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Old 13-05-2010, 12:34   #16
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Originally Posted by S/V Illusion
All good points but I still can't reason why I, as a seller, would take my boat off the market with a financing stipulation anymore than a buyer would like me to keep marketing a boat after which he has signed a contract.
There are boats listed on Yachtworld right now that have been for sale for more than a year. It is an understatement to say that it is not a seller's market right now. If you want to get your boat sold, and don't want to wait and wait until just the right buyer comes along, then you do what you have to do. Including accepting a financing contingency.

Or, think of it this way... Your boat has been on the market for 9 months and the best offer you've gotten is 70% of your asking price. You have chosen to reject those offers. Someone comes along and offers 85% of your asking price, but with a financing contingency. He has a pre-approval, and you are certain the boat is worth the price, so the financing should be a non-issue. Are you REALLY going to turn that down?

Of course, as the seller you would insist on a reasonable time limit for the buyer to acquire financing. Probably no more than a month. That way, if he took too long you would be able to put your boat back on the market.
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Old 16-05-2010, 18:08   #17
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You can get pre-approved for a boat loan, and that makes your offer more attractive to the seller.
When I decided to get a boat last year I tried to get pre-approved for a loan. I jusy wanted to be qualified to a given amount (I already knew what I could afford I'm not a money idiot). But, the finance company (to be nameless I guess or it will get deleted) wouldn't do it. They insisted that a boat model and sales price had to be submitted before they would look at me.

As far as taking a boat off the market with a financing item in the contact: well don't. Accept other offers while the deal goes though......... but be real in today's market buyers aren't beating down the doors.

On the other hand finding out I was going to be able to get insurance was a lot easier and Tabby cat took care of it!
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Old 17-05-2010, 10:11   #18
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Originally Posted by phboujon View Post
Hi,

I am getting ready to make an offer on a boat. I do not have a buyer broker, so I am dealing with the seller's broker on my own.

What clauses are acceptable when making an offer? I am planning to include:

Subject to:
- Sea trial
- Marine survey
- Engine inspection (i.e. compression test and oil draw)
- Getting financing
- Getting insurance

Is that reasonnable? Anything else I should add?

is there a specific format of offer I should follow, or can I create my own.

Thanks
Philippe
I'd want to know what exactly comes with the boat (instruments, spares, charts, etc.) so that when I go aboard there aren't any new gaping holes or empty lockers.

The marine survey should include a haul, preferably over a weekend so you can sound the hull, look for water streaks, and get a good look a the hull, keel, rudder, shaft, propeller, and zincs.

I'd also want a certified engine mechanic to check the transmission as well.

I don't think you're going to find financing for a boat. I've tried banks/credit unions want something like a 700+ credit score and 80% down. And I'd make sure you had the financing as secure as you can before signing or putting money down.

You might want to get preapproval from your insurance company too.

Other than that, your list sounds fine.
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Old 17-05-2010, 11:15   #19
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It's probably better to not have a "buyers broker" - they work for the seller anyways. You then have to deal with two professional salespeople trying to push through any deal to get their commission.

I assume you know - but just to check - do not find your surveyor through the broker. Ask around for a list and then call several. Make sure they've done a lot of sailboats. Even better if they've surveyed the same type of boat you're buying since they will be able to look at differences.

Find some owners of your type of boat (through an owners group or posting on this board or similar) and find out the well known problems. There's sure to be one or two issues that you will want to check.

If you haven't met the owner, try - at least by phone. If the owner's a real jerk or doesn't care, do you really want to take a chance on his boat? Most owner love their boats and want the new owner to love her too. The owner will also be able to help you after the sale to learn about the boat. This is much more valuable than insisting on getting every little thing on the survey fixed.

I just sold a boat to a guy who is likely to be a new lifelong friend. I spent days showing him every piece of the boat and two months after the sale I found a some boat spares in a storage shed that I'd forgotten - they had never been on the listing. I took the stuff down to him - no charge (well, he did happen to have some beer cold). There are plenty of horror stories about bad sellers - but I believe with sailboats more are like me.

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Old 19-05-2010, 08:03   #20
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Originally Posted by S/V Illusion View Post
Question for anyone who may be inclined to respond:
I understand the concept of monthly payment constraints but how does one set a price/budget under which they shop without knowing what they can pay?
It has absolutely nothing to do with knowing what you can pay. It has everything to do with whether or not the banks will dick you around.

Have you tried financing a boat in the last half year? The banks are being real shaky right now, especially if you're buying an older boat.

I know one guy who got approved for 30% down on a boat that was a very good deal, then after the survey the bank did a turn around and wanted him to put 30% down on the survey price, not the offer price(which was considerably lower).

Personally I got fed up enough with the boat loan process I just did an unsecured loan instead. It was far far easier to get a loan with zero collateral than getting a loan with a boat as collateral.
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Old 19-05-2010, 14:28   #21
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I think the point about a financing contingency is frivolous and would never agree to such a contract offer although it is not uncommon in real estate which is typically a different transaction.
Why would anyone waste their time not to mention the time of a broker and seller essentially "kicking tires" until he/she knows they can afford/finance the purchase?
It's crazy for a buyer of anything to obligate themselves to purchase when they don't know for sure that they have financing. Lenders will 'pre-qualify' a buyer but that is essentially meaningless. Lenders frequently turn down a loan after they have pre-qualified the borrower, which they can do because pre-qualification is not an obligation to lend.

In that situation, the buyer is in default of the purchase agreement because, without a financing contingency, the buyer is obligated to close despite the lender refusing to lend. Ergo, goodbye earnest money.

Whether you get your earnest money back from a failed transaction is determined by the purchase obligation contingencies. If you require a loan to close, say so.

