it is guaranteed that you will be on top of the world once they close.
What you have to realize is that experienced sales people have many different negotiation strategies that they can pull out of their toolbox. Since you’re reading this, there is no reason you can’t do the same and beat them at their own game. You will want to pick one strategy before you open negotiations but remain flexible as things proceed. I always like to keep it simple stupid. Usually I pick one of the following techniques.
The Russian businessman is extremely patient. Suppose negotiations are going to take 10 days, then if using the Russian technique you may come up in price by 3% in the first 8 days. This can work really well especially if the other party keeps slashing their price with each counter-offer. You sit back, keep it cool and let the other party negotiate against themselves.
The funnel is used to convey your ceiling. With every new counter offer, reduce the total amount of each subsequent offer. For example, if your maximum is $10,000, then maybe you start at $8,000. Next counter offer is $9,000, then $9,500. Eventually you’ll end up at $9,750 and the final offer of $10,000.
No matter what the counter offer, always always flinch. Make a face of disgust or some sort of noise. You would be surprised by how much effect this has. Immediately the other party is put in an awkward spot and it gives you the power to make a counter offer that is even less.
Step 3: Present the Offer
This is where you may feel like you’re going to lose your cookies. Well, I do at times, but not to worry, once you get rolling everything will fade away. If you’re low-balling, make it a shit sandwhich. Start with “Your boat is beautiful and your family must have had a fantastic time on it.” Then add the shit – “Unfortunately, we have done a ton of research and found various comparables that are priced much lower. And additionally, we are going to need to stick $1,500 into this boat to get her running again”. Finally, slap on the other side of the sandwich – “Please don’t take this personally. I am not trying to put down your boat. This price is simply what I can afford and more importantly what I think is fair market value.”
Present the evidence as you’re talking. Leave all of those printouts with the seller so that they can educate themselves after you leave.
Step 4: Subject To’s
I can’t emphasize this enough, Always always add several conditions into your offer. Specifically to boats, you will probably want a mechanical survey and perhaps also a general boat survey to check the condition of the hull.
Step 5: Going Forward
Unless you are in a panic to buy a boat, know that time is your side. In general, boats don’t sell very fast. There are many boats on the market and you have the power to pick what you want. If your boat model is not available now, look for alternatives or wait a few weeks.
Also be aware that negotiations are not always a continuos event. Never go into a negotiation thinking that during this next phone call you will need to come to a conclusion. Let the negotiations stop and start. If the ball is in your court, you can always delay due to being unsure, price or any other factor. You do NOT need to make a decision today, tomorrow or this week.
I have often come across situations where I was not 100% convinced that the boat is perfect. In these situations I will enter negotations with a low offer and let the price decide. If the sellers won’t come down to my maximum, then I walk away and wait for another, better boat to come on the market. If they do accept my low-ball, then I’m ahead because I can turn around and sell the boat with little or no loss.
On a personal note, Ashley gets very squeamish anytime I am about to present a low offer. She will go hide in the car. Maybe she has more empathy for others. I don’t know. But she stands behind me no matter what the outcome because we have done our research and we know we know the market. We try to take as much emotion out of the process as possible because in the end, it is just a piece of fiberglass with some glue holding it together. A boat has no feelings. Never Ever fall in love before you have concluded the deal!
Did this perk your interest? Do you have any questions? Give us a shout here.