Selling a Yacht....Quickly!
The primary objective when selling a yacht is to sell it as quickly as possible for a fair market price. A realistic price level will determine how fast you will be able to move on to your next hobby or your next boat. The business concept of “sunk costs” is important to understand in order to make the right pricing decision. Webster defines “Sunk Costs” as “Costs that have been incurred in a project or investment that cannot be recovered if the project is stopped or altered.” For example, if you recently repainted your boat, you cannot add the cost of the paint job to your ask price, mostly because all yachts are sold with paint (or gelcoat), so if you painted it, that reflects a need. Had you not painted it, you might have had a hard time selling it at the market price. This concept also applies to discretionary add-ons such as electronics, engine overhauls, new soft goods, etc.
The concept of selling at market value rather than based on what was invested in a boat is the basis of good decision making in a business. "Sunk costs" cannot be recuperated unless the market value of a yacht has appreciated over the years...which is rarely the case, especially with yachts that are less than 15 years old.
Recently an article appeared in Psychology Today about the psychology of sellers. It stated that sellers have a tendency of setting greater value to what they sell, when in fact they should do the opposite. A seller’s attitude should be more like divorce or breaking up, something that needs to happen quickly and as painlessly as possible so we can move on with our lives. Contrary to logic, we begin to add value to what we don’t want anymore! Maybe it’s our pride that pushes us to “save face” by adding our discretionary yacht expenditures back on the sale price.
Saving face, is a hubristic behavior that will cost you time and/or money. The Japanese hastened their demise in WWII with their concept of saving face in battle. At the battle of Guadalcanal, they attacked the US Marine defensive perimeters screaming “BANZAI” (long live the emperor) and were mowed down by machine gun fire only to regroup and do another banzai charge, repeating this behavior until they were all dead. Our boys, just as brave, but not as fanatic about Roosevelt, also charged strong defensive perimeters, but if too many marines were killed, they regrouped and went to Plan B because they understood sunk costs. The Japanese did not obviously understand the concept of “sunk costs.” After losing 20% of their soldiers in a BANZAI charge, a people investment impossible to recuperate, they expended the remaining 80% for the honor of the emperor. Saving face is stupidity, not bravery.
When you establish a selling price for your yacht, forget about all the discretionary or maintenance costs you expended as an owner. Owning a boat is a hobby, not an investment. If your boat does not sell because it’s priced too high, the holding costs and continued depreciation will quickly eat up the premium you thought you should earn on the sale. Boats are like real estate; your profit, if any, is made when you buy, not when you sell. Your selling strategy should be to price your yacht at the market price, because a yacht that is correctly priced will sell quickly, and you can move on with your life.