The yachting industry as a whole is reliant on an active brokerage market, and despite more activity at any point since 2008, the market remains more stagnant than it should be. I truly believe that the market could be a lot more active if yachts were priced correctly in the first place.
When making the decision to sell their yacht, owners often approach a number of brokerage houses to pitch for the central agency. This is of course a sensible and understandable exercise in due diligence before making the important decision on who will manage the sale of what is an extremely high value asset. However, the issue arises during this ‘beauty parade’ when various brokerage houses present what they can do for the owner. Some, and I repeat, only some, brokerage houses seem to be suggesting that they can achieve completely unrealistic prices in order to win central agencies.
Owners are in most instances relying on brokers to advise them on a pricing strategy that achieves a quick sale at the best possible price, but it’s hard not to be attracted to the agents who are promising you 20-30% more than the others. Yachts that come onto the market at an overpriced level tend to languish there for 2-3 years (sometimes more) and only sell after a number of price reductions, during which period the owner has continuing running costs and depreciation to bear, notwithstanding a fair bit of frustration! After a few price reductions, it seems that potential buyers stand back as they await the next inevitable reduction - it’s a dangerous spiral.
Financially, an owner is much better off pricing a yacht at a realistic level. With the right marketing strategy this generates immediate interest and a fast sale. We at Y.CO have an in-house analyst whose sole job is to analyse the brokerage market. He monitors and tracks all activity - price reductions, time on market and eventual selling prices. The issue I raise here is well backed by factual market data.
What can we do about it? Raise awareness and present facts. When presenting to owners, we suggest a price that we feel will achieve the best and fastest sale based on recent comparable sales. If they want to list the yacht at a much higher price we are willing to give it a go, but it is frustrating to lose out on business when you see an owner who has been told a fairy tale price that is never achievable. It’s not good for the owner and it’s not good for the health of the industry as a whole.
Shipyards and hundreds of suppliers rely on new orders. There are many tens of yacht owners ready to sign new build contracts with shipyards, or move up in size on the brokerage market if they could only sell their current yachts. Additionally, more people will be attracted to yacht ownership if they could see it was a more liquid market. It is nice to own an asset which you know will sell quickly if and when required.
The brokerage industry needs to take responsibility and lead the way on this. It is easy to tell a client what they want to hear, but surely owners and the industry as a whole will be better off if we consistently give the facts in order to create an active market from which we will all benefit?
Will Christie works as a sales broker for Y.CO and he can be reached at [email protected]