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Pre-purchase Inspection of Ships

Ships at seaThe Pacoship financial model for the analysis of shipping investments has the cost of pre-purchase inspection as one of the inputs for calculating the cash flow of a shipping investment project.Before purchasing a secondhand ship, the buyer will always (with some scarce exceptions) inspect the vessel before purchase. 

Most often, the buyer will ask to inspect the ship before making an offer to buy. Sometimes the buyer makes an offer to buy the vessel, subject inspection.  In my view, it is, however, best practice to inspect the ship before making an offer. Making an offer to purchase with subject inspection may come across as a less serious intention to buy and may be viewed as an attempt to test out seller’s interest and price level.

Banks and other financiers will, of course, want to see the inspection report before committing to financing the ship purchase.  Banks will often have a list of approved surveyors that they wish the shipowner to use when inspecting a ship before purchase.   The bank or other financiers will rely on the written inspection report to determine the quality and state of the ship.

I came across this white paper on pre-purchase inspections of secondhand ships prepared by Wilhelmsen Ship Management:

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