In the current pandemic scenario, any mechanism which reduces the requirement for prospective buyers or investors to fly around the globe and attend inspections can only be of benefit. Further, it has also become far more difficult and expensive to freely move around between countries due to extra protocols enforced. Due to this, the buoyant S& P market has experienced a notable increase in transactions that make use of the pre-sale ship inspections.
A pre-sale inspection is organized by sellers to assess the condition of their vessel and present the report to their potential buyers. The pre-sale report represents the vessel and provides buyers with an evaluation of the condition of its critical areas. However, as pre-sale inspections are commercially controlled by the vessel’s sellers, the reliability of these inspections and the S&P procedure is always questioned. Let’s discuss the advantages and disadvantages in detail, but first, understand the difference between pre-purchase and pre-sale inspections.
Difference between Pre-Purchase and Pre-Sale Inspection
Pre-purchase inspections typically refer to a buyer’s inspection where they engage with a 3rd party inspection company for a general condition assessment of the ship. Based on the surveyor assessment report provided by the inspection company, the buyer makes the decision and bids for purchasing the vessel. Whereas, in a pre-sale inspection, sellers engage a third-party inspection company to evaluate the condition of their ship.
Pros of Pre-sale inspections
The advantages of a pre-sale inspection differ for the seller and buyer of the ship. Read along to find out-
- Complete control of the vessel’s sale in the seller’s controlled market.
- Sellers get the opportunity to correct the defects or address pertaining issues before presenting the ship to its prospective buyers.
- There are no multiple surveyor attendances. Furthermore, there is less distraction to the shipboard crew and a reduced risk of COVID-19 infection to the crew.
- Confidential reports of the ship are only made available to serious buyers.
- Crew motivation is preserved.
- Buyers get inspection reports of the vessel at a relatively lower cost as the cost of the inspection is shared amongst all prospective buyers.
- The inspection report is readily available. There is no requirement of conducting a pre-purchase inspection.
Cons of a Pre-Sale Inspection
Like advantages, the sellers and buyers have different disadvantages when it comes to pre-sale inspections.
- As the inspection is controlled by sellers, buyers are not able to trust the inspection reports.
- By presenting a pre-sale inspection report, sellers lose some serious buyers who prefer to conduct the inspection by their representatives.
- As the inspection is controlled by sellers, there is a risk of evaluating a biased inspection report.
- Buyers have no control over the inspection procedures.
- Buyers have to compromise with the information provided and then make a decision based on it.
- There is no competitive advantage to the serious buyers. All buyers are provided with the same information.
- Lack of transparency in the S&P process from the perspective of the buyer.
Sinotech Marine’s Transparent Solution to the Pre-Sale Inspection
As both buyers and sellers have to face some risks and losses due to pre-sale inspection, Sinotech Marine has come up with a solution that will increase transparency and benefit all those associated with the transaction. Sinotech Marine provides ship inspection reports through its portal, www.shipinspectors.com. On this portal, a buyer can directly verify inspection reports, post their reviews and share their feedback with the community of customers. A feedback-driven community makes our inspectors more diligent and reliable for ship inspections.
The ship inspection reports are produced electronically on a portal by a ship inspector. Therefore, there are no possibilities of manipulation or alteration once populated by the ship inspector. The analytical reports with supporting documents are under complete control of the ship inspector, therefore; promoting impartiality and transparency.
How does it work?
Step 1: The inspector discusses with the sellers and decides the schedule, port, and cost of the inspection.
Step 2: After the survey is completed, the reports are published on Sinotech Marine’s portal www.shipinspectors.com
Step 3: Prospective buyers can visit the portal and download the report after making a payment of USD 1000/-
Step 4: 50% of the fees received from the buyer will be used to offset the seller’s cost of the inspection.
Connect with Sinotech Marine to know more about pre-sale inspection reports.