And if you want the loan to be a minimum percentage of the purchase price, and at a certain interest rate for a certain term, say so. Failure to do so will obligate you to close with perhaps an undesirable loan or forfeit your earnest money.

Especially in this crazy-ass loan market.

No reasonable seller will object, especially if you are pre-qualified because most sellers misunderstand what that really means (not much). Besides, it's a buyer's market right now.
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Old 19-05-2010, 14:40   #22
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I also think it is crazy for a seller to tie up the boat waiting on a buyer who can't get financing. If the seller has to wait for the buyer to be able to pay for it he might miss a chance to close with someone that can.

I would not sell a boat that is contingent on the buyer getting financing. If they find they can't pay then the deposit is forfeit and pays for the time the boat is off the market. Too many people, especially these days, think they deserve far more than they can afford.
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Old 19-05-2010, 14:55   #23
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Hi,

I am getting ready to make an offer on a boat. I do not have a buyer broker, so I am dealing with the seller's broker on my own.

Why would you not get your own broker? It doesn't cost you anything - it comes out of the other broker's profit.
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Old 19-05-2010, 15:01   #24
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I also think it is crazy for a seller to tie up the boat waiting on a buyer who can't get financing. If the seller has to wait for the buyer to be able to pay for it he might miss a chance to close with someone that can.

I would not sell a boat that is contingent on the buyer getting financing. If they find they can't pay then the deposit is forfeit and pays for the time the boat is off the market. Too many people, especially these days, think they deserve far more than they can afford.
I've always loved the Art of the Deal.

I agree with you, which is why I counter with a drop-dead date when the buyer must waive their financing contingency, and I accept back-up offers contingent on the existing offer failing to close. So my property is never tied up and I know exactly when I'm free to close with a back-up buyer.

And I might add, my counters explain this is what I'm doing.

This is much better than sending a prospective buyer to find another boat just because they were smart about financing contingencies. Further, my buyers come to the deal very motived to close--because they know the boat is not in fact tied up at all. Only that they have first dibs for a specified period of time.

But you can do it your way if you want.
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Old 19-05-2010, 15:17   #25
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It's crazy for a buyer of anything to obligate themselves to purchase when they don't know for sure that they have financing.....

In that situation, the buyer is in default of the purchase agreement because, without a financing contingency, the buyer is obligated to close despite the lender refusing to lend. Ergo, goodbye earnest money.




No reasonable seller will object, especially if you are pre-qualified because most sellers misunderstand what that really means (not much). Besides, it's a buyer's market right now.
Not sure everyone agrees. It appears that, at least to me, a seller has no business entering into negs and signing a contract with no confidence he has the ability to live up to his obligation. This is analogous to playing some game with someone else's boat sale. If anyone ever told me they are unsure of their ability to pay an agreed price, I'd throw their ass out the door for wasting my time. This certainly seems "reasonable" to me!

If some jerk did this to me and lost his earnest money for lack of financing, I wouldn't lose any sleep over it.
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Old 19-05-2010, 15:30   #26
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If anyone ever told me they are unsure of their ability to pay an agreed price, I'd throw their ass out the door for wasting my time. This certainly seems "reasonable" to me!
When you get to the point where boats are 100 feet plus, most buyers do not have the ability to close without financing. In that market, I can personally guarantee that 100% of the purchase and sale agreements contain finance contingencies if the buyer is not closing with buyer sourced cash. Sellers expect them; the issue is how long until the buyer waives the contingency.

There really is no compelling reason to do it differently just because the boat is 30 feet or so.

If you want to turn away what might be a perfectly good buyer just because he's smart about financing contingencies, that's your business. Me, I let them take a swing at the bat--for a while. It's their earnest money at risk not mine.

Now, if the buyer is obviously flaky and will never qualify, that's an entirely different fact pattern. But I can't see turning down a strong buyer ONLY because he's smart about financing contingencies. Further, I think it's bad advice to tell people that's the best way to do it. Many times, the guy who is the smartest about how to structure the deal is also the strongest buyer. The two tend to go together.
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Old 19-05-2010, 18:44   #27
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I would not sell a boat that is contingent on the buyer getting financing. If they find they can't pay then the deposit is forfeit and pays for the time the boat is off the market. Too many people, especially these days, think they deserve far more than they can afford.
That's the way we handled it. Whether financing or just getting the money out of the bank.

Along with survey and pricing (based on survey) contingencies, we had a contingency date that said if we didn't produce the money the deposit is forfeit.

Fair for the seller. If you are serious about buying you don't worry about this clause.
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Old 19-05-2010, 19:13   #28
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When you get to the point where boats are 100 feet plus, most buyers do not have the ability to close without financing.

I will keep that in mind when I am selling the mega yacht.
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Old 20-05-2010, 20:39   #29
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Hope I'm not too late on this one.....but

Find out and get a commitment from the seller as to what condition the vessel is in. After he commits to you the condition, its time to talk about the survey and what happens after the survey. For example if the seller represents the vessel in excellent or very good condition, this is the time to get him to commit to paying for repairs needed as a result of the survey. Since he has just stated to you the vessel is in such great condition, he won't have a problem committing to this as he probably believes it is. As we all know, a good marine surveyor will discover many things to be repaired or improved upon. If he, the seller, agrees verbally, put it in writing. Using this method will save you, the buyer, a lot of money and will get a lot of repairs done to the boat that later on you the buyer would have to pay for.
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Old 20-05-2010, 20:50   #30
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It is better to have the Seller list… “What does not come with the boat” as viewed on such a date as well as the standard specifications list of equipment.

It is amazing what the Seller may decide is personal after the deal is made, especially if he thinks you got too good a deal.

Clear title is also an obvious legal stipulation
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