If you are in the market for a used boat, there are more repossessed boats on the market now then ever before. Just as foreclosures have been at an all time high due to the downturn in the global economy, many boats have unfortunately also been repossessed. These repossessed boats offer boat shoppers some of the best deals on the market.
Buyers lucky enough to find a repo boat are able to afford late model, quality boats at very low prices.
Here are some tips to consider if you are looking to buy a boat and land yourself a repo boat deal. (based on insight from my own experience buying a repo boat!)
Repo Boat Deals Go Quickly
Although there are many more repo boats on the market than in past years, these boats don’t stay on the market long. As you can imagine, people are actively seeking these listings because they are priced so low. The low price is a big draw for boat shoppers, especially if it is priced aggressively lower than similar boats on the market.
Banks are also eager to recoup whatever they can from a defaulted loan. They’ll price boats as competitively as possible to get them off their books as soon as possible.
If you are looking to buy a repo boat and you are lucky enough to find one that meets your boat criteria – the right price, model, year, condition – be prepared to act fast. A few days delay can mean missing out on a repo deal. You should also be prepared to travel for bank owned boat deals. Logistics may be more challenging, but worth it to save tens of thousands of dollars (depending on your price range of course).
Negotiating Price on a Repossessed Boat
Sometimes when a boat is listed as “repo boat” it immediately gets more attention then other boat listings. Boat shoppers know that a bank owned boat is most likely open to price negotiation. Unfortunately, it is not always easy to know how low a bank is willing to go to unload the boat.
A low price bid on the boat to test the waters is sometimes a good tactic. You may be able to get an idea of how much negotiating room there is with the bank. If a dealer is involved, a good relationship with the dealer may also help. A dealer may be privy to inside information from the bank and clue you in on the bottom price the bank is willing to accept for the boat.
It’s also helpful to know the NADA Marine Appraisal or BUC boat appraisal guide. The bank is most likely aware of the boat’s appraised value and is considering that value in pricing the boat. However, in this market a bank owned boat is open for price negotiation more than ever before. Chances are they are willing to go below the boat resale value to sell the boat and get the boat off their books.
Quality of Repossessed Boats
Buying a repossessed boat doesn’t necessarily mean compromising quality. I have heard stories about some people having issues with the condition of a repo boat, but in most cases their condition is just as good as any other boat on the market. However, expect the boat to be somewhat untidy and in need of a good cleaning. The boat owner was not likely thinking about preparing a boat to sell when the boat got repossessed.
Just like buying a home, an inspection of the condition of a boat prior to purchase is essential to save many headaches and unexpected maintenance issues. In some cases, a bank may not allow a survey and sea trial when purchasing a repossessed boat. I would be weary of buying a boat without doing a thorough survey and making sure that the boat is sea-worthy (or at least river or bay-worthy). If the boat has diesel engines, consider having an additional inspection from a diesel engine specialist.
A pre-purchase survey (whether a power boat or sail boat) should be in the purchase agreement. Never buy a boat without a survey or sea trial. The repo boat is not a deal if you have to replace the engines or discover major hull damage.
Boat Loans When Buying Repossessed Boats
As long as the value of the loan does not exceed the value of the boat, the boat loan process should not be much different than the typical boat loan approval process. In fact, if you get a great repo deal at a low price it should be even easier getting approved for the loan amount needed. The same rules apply: you’ll get a better interest rate with good credit and more money down for the down payment. It may be difficult to get more than a 12 or 15 year loan on older boats, but this is typical of any boat loan.
The biggest difference may come when dealing with the bank that currently owns the boat to get the boat loan. They may be willing to provide a good interest rate, but may be stringent with loan requirements. For example, an outstanding boat loan on a current boat may need to be paid off prior to lending for the repo boat. Its somewhat understandable that a bank doesn’t want to risk a boat owner defaulting on a repossessed boat for a second time.
Finding Repo Boats for Sale
Try the typical places for used boat listings – like yachtworld and boattrader – repo boats sitting with a dealer will be placed online with other used boat listings. There are also specialty repo dealers that are a good source for repossessed boats – like National Liquidators. Establishing connections with some of the bigger boat brokers and dealers in the area is also a good way to get a leg up on repo boats coming on the market. Whether buying a boat in the spring or the fall, a repossessed boat is probably one of the best deals (price-wise) you’ll find for your next used boat.
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