When boat owners default on loans, the bank contracts with repo companies to recover the money. The repo firms sell the boats off to recover their cash, and you can get excellent deals on repo boats if you act fast.
With a good gambler’s instincts and some repair skills, you can get a good deal on a boat that will accompany you for years to come. However, one big potential downside to this game is that you don’t get any history or warranty of the boat at auction.
So, how do you get a repo boat deal and not be ripped off? In this post, I will share everything you need to know about repo boats before buying one.
What is a Repo Boat?
If you want to escape the humdrum and give yourself the reward of a boat, nothing can stop you from getting the best boat out there. Especially not a limited budget. While you don’t have to spend a fortune on a boat, it doesn’t mean you should settle for low quality.
When people consider buying a boat, they often look past repo boats. These are usually cheaper while being better in quality than the new low-priced ones. That means you can set your sails without putting a dent in your wallet or getting tricked.
A repossessed boat up for sale is often one which a bank has seized when the owner fails to pay back the loan. A different lender might also seize boats when the owners are unable to keep up with their financial commitments. These owners go into defaults, and the bank or lender takes the boat and resells it to reclaim their loan money.
One significant flaw of these boats is no history and no warranty when bought at auction. As these boats have no historical record, you never know what you are going for.
Risks of Buying Repo Boats
Even though getting an excellent repo boat deal is not impossible, there are a few potential downsides to these boats that need to be taken into account. Some of them are seized due to illegal activities such as smuggling, or the owner might not be paying his taxes. Since they have no historical records, you never know what your boat has gone through.
Another factor that adds to this is the lack of responsibility of the owner, who most probably would have neglected the maintenance of the boat. Hence, the physical condition of the boat has most likely declined over time.
You may also miss the chance of a sea trial, depending on the company you’re buying from. Due to these reasons and no warranty after purchase, repo boats’ potential value declines, and dealers sell them at low prices.
If you get lucky, you might get the original boat manufacturer’s warranty, which is still applicable. This warranty won’t cover damages but might cover defects in the engine or electronics.
Without this warranty, you are signing up for unknown problems, but it might be a rewarding deal if no problems exist at all.
Things to Consider Before Buying Repo Boats
Here are a few things you have to keep in mind when you are in search of a repo boat.
Repo Boat Deals Go Quickly
By going for a repo boat, you might be able to afford a late model at a surprisingly low price. But, you will have to be quick because these boats don’t stay on the market for long.
As people are always seeking the best deals, the lowest-priced boats get sold quickly. The banks also want to recover whatever loss they can, so they price their boats with the lowest possible price tags.
If you act quickly and smartly, you can get your hands on a boat that is in good condition and fits in your budget. Taking too long to decide on a boat can mean missing out on a deal that you might not be able to get for a while.
Also, prepare to travel for bank-owned boat deals, as it’ll be worth it after you have saved hundreds of dollars on your purchase.
Negotiating Price on a Repossessed Boat
You might think that a boat listed by a bank is more open to negotiation, but that’s not always the case. You will have to find out how low a bank is willing to drop the price to get the boat out of its books.
A good way to find out is by making a low price bid on the post, which will give you an idea of how much you can negotiate further. Some relations with a dealer might also give you a hint on the lowest price the back is willing to sell the boat for.
The boat appraisal guide (BUC) will also be helpful during the negotiations. The bank likely knows the appraised value and is considering it to price the boat. Plus, they will have a fair chance to go below the resale value to sell the boat and get it off their shoulders.
Quality of Repossessed Boat
Getting a repo boat deal doesn’t mean you have to compromise on quality or condition. Many repo boats are as good quality as any other boat in the market. They mostly need a bit of cleaning before they are all set.
Since the boat owner was not prepared to sell it soon, the condition of the boat varies in each case. The owner’s irresponsibility in terms of financial payment might also hint at a lack of focus on the vessel’s maintenance. Due to these issues, you will have to inspect carefully before purchase, especially the engine.
The problem arises when some banks don’t allow a sea trial when you are purchasing a repo boat. This way, you are not entirely sure if the boat will be able to survive the waters.
So, make sure your purchase agreement includes a pre-survey of the boat to ensure a fair deal, which is beneficial for you.
Condition of Repossessed Boats
Often the dealers of repo boats at auctions don’t know any more history of the boat than the buyer, which is why they have fewer reasons to justify their high price tag. In this case, they give you a warranty, but if it would last only 30 days, it won’t be of much use to you. So, go for a boat with at least a 12-month warranty on the main parts.
Furthermore, many repo boats have missing electronic parts, outboard motors, and other components that are out of sight. Therefore if a boat has all its features intact and all it needs is a little touch-up, you have found yourself a gem of a boat. A little scrubbing, waxing, and some new upholstery will reveal your excellent finding.
When it comes to larger cruisers, you have to focus more on the reliability of the vessel with fully functional systems. Then you can move on to other upgrades and add new electronics to finish off your masterpiece. As long as it’s reliable, a larger boat might turn out to be a better choice for many.
Fixing and Repairing Repo Boats
If you are going for a repo boat that was stolen and stripped of its parts, you will have to consider the cost that will go into restoring it to its original state. Repo boats often come without many of their electronic components such as GPS units, stereos, VHF radios, fish finders, sensors, etc., and outboard motors.
