POSTED November 12, 2020
What is the Boat Survey Process?
If you’ve never bought a boat before, you’re probably curious to know the normal procedure. Do you need to put down a deposit? Do we need to slip the boat? Who pays for this? Do I need a boat survey and what does this process involve?
If you’re new to boating, it can seem daunting purchasing a boat. Buying a boat is not like any other purchase. There are certain steps that need to be followed to achieve a desirable outcome. There can be many pitfalls and newbie mistakes that can turn a pleasurable experience into a boating nightmare.
Decide on a boat
After your search, the first step is deciding on the boat you like. It’s worthwhile reviewing the service history to see if it’s within the manufacturer’s recommendations. This should come before putting down a deposit. If you don’t understand the paperwork, ask someone who does. Once you’ve found a boat, and viewed it in person, it’s time to get a contract signed. Once you have this, a deposit is paid so you can organise a boat survey and mechanical inspection.
Before the deposit is paid, a contract of sale must be written up and agreed to by the buyer and seller. It is normal practice to pay a deposit, having in the contract a clause pending a satisfactory boat survey. The survey needs to be completed in a set amount of time, and a sea trial undertaken. If issues arise on the survey, and you and the seller cannot agree to fixing or negotiating on, the deposit is fully refundable. Typical settlement periods allow 2 to 4 weeks, giving you time to do your due diligence before handover. If you have a short settlement period, you might not allow enough time to book with a reputable surveyor. There also needs to be sufficient time to get issues fixed or quoted if they arise on the survey.
Most sellers/brokers will request 5 to 10% deposit be paid before the vessel is taken to survey. Because it is a lot of effort to spend half to a full day inspecting, testing, slipping and sea trialing a boat, the seller wants to know you’re serious. For bigger boats, for example a $500,000 boat, the deposit at 10% would be $50,000. It is important to pay a deposit as otherwise you may get halfway through the boat survey process and the broker can rightfully sell the boat to somebody else. Having a deposit also allows the broker to motivate the vendor, showing they have a serious buyer ready to purchase should issues arise on the survey and there needs to be a price reduction.
Organise a Surveyor & Mechanic
Now the deposit is paid and contract signed, you should contact your preferred surveyor/mechanic and book them for an inspection. If you contact us to do the job, it is as simple as calling us to request a date. You then complete our online form to collect details, then we can organise the rest for you. Don’t be fooled by some surveyors claiming to provide pre-purchase reports, be sure to find out what exactly is inspected.
Most surveyors do not include mechanical, and if you decide to go with one of these providers it is advised to have a mechanic check the engines. An engine is often 50% of the cost of the boat, even sometimes more. Here at BoatBuy, we offer the full boat survey process and mechanical inspections in one comprehensive report upon request. All decent surveyors will be happy to provide a sample report upon request. It is also worthwhile asking the surveyor how long it will take to produce their report. If you opt for oil samples, be aware that they can take up to 5 days for the results so it’s important to factor this into your settlement dates.
What about slipping?
Slipping or hardstanding a vessel, is the process of removing it from the water for inspection or repair. To complete a satisfactory inspection, it is normal practice for the vessel to be “slipped” for the surveyor and mechanic to check the underwater components, have the bottom of the boat cleaned off, and then the vessel put back in the water for sea trialing. Slipping is also required for a pre-purchase report to be accepted by most insurance companies, and is necessary when buying a boat. If the vessel is not slipped, the surveyor can not verify if the bottom of the boat is clean, and therefore may not be able to get a satisfactory sea trial completed.
Who pays for, and organises, the slipping?
It is normal practice for the buyer to pay for the slipping and cleaning of the hull, to complete a boat survey. Occasionally I will have a customer ask about antifouling the boat while it’s slipped, and this is not recommended. The reason this is not recommended is because you need to give the surveyor time to compete the inspection, the vessel needs to go back in the water for a sea trial, and the report produced. You don’t want to pay for an antifoul on a boat that you down own yet! The broker/seller can organise the slipping if they have a preferred slipway, otherwise the surveyor can liaise with slipways and put the buyer in direct contact for payment.
Can we do the slipping separate to the sea trial?
If the survey needs to be conducted over the course of more than one day, it is normal practice for the surveyor to charge additional fees to visit the boat on more than one occasion.
Can I attend the Boat Survey process?
Yes, as a buyer it is encouraged that you attend the survey. This allows you to be available to see the process, and ask questions about areas you’re unsure about. It is a good idea to stay out of the way of the surveyor. This ensure you don’t distract them while they are inspecting important areas of the vessel.
Should I show the seller the finalised boat survey?
Generally speaking it is better to share the survey findings with the seller so that both parties can come to an agreement to move forward with the sale. When there are defects found, the buyer and seller can obtain quotes to rectify work where possible. In some circumstances the findings in the survey may require further diagnosis, and in this case it is recommend to get the seller to complete further diagnosis so you can come to an agreement that suits both parties.
Most reputable boat brokers will strongly recommend a survey is done prior to purchase. This provides a written baseline on the condition of the boat on the day the boat was sold, which can avoid later disputes. A boat broker/seller will not typically go to the same lengths of inspection as a surveyor. Issues are more likely to be uncovered on a survey as opposed to when a seller lists a boat.
Do I need to get a boat survey? The seller told me the boat was in good condition.
It is in your best interest to check your boat. A boat broker typically does not spend the same amount of time inspecting a boat as surveyor or mechanic would. Brokers rely on the survey report to form their opinion of the condition. While some brokers hire shoddy surveyors, most reputable brokers understand that it’s in their best interest to hire an experienced and thorough surveyor to avoid the chances of getting sued later down the track!
What if the boat is on a trailer?
If the boat is on a trailer it is your decision whether to sea trial it or not. For boats more then 10 years old, it is strongly recommended a sea trial is completed, as you cannot verify if a vessels seaworthiness without putting it in the water and testing it out under load. Potential issues such as performance, overheating, trailer problems and leaks are more likely to be found when the vessel is water tested.
Is a Boat Survey a warranty?
While the process of a boat survey is a necessary and valuable step when purchasing a boat, it is not a warranty. Most survey and mechanical inspections are visual only, as it is not plausible to disassemble another persons boat. The aim of the survey is to uncover as many issues as possible. However hidden or latent defects are possible. This does not mean a survey is useless. A good surveyor can detect an array of potential issues before they arise, saving you thousands before a purchase. As the nature of second hand boats are, once you purchase a boat and start using it, there will be additional items discovered.
1: Decide on a boat and negotiate the price.
2: Write up a contract of sale, including a clause stating the deposit is refundable if the survey is unsatisfactory.
3: Pay the deposit.
4: Book a surveyor/mechanic.
5: The surveyor/broker organises a slipway and date for the inspection to be completed.
6: Review survey report and proceed with sale if the report is satisfactory. If the report is unsatisfactory, negotiate or request the seller repair desired items on report.
7: Go boating!