buyer’s guide
Purchasing anewNordhavn With three decades of experience, PAE gives buyers choice, financial security and service By Jim Leishman
In addition to financial security and post-delivery service, PAE is unique in the industry in giving its customers a high degree of choice and involvement in the design of their Nordhavn.
80
circumnavigator | 2008-2009
pacific asian enterprises
For most people the purchase of a new yacht is the largest non-business or real estate transaction of their lives, and for many the decision process can take years. If there is one thing we know that Nordhavn buyers are not, it is impulsive. After almost two decades since the introduction of the Nordhavn 46, we also know two other important things about our customers—they demand the best of value, and each buyer is unique, as are the boats they buy. This knowledge has become the foundation upon which Pacific Asian Enterprises has built its business, allowing us to deliver over 600 new vessels. Beginning the process of buying a new Nordhavn is as easy as making an Internet inquiry requesting information. The inquiry is distributed to the appropriate region and then to the salesperson in a rotation “up” system. One could simply call PAE and ask for Jim Leishman or Dan Streech and we’re happy to help. As well, people can call our regional offices, or they can visit us at a boat show, meet the salespeople and choose one to assist. This initial contact begins the first of three contract phases at PAE. The customer first must decide that he wants to own a Nordhavn, which can take weeks, months and even years of consideration. Talking with Nordhavn owners, viewing and often crewing on their vessels, and hours of conversations with the PAE sales staff all serve to generate the confidence needed to move ahead. The second phase is the show of intent by the prospective buyer—a way that the PAE designers, project managers and sales staff can recognize the true desire of a prospect to purchase. This allows us to focus and provide the detailed information, price quotes, and design modifications required by him before going to contract. We call this a letter of intent. The LOI involves a simple threeparagraph agreement stating that the prospective buyer wishes to buy and PAE wishes
to sell a specific model and hull number, and a basic price and delivery date are agreed upon. The prospective buyer submits a deposit check of $10,000 and a time is given to develop a mutually agreeable contract, usually two to four weeks. At the end of the allotted time period one of two things happens: either the contract with detailed terms, prices and specifications is developed and accepted by the prospective buyer, or the deposit is refunded in full. A signed LOI usually leads to a purchase agreement—the final phase in the contract process—but often it does not. In fact, prospects sometimes sign and let numerous LOI’s expire before finally signing a formal purchase agreement. Financial security for our buyers is a cornerstone of PAE’s business. For over 30 years we’ve watched inexperienced, undercapitalized, sometimes unscrupulous but usually just incompetent boat builders come and go, often leaving a trail of financial havoc and broken dreams behind them. Nordhavn takes most of the financial risk away from the transaction. Rather than onerous progress payments tied to construction milestones, a Nordhavn buyer makes two payments— 10 percent upon signing a purchase agreement and another 10 percent payment when his boat begins the construction process. A third payment of 75 percent is due at the time of factory completion and the buyer’s acceptance of the vessel, his receipt of title documents and an insurance policy which collateralizes all three payments, securing the buyer’s position. A final payment of five percent is made upon the buyer’s acceptance of his yacht after commissioning and sea trials. A maximum of 20 percent of the vessel purchase price is temporarily unsecured, and while this is reasonable cause for concern by any discerning buyer it is far less than what is typically required in this type of transaction. While the vessel is being built and www.circumnavigatormag .com