Why you need a Professional Marine Survey before you buy a used boat.
By Barry Goodyear
During the past several years, the pleasure boat market has experienced major fluctuations in both values and buying trends. The recent change in the value of the Canadian dollar versus the US dollar, continued low interest rates, and renewed consumer confidence have made the used boat market in Canada hotter than ever. Add to that recent changes in some insurance companies requirements to issue a marine policy, and a pre-purchase marine inspection is more important than ever. Let’s look at why?
Reasons to do a Pre-Purchase Survey
There are three main reasons to do a marine inspection before you buy any used boat – regardless of the size. First, to determine the value and overall condition to set a fair purchase price; second to receive an appraisal from a professional to provide to your insurance company in order to obtain a marine policy (some companies won’t insure without a satisfactory survey); and thirdly, to alert the new owner to possible future maintenance or repair concerns that they can’t see, that they should factor into their decision to buy or not buy any particular boat.
For example, a Marine Surveyor’s might find that the boat you’re interested in is in fact one of the tens of thousands of boats that were written off by U.S. insurance companies due to hurricanes such as Sandy and Katrina, perhaps because it had been submerged. Or that the boat had been previously damaged and the repair was substandard. Or there may be significant maintenance issues required that you can’t easily see – osmosis blistering, softened decks, rotting stringers, etc.
What’s in a Survey?
The condition of the vessel is reported to the person paying the surveyor (not the boat owner) in its present state from a general examination and is limited to areas of the boat that are accessible for inspection which are not concealed. You can use the information in the survey to bargain down the purchase price if applicable.
An experienced surveyor will inspect your vessel using guidelines/standards set out by the A.B.Y.C. (American Boat and Yacht Council Inc.), and N.F.P.A. (National Fire Protection Association), and both the U.S.C.G. (United States Coast Guard) and C.C.G. TP 1332E (Canadian Coast Guard). Make sure the surveyor you hire is fully versed in these standards and receives regular updates.
The survey will consist of sounding and obtaining moisture meter readings through the hull, decks, superstructure, frames, stringers transom and bulkheads. This is the core of the inspection as there is balsa and plywood used in the coring in most of these areas, and with newer types of construction such as vacuum bagging, it is even more important to determine the condition of the core. This will determine if there are areas of delamination, air voids from time of manufacturing and the amount of moisture retention in the core and/or fiberglass. Most boats will have some moisture in certain areas and it needs to be determined if it is at normal or excessive levels for the age of the boat. All of the systems will be checked for operation (not diagnostic), both shore and house electrical systems thoroughly inspected, fuel installations etc. Your surveyor should use the regulations to thoroughly inspect the vessel. Surveyors are not licensed mechanics and what is not inspected by the surveyor are the mechanical items such as the engines, transmissions, sterndrives and generator. Another condition in your offer to purchase is a satisfactory mechanical inspection, which is performed after the marine survey. It is a good idea to have the mechanic come along on the sea trial.
The surveyor will also be checking for electrolysis activity (stray electrical current), osmosis, condition of underwater gear such as cutlass bearings, struts, propellers, any modifications, previous repairs, their condition and an overall inspection of fasteners such as bolts, chain plates and any evidence of leaks or signs of moisture weeping from the core.
If at all possible, make arrangements in your schedule to attend the survey so you can learn as much as you can about your new boat. The surveyor will explain the deficiencies and let you know which ones are normal for the age of the boat and which ones you perhaps need to go back and renegotiate on.
Having a survey is not just for mid-range or larger boats. Small runabouts and cuddy cabins can also have expensive problems with rotted stringers, weak transoms or floor boards, or they may have saturated flotation foam. While the boat may appear to “look” in great condition, the surveyor is looking at a lot more then just the cosmetics, in determining the structural condition and will make you aware of any problems there are with the boat before you finalize the deal, not after you’ve purchased the boat and you find out you require a survey for insurance.
Most insurance companies require an up to date survey once a vessel hits a certain age (usually 15 years) and every 5 years thereafter. The insurance company wants to know the overall condition of the vessel, is an acceptable risk and to determine its value. (This is not to suggest those vessels newer than 15 years do not require a survey as many problems can be found well before a boat is 15 years old.) Most marinas require your boat to be insured to protect boats in slips beside you as well as the marina itself.
Not all Marine Surveys are the Same
A Pre-Purchase Survey is often the most in depth look at your boat you’ll ever get, and your offer to purchase should stipulate that it is subject to a satisfactory independent out of water marine survey to the purchaser. In your offer, allow enough time for the survey to be completed. During certain times of the year it is very demanding fitting everyone’s needs into a tight schedule. Once received you should send a copy to your insurance company to see if they require any recommendations contained in the survey to be professionally completed.
Every Surveyor is NOT Created Equal!
Many people hang up a shingle and call themselves a surveyor. If you want to make sure the marine surveyor you hire is reputable and professional, ask the correct questions. Do all financial institutions and insurance companies accept them? Talk to your insurance company during the buying process as can provide a list of acceptable surveyors in the area, and many surveyors will travel. Ask if the surveyor repairs, sells or deal with boats other that surveying in any manner? This question will determine if there might be a conflict of interest. How many years have they been surveying and how many boats do you survey each year? This will determine if this is their full time job. What guidelines/regulations do you use? What associations do you belong to? Where did they receive their hands on experience and knowledge? Ask for a sample survey to see what you will be getting as a final product. You can also ask local marinas as they are aware of active professional surveyors that they deal with regularly. Most important is to ask if they are insured with not just liability insurance but with errors and omissions insurance and if they aren’t, move onto the next surveyor. Survey fees vary depending on the boat; what model, year, type of construction and if there is any travel required. Survey fees range can from $17.00 to $22.00 per foot.
Knowing the information that a pre-purchase marine inspection can reveal, may significantly change the real market value of the boat compared to other similar vessels of the same size and year. After spending a few dollars on a survey, you may choose to walk away from the boat rather than incur the repair costs involved. You may also find that with this information the boat is not insurable, and thus you may not be able to keep it in a marina. In short, the few dollars you will spend on a survey is much less expensive than buying a problem, or can give you the confidence that you are buying a boat that will last you for years to come.
Barry Goodyear is the owner of Ra Kon Marine Surveyors & Appraisers since 1980. You can reach him at 1-877-777-2566 or www.rakon.ca
Suggested Conditions to Include in your Offer to Purchase:
- The boat is free of any liens or encumbrances.
- Subject to an out of water marine inspection.
- Subject to acquiring financing and insurance.
- Satisfactory oil analysis of engines, transmissions and generator’s.
- Sea trial satisfactory to purchaser.
- All systems are in good working and in operational order including ground tackle and running gear by time of sea trial and delivery of vessel upon closing of the sale.
- The vendor will familiarize the new owner with all of the operating systems of the vessel.