If you see a boat without these electronics, you are looking at a repair job that will cost you a fair amount of money. The body repairs will also cost you time and effort for correct matching of the external surfaces.
Even though these fixes require time and money, you can still go through them if you have the skills and the tools. A high-performance boat will likely have gone through more abuse, and you will need a high level of skill to repair the damages in it.
Alternatively, you could go for a slightly higher priced model that is undamaged or slightly damaged and doesn’t require many repairs.
Where to Find Repo Boats For Sale
Not sure where to get started? Here’s where to find them.
Finding Repo Boats for Sale
You will find various repo boat deals at auctions held online or in-person. Online sites such as Yachtworld and Boattrader have online dealer listings along with other used ones. There are also sites specifically for repo dealers like National Liquidators.
It is a good idea to search for auctions in your area and make connections with boat brokers to know about the boats in the marketing ahead of time. You will find all kinds of boats in auctions, ranging from small marine boats to yachts and even pontoon boats.
But, before you start looking for auctions, first try to decide which type of boat you want so you can scroll through your options faster. It will also be more convenient if you have a set budget in mind.
As you can find boats that fit nearly every budget, you won’t have much trouble finding one that fits yours. However, don’t get too excited on the first boat you see and make sure you have done enough research before making a purchase.
The best online boat repossession auctions are here:
- National Liquidators – it is the world’s largest boat liquidation company with offices based in Cleveland, Ohio, Fort Lauderdale, Florida, and Capistrano Beach, California. Here you will find repo boats, bank repossession boats, foreclosures, and government seized boats.
- eBay Boats – it’s the site where the highest bid wins from a fine selection of clean repo sailboats, open boats, PWC’s, etc.
- ADESA – a service to buy and sell used vehicles and locate auctions around you.
Repo Boats from Bank
As you already know, you can purchase repo boats through banks and lenders who are willing to sell at lower prices. They want to get the burden of the boat off their shoulders, which is why you can get a great deal on them.
If you need financing, the band can provide you with that as well, and good credit card scores also lead to lower prices.
Tips On How to Get a Deal And Not Be Ripped Off
Here are four tips to get the best repo boat deal without getting cheated on by the dealers.
Assess the Condition
When owners find that they are about to lose the boat, they stop caring for it, which is why it could have both interior and exterior damages. A repo boat in a rough shape might require some exterior touches and engine work as well.
But, you will be saving money on the boat, which you can use to do these repairs. You can buy the boat at a lower price and use the rest of your budget on maintenance.
One way to avoid risks is to carry out research on your desired boat type on the auction site and read everything on it. Read on the external and internal problems, as well as search on what you need to fix them. You can also get a professional estimate of the repairs to get an idea of the final cost.
If the final amount falls out of your budget, then step back and start your hunt again. Besides, going into debt to buy a repo boat does not make much sense.
Take Fast Actions – Repo Boats Don’t Stay For Long
As repo boats are listed at competitively lower prices, they don’t stay in the market for too long. As shoppers are actively searching listings, you might see a boat listing today, and it will disappear in a matter of days.
You might have an idea of how competitive repo boats are, so don’t be surprised if the boat you like has more than one bid on it. These bids will increase the cost of the boat, which is exactly why you want to act fast when you have found the one you like.
Nonetheless, even if you miss a deal or lose the bid to someone, don’t lose hope. You will come across plenty of opportunities to get the best repo boat deal.
Find Out What the Boat Is Appraised At
When a bank lists a repo boat, shoppers think they have plenty of room for negotiation. However, that is not always the case, and it’s hard to determine how low a bank is willing to go.
So, before making a bid, check out the boat appraisal guide to get an idea, as lenders usually use these guides to price their boats.
Get Ready With Your Cleaning Supplies
You will find many repo boats that are decent in condition. Usually, they just need good cleaning because owners stop maintaining the boats before repossession.
It also means the boat might need minor repairs as it might not have received maintenance in a while.
Request a Survey and Sea Trial
An inspection of the boat before placing a bid is strongly recommended. You want to do a pre-purchase survey of the whole boat to make sure it is worthy of going in the water.
Never go for a boat without a survey, or else the deal can turn out to be a huge fail. If you discover major hull damage or you end up replacing the engine, it will cost you more than what the boat is worth.
If the boat has a diesel engine, thoroughly check it or get it checked by a professional. This will ensure that you are buying a decent boat and not just problems that will cost you unexpectedly.
Boat Loans When Buying Repossessed Boat
Getting a boat loan from the bank should be easy as long as the loan does not exceed the coat of the boat. Moreover, it can be even easier to get the loan approved when you find a good deal at a low price.
Good credit and more money for a down payment will lead to a better interest rate. And even though it can be harder to get a loan for more than 12 to 15 years on an old boat, it is typical of all boat loan plans.
It might be tricky to get a loan from the same bank that owns the boat you want to get the loan for. The band might offer you a good interest rate, but it will most likely be very strict with the loan requirements. That is because the bank won’t want to risk another boat owner defaulting on the same repo boat, which is understandable.
A late-model boat kept under covers is the ideal find, but expect to pay more for it. Or, look for a boat that needs minor repairs, and the dealer offers some warranty so you have a repo boat deal that won’t be a ripoff.
Whichever season you choose to buy a repo boat, you can get the best deals in terms of price on your next used boat.