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Overview Of How to Buy A Yacht: 10 Steps To Success

how to buy a yachtIf you choose to be your own yacht trader without a buyer's broker, this checklist links to handy tools will help you avoid common mistakes. We have worked with hundreds of boat buyers and they always are very anxious about all the paperwork and documents required to complete the sale of a yacht. It really is not all that bad, but you have to be mindful not to miss deadlines and to do your research.

To make buying a yacht a more pleasant and less risky transaction, we recommend that you have a good team on your side in your yacht broker, yacht surveyor and documentation agent. Similar to real estate sales, sellers pay the commission on a boat sale, so it won't cost you anything extra to have a yacht broker on your side. As a licensed and bonded yacht broker in Florida, we operate under a strict set of legal guidelines and ethical standards, and it's good to have us on your side during a transaction.

If you are an inexperienced boat buyer, you may be better served by having your own yacht broker to do the negotiations. However, if you want to go it alone, here are some guidelines to follow. Also read check out our sections on Boat Buying Tips and Charter Boat Buying Tips.

Yacht Financing

Once you have identified the boat you want to buy, you'll need to get a bank loan to finance the purchase. Yacht trading is not as common as a home mortgage so it can be a challenging process. Generally, we recommend that our clients get pre-qualified for a bank loan before they even start looking for a boat. With that pre-qualification in hand and a down payment of 20%, sellers are much more eager to negotiate.

Calculate the loan amount you can afford. These loan calculators below can help you determine a loan amount that fits your budget. Things to keep in mind:

  • Lenders will finance a yacht for up to 80% with a minimum 20% down payment for a term of 15 years. We do not recommend 20 yrs.
  • Your monthly payment is based on buying a boat for $100,000. Financing $80,000 for 15 years at 5.5% equals a monthly payment of $653.67.
  • Sales tax and coast guard documentation are your only closing costs. The documentation agent and Surveyor are paid directly by the buyer.
  • Many banks will not finance live-aboards. Do not mention it in your initial applications.
  • Lenders do not recognize charter income as additional income to qualify for a loan. Do not mention it in your initial applications.
  • Tip: Loan interest payments are deductible in the U.S. as "second home mortgage interest expenses", unless you already take this deduction on a second home.
  • What the banks are looking for is a maximum 40% debt to income ratio, liquid of at least one year of mortgage payments (these can be in the form of a 401K), a credit score above 700 and a loan history for a similar amount. They will require the last two years Tax returns and a personal balance sheet that shows a net worth capable of covering the loan

Other Things To Look Out For

  • Make sure the loan is simple interest, and that there is no pre-payment penalty
  • Do not submit applications to multiple lenders. Multiple inquiries lower your credit score

Read our article: Tips To An Afforadble Yacht Loan

Some Loan Calculators: Essex Credit or Boat Trader or LH-Finance

Check out marine lenders resources on our Favorite Links & Resources page.

Get Pre-Qualified For A Marine Loan

Get pre-qualified for marine financing in advance of purchasing a new catamaran with LH Finance, one of our preferred marine lenders. Getting pre-qualified is the initial step in the boat loan process. Applicants supply the Fiance company with their overall financial picture (income, assets, debts…); credit reports will not be pulled. After evaluating this initial information, your lending specialist will inform you of the loan amount that you may qualify for. Contact us and reference "Marine Loan Pre-Qualification".

Start Your Yacht Trader Journey with an Offer

You have found your dream boat and are ready to buy. The first steps in the yacht trader process are:

  • Make an "offer to purchase".
  • Prepare a written offer (the Purchase & Sale Agreement), including a 10% deposit to the seller, pending satisfactory survey, mechanical and engine inspections and sea trial. The deposit should go into an escrow account.
  • When we present offers, we usually go in at about 80% of the asking price as a starting point. The seller will counter, we will counter again, and this process will go back and forth until a mutually agreed upon price is reached.
  • Once the Purchase & Sale Agreement is signed by the seller and buyer at an agreed upon price, the buyer can schedule a haulout and a surveyor.
  • The buyer has a timeframe in which to complete survey (usually two weeks, but sometimes longer).
  • The seller is bound by the contract and prohibited from selling the vessel to anyone else, even if a better offer comes along.
  • The buyer can at any point during this time pull out of the deal and get a full refund of his 10% deposit.

