Value of restored boats

[Ceto]

How is the value of a boat determined once the restoration is finished (I know, I know, it's never finished...)?

For insurance purposes and/or resale, for instance.

I would think that a restoration adds a certain value that is more than the sum of the price paid for all the new items fitted in the boat.

[Tim]

Value is always in the eye of the beholder. Cold monetary "value", however, will end up being determined by market conditions. There are no two ways around it: value in this case is a subjective term that is generally meaningless unless the boat is being bought, sold, or otherwise handled in a way where a relatively arbitrary figure must be placed upon her overall merits. A boat is worth what someone is willing to pay for her at a given time.

The particulars of any individual case make this a topic that's probably too vague and complex to adequately cover here, and there is always one scenario or another that creates exceptions to the basics detailed below. But in general, one shouldn't expect that their boat restoration will do anything beyond bringing their particular vessel up to perhaps the high end of the general historical monetary range for boats of their class. And even this may be reaching, depending on the quality and extent of the restoration or other work. Whether or not this equals or is greater than the sum of the parts installed is greatly dependent on factors that aren't possible to address in a general sense, but totaling up the invoices to determine how much one has increased the value is not an accurate undertaking. It really doesn't work that way.

In the case of value for insurance, the boat's value is arbitrarily determined using market research and anecdotal data typically provided by a disinterested, objective party: a surveyor. There are not any hard and fast rules for how surveyors assign value to any boat, nor any particular guidelines--in other words, there is a lot of discretion possible, provided the surveyor's report includes sufficient detail to back up the numbers provided. But it takes an exceptional vessel to cause the value to go very far either side of the typical market average for that boat.

One shouldn't restore a boat looking to necessarily improve her monetary value, but instead to improve her value to the owner. While most restorations improve the value of any boat, they often have a much lesser overall effect than we might like in our ideal scenario. The sum of items fitted in the boat rarely equates to the increase in value, and attempting to use this as a guideline has led many people to unrealistic expectations for their boats' values.

Except in rare cases with unique or otherwise extra-worthy boats (such as those with enduring historical value, or one-of-a-kind custom creations), there is not generally any financial benefit to major restorations--that is, it costs more to restore the boat than one can reasonably expect to get back at time of sale. Of course, this depends a lot on how much one paid for the boat in the first place, and what sort of values sisterships typically generate.

Boats that are "exceptional"--that is, far and above the general condition of others of their type--can be valued significantly higher than the typical market conditions might otherwise indicate, but these are few and far between. And in terms of resale, whether this sort of exceptional valuation would attract a buyer or not is largely dependent on circumstance and the luck of having the right person come along at the right time.

There's more to it than all this, but it's a start.

[Hirilondë]

I would think that a restoration adds a certain value that is more than the sum of the price paid for all the new items fitted in the boat.

I sure wish that were true.

I don't think the price a boat can fetch in the open market can be calculated. And even if brokers are good at estimating these numbers, it will rarely cover any restoration work, especially major refits. If someone isn't putting all their work into the boat for their own benefit, with the realistic expectation of having some equity at the end of ownership, they are fooling only themselves.

My boat is worth considerably more than I paid for it. Even without considering all the perks I got from my employer during the restoration, I will never recoup even a laborer's wage for my work. But then I did it for me, so the equity I get to cash in at the end is all a bonus.

[Ceasar Choppy]

All political references aside, you can put lipstick on a pig, but its still a pig. I'm not saying our boats are ugly per se. I am saying that they are used and that a used boat won't fetch a lot of money no matter how much lipstick you use (unless maybe you replaced the lead ballast with gold).

The good news is that the used boat market is relatively recession-proof. Prices are generally stable AND affordable compared to new boats; but thats because its the bottom of the market. It's a lot like the used car market actually. And while boats hold their value longer, no matter what you do, it remains a depreciating asset. A boat really is a hole in the water.

BUT, I think of all the money I would spend on vacations, bar hopping & clubbing, and a shrink, and then I look at what I spend on the boat and the enjoyment I get back, and the restoration "investment" is completely worth it.

[Ceto]

Then I'll narrow my question to insurance purposes. How do you determine the value of your restored boat for insurance purposes?

[Tim]

In the case of value for insurance, the boat's value is arbitrarily determined using market research and anecdotal data typically provided by a disinterested, objective party: a surveyor. There are not any hard and fast rules for how surveyors assign value to any boat, nor any particular guidelines--in other words, there is a lot of discretion possible, provided the surveyor's report includes sufficient detail to back up the numbers provided. But it takes an exceptional vessel to cause the value to go very far either side of the typical market average for that boat.

