Devin Zwick, a Nordhavn broker out of the Northwest-Anacortes office has customers who have lost out on three different Nordhavn 43s this year and are getting discouraged. They’re not alone. The COVID-19 pandemic kickstarted a perfect storm for the pre-owned boat market, and it doesn’t seem like it’s going to get better for buyers anytime soon.
In just the last week alone, Nordhavn brokers accepted offers on four boats, but you wouldn’t know about most of them because they never had the chance to go publicly for sale. These days at Nordhavn, fresh listings typically don’t make it to market, they’re going for full ask, and most have back-up offers with buyers ready to pounce should an initial sale fall through. Is this the new normal in brokerage yacht sales?
“The market has definitely been strong over the past three years,” said Zwick. “But nothing like we’re seeing today.”
In the beginning, it was COVID’s disruption of all things social that first spurred the market, leaving boating as the perfect socially distant activity to be had with your pod. But the pandemic also touched off a widespread existential crisis, caused by the uncertainty of not knowing what tomorrow, the next month or next year would bring. It provoked radical life changes and a sudden need to prioritize the path to the rest of your life. “I think people realized that we aren’t promised a future,” said Nordhavn Yachts Southeast broker Valerie Weingrad. “They’re thinking, ‘life is short, time to do it now.’”
Longtime Nordhavn Yachts salesman Larry Gieselman hasn’t ever seen a buying frenzy like this in the 40 years he’s been with the company. Gieselman, who works out of the Dana Point, CA office, says what is manipulating yacht sales right now is an intersection of lines. The direct influence COVID has had on isolation-friendly activities is obvious, but that line is criss-crossing with indirect impacts COVID has caused, which are just as compelling.
In order to stabilize the virus-devastated economy, the fed lowered interest rates to encourage people to keep buying, or as Gieselman succinctly puts it: “money is cheap now.” Low interest rates means more people can afford to buy things that two years ago seemed out of their reach. Across the board, big-time life purchases such as campers/RVs, homes, cars, and especially boats, are more accessible now than they have ever been.
While, on one hand, the government is responsible for boosting consumer confidence, another driver has been the stock market. Since the crash that occurred on the heels of the pandemic announcement back on March 23, 2020, the market has boomed with a steady climb, especially for the S & P 500, leading to positive stock gains happening just about every week since. “People look at their quarterly investment, their retirement statements, and feel very good about their net worth gains,” Gieselman said. “This is a major factor in giving them the confidence to move forward with larger purchases.”
The big question remains: how long will we be in this pro-seller COVID bubble? Most of the Nordhavn brokers foresee this being the status quo certainly for the remainder of the year. And the problem falls squarely on the shoulders of inventory. “I don’t think people’s interest in boating is going to change radically over the next six months and I think people who do have an interest in something like a Nordhavn will continue to stoke that nest egg. Those two factors aren’t going to change,” said Nordhavn Northeast broker Dave Balfour. “So the issue boils down to inventory.”
The challenge is for the number of buyers that exists to remain prudent. Balfour says that buyers who do come to the table need to curb their expectations somewhat, especially when it comes to a survey. “I have advised clients to look for major deficiencies but not to argue too much on the little stuff,” he said. “If they do, there will be someone waiting in the wings who will be more prepared to make a deal work.”
Zwick also advises clients to think more about the big picture. If a boat has been well maintained but has cosmetic issues, a compromise is likely in order. “If you don’t find a boat that is 100 percent what you were looking for, Nordhavn has relationships with vendors and contractors that can help make your vision happen after the fact,” he said. “Finding a boat in good condition, first and foremost, is what’s most important.”
Other ways buyers can help themselves prior to making an offer is to have their finances ready to go and also be locked into knowing exactly what their priorities are in a boat (ie. LOA or number of staterooms). Also, have trust in your broker, adds Zwick. “These are extraordinary times and they are calling for extraordinary measures,” he said. “Things a buyer can do to help their luck is to make an offer sight unseen. When it comes to this tactic, you are already at an advantage if you are paired with a knowledgeable, experienced Nordhavn rep. There’s a very good chance the broker knows the boat, knows the current owner or works with someone on the Nordhavn Yachts sales team who does. Putting an offer in sight unseen gives you a leg up timing wise, plus you can always get on board during the seatrial.”
The other reason to build a trusting relationship with your Nordhavn broker is that they will return the loyalty when they have – or learn of – a pocket listing, which lately is one of the only ways to land a pre-owned Nordhavn. “It’s hard to be motivated to offer the inside track to a client who is dealing with multiple brokers,” he said.
Above all, patience may be the biggest determinant of a buyer’s luck with the pre-owned market. Gieselman, for one, does not see the current climate as the new normal, especially since it is reliant on a convergence of so many factors. “It takes just one of those intersecting lines to fall off the graph,” he said. Which of those lines moves first is anyone’s guess. “The economy is always cycling so I think there will be a cooling off period here.
“This is kind of uncharted territory we’re in, and I don’t think it’s sustainable.”