Basic Purchase and Sale Agreement Contract Terms

The Purchase and Sale Agreement defines the name of the vessel, agreed upon amount, and terms of the agreement and should include the following minimum information:

  • Complete names and addresses of buyer and seller.
  • Complete description of boat and engine, including make, model, year, and Hull Identification Number (HIN) and engine serial number(s). A complete equipment / inventory list must be supplied.
  • The purchase price, including deposits paid by buyer and how the balance will be paid (for example, certified check, etc.).
  • A firm acceptance date describing when and where the deal will be finalized.
  • The condition of the boat at the time of acceptance.
  • Buyer's contingencies: Spell out that the sale hinges on a satisfactory survey and sea trial and the ability to obtain acceptable financing and marine insurance.
  • A statement that the boat is free of all liens and encumbrances.
  • The seller should also assume all responsibility for debts incurred during his ownership.

Survey and Seatrial

  • Most offers to purchase contain conditions (contingencies). The most common is your right to survey, inspect and a seatrial. We absolutely recommend you conduct a boat survey. It is in your interest to select your own independent surveyor and your broker (if you have one) will be able to give you a list of the three closest accredited surveyors to the vessel but you must interview them and choose the person that you would like to work with. If no broker, go to Society of Accredited Marine Surveyor (SAMS) for a list of accredited surveyors in area close to the vessel. Costs vary depending on the vessel location, distance from selected surveyor and type of vessel. Some surveyors will also conduct an analysis on the engine(s). If not, they may have recommendations.
  • You need to coordinate the haulout, survey, and seatrial with all interested parties. The haulout, or hang and hold as it's called, is usually scheduled for early in the day so that the seatrial can be done the same day.
  • It may take up to 2 days after survey for you to receive your written report from your surveyor. It typically includes photos of important areas on the vessel that are discussed. A good surveyor will point out every area that needs any amount of attention.
  • After reviewing your survey, you may reject the vessel because of the survey findings (or for any reason, or no reason). Your deposit will be wired back to your bank. If you choose to accept the vessel but want to be compensated for defects or have defects fixed, you will enter into another set of negotiations with the seller.
  • It is expected, after the survey, that the buyer will re-negotiate the price based on repairs that must be made. Would the seller be willing to make the repairs himself, or reduce the sale price?
  • Usually the seller will reduce the price but be reasonable. Don't expect perfectly new counter tops on a 15-year old boat. Fair wear and tear is reasonable, but osmosis, a major repair, is not.

Check out our surveyors resources on our Favorite Links & Resources page.

a Yacht survey is necessary for buying and selling yachts







Above are examples of yacht survey findings, such as leaks, stress cracks, and potential grounding.

Yacht Insurance

You will be required to purchase yacht insurance immediately after final price negotiations. This is primarily for the benefit of your finance company. Most finance companies won't write a check until the buyer can show proof of insurance. Read our tips on the pitfalls of marine insurance.

Check out our marine insurance company resources on our Favorite Links & Resources page.

Conditional Acceptance of Vessel

Once you decide to go ahead with the purchase of the vessel, you will be provided with a document called a "Conditional Acceptance of Vessel" that contains:

  • the final amount due to purchase the vessel, the purchase price minus the 10% deposit.
  • statement that the buyer accepts the condition of vessel "as is" with the condition that agreed upon repairs are done satisfactorily or with an agreed upon price reduction.

This document has a time constraint (usually 10 days) and must be adhered to or you will be out of contract and all bets are off. If you need more time, an addendum must be added that is signed by yourself and the seller that extends the date for acceptance or closing.