[Al]

How much do you get back from improvements? I spent $20K fixing up my last boat, which was not a classic and not as old as a Triton. When I sold it, I figure I got about $5K of my improvements back.

Insurance value: some companies are a lot better at this than others. I was able to substantially increase the agreed hull value of my last boat by proving a cost breakdown of the improvements to the insurance company. I'm not sure how it would work if you essentially go from a bare hull to a masterpiece since the starting point is almost always what you paid. A company called Heritage Marine Insurance advertises in Good Old Boat, 800-959-3047 (I have no experience with them).

[Rachel]

I'm not sure how it would work if you essentially go from a bare hull to a masterpiece since the starting point is almost always what you paid.

I insured my boat for agreed value, and when they asked what I paid for it I said that I didn't see how that could make any difference (aside from being one statistic that would average with hundreds of other sales over time). For example, what if a friend sold me the boat for a dollar? That wouldn't have any bearing on its market value (it would make me love the friend a lot though). Likewise, what if I overpaid, and spent $25,000 on a boat typically worth $15,000? That too should not affect the value (other than very slightly inching up the overall statistics).

As it was, I have a smart/agreeable insurance agent, and they agreed with my logic. As part of the agreed-value agreement, I provided photos of my boat and suggested a realistic market value. I had a broker sign off on this as being reasonable, and the value also happened to agree with data on other same-model boats that had sold.

Actually, I kept the agreed value a bit lower than I thought I could actually sell the boat for. I figured that I'd rather have a thousand less, if it came to it, than raise eyebrows over whether my value was inflated.

As far as selling prices in relation to how much one has spent on the boat; I always use my car to compare. That is, if I add up all the receipts for gas, maintenance, and improvements, then by that logic my 1980s Volvo is worth $30,000 or more (if only...)

Rachel

[heartofgold]

Insurance value of a boat is a tricky thing. I am not an expert, but I did see the fallout of this following Hurricanes Ivan, Dennis and Katrina. Much of this is what I heard from talking to owners, friends, businesses and insurance adjusters (one couple sailed in from Houston and lived aboard for 2 years while handling claims).

Many area boat owners, in an attempt to save a little on insurance, intentionally undervalued the insurance on their boats. This had a significant affect on the local boating community. Let me explain. A $40,000 was valued at $30,000 for insurance. Hurricane comes through and does $16,000 in damage. As this figure was more than half of the insured $30,000, so insurance totals the boat. No repairs possible and they settle with the owner for less than the vessel was actually worth.

But that is only half the story. Then the insurance company sells these "totaled" boats which are in reality in repairable condition. Some owners actually bought their boats back, and many more went to people looking for a deal. What happened? They do repairs (or have them done) and can't get insurance on their boats, because the boat has been "totaled," and therefore was considered an unaccpetable risk by the industry. This flooded the market with uninsurable boats. As insurance went up on all boats, the value of boats went down. It wasn't a pretty picture.

[Allen]

Ceto, Tim and I went through this insurance question with KAHOLEE before we launched. All I could get was a policy for $20k, which wouldn't replace the engine and electronics, much less the rest of the boat. We even tried to get one of those agreed value policies figuring I'd just pay for the extra coverage, but that was a no go too. If you spent this kind of money restoring just about any old car you could insure it for $100k easily, but because the corporate world does not see boats in the same way, we get the short end of the stick.

KAHOLEE, value to the insurance company $20K

Having the guy on the Etchells sail by and ask my sail number then tell me he used to own #126, priceless.

Having people on another Triton stop by and actually know how KAHOLEE's name was pronounced from reading about her on the web, priceless.

The experience of sailing her and living aboard her, priceless.

Retrun on investiment? Worth every penny mate...

[Ceto]

Thanks Allen. I like your no-nonsense answer.

If you spent this kind of money restoring just about any old car you could insure it for $100k easily, but because the corporate world does not see boats in the same way, we get the short end of the stick.

Perhaps that's because these cars are used as museum pieces and they don't see much use on the road? Turning an old boat into a showcase, you still have a risk of sinking which you do not have with a car...

Having the guy on the Etchells sail by and ask my sail number then tell me he used to own #126, priceless.

I know what you mean although it's not an incentive to do this kind of beautiful restoration. I restored an old Gibson amp that I got for nothing and sent pics of before and after to the former owner. I never got an answer though...

The experience of sailing her and living aboard her, priceless.

Retrun on investiment? Worth every penny mate...

That's my aim: give myself the best sailing experience I can get, in the cockpit and below deck.