Owning a luxury superyacht is a dream of many. And that dream becomes a reality with the help of a luxury yacht brokerage and an experienced broker. David Seal, of the famed Yachts for Sale YouTube channel, sat down with Northrop & Johnson CCO Cromwell Littlejohn to answer the most common questions about purchasing a yacht and to map out a complete buyer’s guide for potential yacht owners.
Size, style and builder
When shopping for a yacht, one of the bests parts is the seemingly countless options of sizes, styles, and builders. The possibilities are endless, from classic motor yachts to ultra-modern superyachts, stunning sailing yachts to global explorers and beyond. If you’re contemplating a yacht purchase, keep in mind the following questions:
- How will you use the boat? (get VERY realistic here)
- Are you looking for a new or pre-owned yacht?
- Custom built, semi-custom or production?
- Are you looking for a high-speed performance boat or one with extended cruising capabilities?
- What size range would you like to stay in?
- What price range would you like to stay in?
- Do you have intentions to put your yacht on the charter market?
Once you have an idea of what you’re looking for, the next step is working with a dedicated broker to make your dreams come true.
Your broker is your new best friend
At N&J, our team of well-rounded brokers has the skills and the passion for finding you your perfect yacht.
“The process of buying a brokerage yacht is pretty straightforward, the devil is in the details,” states Seal.
“Having that information and guidance from an experienced, knowledgeable broker is key,” Littlejohn assures.
Your broker will compile a list of yachts on the market – and perhaps include options not publicly known to be available that best meet your search criteria, such as styling, number of staterooms, amenities and budget.
Once you and your broker have selected the perfect yacht, the next step is negotiation, presenting offers, sea trials and surveys. Your Northrop & Johnson broker will walk you through all the necessary steps and prepare you for what to expect during this process.
Seal asks, “Do you recommend people try a cheeky offer first, a very low-ball offer?”
“I think we’re always trying to get the boat at the best price we can for our clients. What we don’t want to do is come in so low that we insult somebody and then find that they no longer wish to negotiate with us…we’ll do all the necessary market research and find data that provides us with a well-rounded understanding of the boat’s true value on the market. This way, we can get in and out of it properly, and from there we’ll advise and see where we end up” replies Littlejohn.
“Let’s say the offer is accepted; where do we go from there?” says Seal.
Littlejohn says, “If we back up a bit, we can get to how we present that offer. To present the offer, we need to put it in writing on the best contract to use, then there are some dates we have to concern ourselves with; these also need to be added to the contract. These include acceptance/rejection dates, closing dates, etc… We put the number down [with] any additional terms we may be considering such as sea trials and surveys and such, and then from there we put the agreement together; we need to be prepared to back that up with a 10% deposit based on the selling price that we’re offering.”
What happens next?
Your N&J broker will assist in scheduling a buyer’s sea trial and condition survey. This is to essentially “test drive” the yacht and have the opportunity to identify any deficiencies or discrepancies, whether that be mechanically or aesthetically.
Littlejohn states, “There may be further negotiations post-survey based on the findings. This may allow us to get the owner or the seller to fix items or give us a monetary credit for those items that we can fix once we own the boat.”
“That’s a really important point for [those] who have not bought a yacht before or are thinking of buying a yacht,” states Seal. “…this is not like buying a used car where you take it off the lot, and it’s your problem after that- you do your sea trial and survey and let’s say for example that I’ve offered $4,00,000 on a yacht, and you take it out to sea and the stabilizers don’t work-it’s not a take it or leave it situation is it?”
Littlejohn replies, “…we may go back to that seller and ask them to fix that and repair it, and in most cases, we’ll make those repairs subject to our surveyor’s review of the repairs and confirmation that they were done in a proper and “yacht-like” fashion, or we may come back and say we think it’s going to cost us this much and we’d like to re-negotiate the agreement to that extent.”
Once a final agreement has been made post sea trial and survey, the necessary documents will be exchanged. There are a few other factors to consider before the payment is made and the sale is completed.
“We’re now getting to acceptance day. The buyer will have to register the yacht. How easy is that, and, as a brokerage company, how involved does N&J get with that side of things?” asks Seal.
“Most of the brokers, especially those at N&J, are familiar with the requirements, the benefits and the downfalls of the different flag states. Each flag state has its own set of rules, which sometimes go as far as licensing requirements for crew, how many crew you have to be (safe manning requirements). As such there are several choices when it comes to flag states. Knowledgeable brokers have upfront conversations with their buyers about all of these aspects of yacht registration,” answers Littlejohn.
Some new yacht buyers may feel they can navigate the waters of yacht purchase on their own, but factors like where to register a new yacht really showcase the importance of having an experienced broker in your corner who can guide you in the right direction for your needs. Once all the technicalities are sorted out, the payment is submitted and the deal closed. But much like taking home an infant from the hospital, there is no “handbook” on yacht ownership. This is another reason working with an experienced broker is advantageous. Your broker will advise you on all things concerning yacht ownership. From documentation and insurance to crew and charter marketing, your broker will guide you on how to best manage your new vessel.
A common question answered
One of the most common questions regarding yacht purchase: “What’s it all about when you see an advert on a yacht, and it says “Not for sale or charter to U.S. residents while in U.S. waters?” asks Seal.
“That’s a law that goes back hundreds of years in U.S. history, and it disallows the ability to offer boats for sales or charter to U.S. residents if the boat is foreign-built or foreign-flagged and has not been imported into the United States. There are a few different ways to navigate this restriction. One is to have the seller move the yacht to a free trade zone (FTZ). This is a new option that only came about within the last three or so years. Another way for US buyers to purchase foreign-built or foreign-flagged yachts is to purchase them at a boat show under a boat-show bond or to close the deal on the yacht offshore in international waters or a country close to the US. In many cases, before free trade zones, buyers and sellers would cruise the yacht from the US to The Bahamas for the buyer to inspect and purchase the yacht legally.” answers Littlejohn.
“We’re actually in a free trade zone here (in Fort Lauderdale at the Northrop & Johnson office); what’s the benefit of that to Northrop & Johnson?” asks Seal.
“It gives us the ability to sit boats right outside of our office and offer them for sale to U.S. residents while in the free trade zone. It makes the whole process much easier for both the seller and the potential buyer as he or she can come to the N&J office and inspect or purchase the yacht with ease,” states Littlejohn.
Northrop & Johnson’s industry-leading knowledgeable yacht brokers have decades of experience in both yacht sales and purchase. They have access to the world’s most advanced yachting tech tools and databases, ensuring they have their fingers on the pulse of the industry. If you have any questions about yacht purchase, please contact a dedicated N&J yacht broker today.
If you’re interested in buying or selling a yacht, contact the professional team of yacht brokers at Northrop & Johnson today. As a world-leading yacht brokerage, Northrop & Johnson offers access to thousands of luxury yachts for sale around the world, including private yachts not publicly advertised for sale. From yacht sales to new construction, contact our team of yacht brokers to get the results you need.