Bill of Sale

A Bill of Sale will be drawn up with the buyer's details and the seller's details, the vessel information and purchase price. The Bill of Sale needs to be signed and dated by both yourself and the seller to be consummated.

Final Payment and Closing Statement

This is the summary of the deal for the seller and the buyer. The Buyer's Financial Statement shows the final balance due to complete the purchase. You wire the funds. Once the funds are cleared in the escrow account and all documents are signed, the closing is done and funds are dispersed to the seller (and/or the seller's bank if a payoff is necessary to receive the Title).

Vessel Documentation

Vessel documentation is a national form of registration and provides conclusive evidence of nationality for international purposes. Your documentation agent will make sure that the boat title is free and clear of any encumbrances and liens. They will de-register/de-flag the boat, transfer ownership to the buyer, and register the boat in the new buyer's name. It is important to have your own documentation agent to ensure that all paperwork and documentation is in order before money is paid to the seller. Important documents are: Tax Paid Statement, signed Bill of Sale, and signed-over Title. See these FAQs about yacht documentation.

The bank will require U.S. Flagging of the boat (Coast Guard Documentation). This is in your and the Banks best interest. They get their lien recorded. You get a clear title that’s easy to deal with at settlement when you sell. Settlement costs are typically about $500 for documentation or around $300-$400 if you set up an LLC 

Check out our documentation agent company resources on our Favorite Links & Resources page.

Sales Tax

Every state is different, so for this exercise, I will discuss the Florida state rule. Please check with your own state for requirements. Sales tax is due on all boat sales within the State of Florida, if the vessel is located in Florida and staying in Florida. To register the vessel in your name, most states will require you to bring the Tax Paid statement. To report use tax due to the State of Florida on the purchase of a boat, the owner must complete an Ownership Declaration and Sales and Use Tax Report. Form DR-42B. Read this article about Florida Sales and Use Tax.

You do not avoid sales or use taxes by registering a boat in Delaware (or any other non-sales tax state) and it makes no difference whether you’re a state resident or not. If you use the boat in the state a majority of the time, the use tax is due to the state. By locating a boat in the Bahamas or the Caribbean for the majority of the year, the tax can legitimately be avoided. If the tax is due, it is 6% in Florida, capped at $18,000. Generally, once you pay it in one state, you don't pay it again in another, unless they have a personal property tax, like VA.

Out of State Sales and International Sales

The yacht buyer will be required to sign a Florida Tax Affidavit that will confirm that the buyer will be moving the vessel out of Florida after purchase and no taxes are due. It is required to file this paperwork with the State of Florida within 5 days of the closing.

Read our article on general boat-related taxes.

Purchase The Following Sales Documents @ $5.00/document

You will need some documents to complete the sale. If you don't already have the templates, purchase the documents here. Fill out the form and click on the forms you want to purchase. The four most important documents are:

  • Purchase and Sale Agreement
  • Acceptance of Vessel
  • Closing Statement
  • Bill of Sale

Call us! 1-804-815-5054 or Email We are eager to meet you!

Check Out Our "For Sale By Owner" Listings


* Please note: None of the companies listed in this article are recommended by Catamaran Guru™ specifically. We have worked with most of them and have had good results but please, always do your own research.

Comments (2)

This comment was minimized by the moderator on the site

So here is my question? What if I find a boat I'm interested in that is for sale by owner but I would like to be represented by a buyers broker? What are the cost associated with that. I can assume they will be my cost since owner doesn't want...

So here is my question? What if I find a boat I'm interested in that is for sale by owner but I would like to be represented by a buyers broker? What are the cost associated with that. I can assume they will be my cost since owner doesn't want broker representation.

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This comment was minimized by the moderator on the site

Hi Phillip, 5% is the industry standard but you can negotiate with your broker and the seller may be amenable to kicking in some money to make the sale happen.

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