Deposit to Make an Offer 'Valid?'

[AnchorageGuy]

Originally Posted by bashful

in a seller's market you play by the broker's rules. in a buyer's market the broker plays by your rules.

Sorry but that is not going to work with a reputable broker.

[irwinsailor]

I just do not understand why anyone would be expected to put down a deposit until buyer and seller have a meeting of the minds on the price. The day after my offer was accepted I put down the deposit and continued through with the other contingies. The end result was a deal.

[Stevens 47]

In California the broker (brokers are licensed) is required to present a offer with a deposit. It is customary to use the amount of 10% of offered price but it is not a requirement, however most sellers and broker would not see a low deposit as a serious offer, such as $500 for a 200K vessel. It is also the requirement that all offers made in writing must be presented to the seller. You can put down a dollar and the broker must present it to the seller. The seller will just counter what ever price and that the deposit is brought up an acceptable amount. One of the other reasons for deposits is that the costs to survey and haul the boat are normally born by the buyer, if the buyer stiffs the surveyor or the boat yard sometimes their only recourse is to lean the vessel under question. The broker will refund the buyers money less the inspection costs, this is how I have done it, but not all brokers are the same. Some brokers will manage the process disperse funds to all parties giving the buyer a statement at the end of the process with all expense detailed. I think Florida has similar laws the rest of the USA is not governed by a broker licensed requirements. But we ethical ones all work to some customary standard.

[sjpm]

I'm with you on that one... I can see why people wouldn't want to give free daysails or have their boat hauled simply on the basis of someone's offer with no deposit or contract in place. Sure makes sense to me.

There'd have to be some money on the table before that happens (or before the boat is even officially "off the market"). I completely understand that and fully agree.

Now, what boggles my mind is that you'd need to pay that deposit simply to get to negotiate on price, something that involves no risk or cost on anyone's part (save perhaps for a few emails sent back and forth.)

But anyway, at this point I'm just ranting If this is accepted practice then I guess I'll have to deal with it.

Thanks and Happy Holidays!

Originally Posted by BlueWaterSail

The 10% deposit on acceptance of the buyer's offer by the seller (subject to survey, sea trial) is an effective and accepted screening process to weed out serious buyers from those just interested in going out for a pleasure sail in the seller's boat because they feel like it.

Since you can always back out and get your money back if the survey/sea trial are not to your complete satisfaction, all that 10% says is "I'm serious about buying this boat". Sounds only fair to me.

BWS

[sjpm]

First of all, thanks for the info, it's very much appreciated.

I guess the "would not see a low deposit as a serious offer" part is what I don't get. Say someone makes an offer and puts down a buck. You may not think they are being serious, but if the offer amount is acceptable and you tell them so, what exactly have you lost? If they then proceed to put down the 10% deposit and eventually close the deal, everyone comes out ahead. If they don't, what's the big deal?

Please don't take this the wrong way, I'm genuinely curious as to the reasoning behind this.

Now, as far as haul-out costs and such goes... I absolutely agree, before things get to to that stage there should be money on the table and papers signed.

Thanks and happy holidays!

Originally Posted by Stevens 47

In California the broker (brokers are licensed) is required to present a offer with a deposit. It is customary to use the amount of 10% of offered price but it is not a requirement, however most sellers and broker would not see a low deposit as a serious offer, such as $500 for a 200K vessel. It is also the requirement that all offers made in writing must be presented to the seller. You can put down a dollar and the broker must present it to the seller. The seller will just counter what ever price and that the deposit is brought up an acceptable amount. One of the other reasons for deposits is that the costs to survey and haul the boat are normally born by the buyer, if the buyer stiffs the surveyor or the boat yard sometimes their only recourse is to lean the vessel under question. The broker will refund the buyers money less the inspection costs, this is how I have done it, but not all brokers are the same. Some brokers will manage the process disperse funds to all parties giving the buyer a statement at the end of the process with all expense detailed. I think Florida has similar laws the rest of the USA is not governed by a broker licensed requirements. But we ethical ones all work to some customary standard.

[AnchorageGuy]

Originally Posted by irwinsailor

I just do not understand why anyone would be expected to put down a deposit until buyer and seller have a meeting of the minds on the price. The day after my offer was accepted I put down the deposit and continued through with the other contingies. The end result was a deal.

Well IS, That is you but unfortunately there are a lot of flakes out there and the rules are designed for the flakes. If someone is seriously interested in purchasing a boat, what harm is done if he writes me a check and it sits in a folder. If a potential client is not willing to do at least that then I and probably most ever other broker has no interest in doing business with them because that is usually just the start of more aggravation and almost never winds up in a sale. You may be the exception but not the rule.

[AnchorageGuy]

Originally Posted by sjpm

First of all, thanks for the info, it's very much appreciated.

I guess the "would not see a low deposit as a serious offer" part is what I don't get. Say someone makes an offer and puts down a buck. You may not think they are being serious, but if the offer amount is acceptable and you tell them so, what exactly have you lost? If they then proceed to put down the 10% deposit and eventually close the deal, everyone comes out ahead. If they don't, what's the big deal?

Please don't take this the wrong way, I'm genuinely curious as to the reasoning behind this.

Now, as far as haul-out costs and such goes... I absolutely agree, before things get to to that stage there should be money on the table and papers signed.

Thanks and happy holidays!

I can tell you that if you walked into my office and put down a dollar and ask me to present an offer the only thing I would present is the door to you. That is not how the brokerage business is done and when we get an individual that is not interested in playing by the rules we will not waste our time nor the sellers. If you want to buy a boat through a broker this is what you must do. If you don't want to do that go buy one on your own. It is just the simple. There is no need for a broker to justify decades of proven practices as well as guarantees to the listing sellers that less than earnest tire kickers will be weeded out. That is what they pay the commission for and why they listed with a broker instead of selling it themselves. That usually comes after several incidents with folks that just wasted their time and drove them half crazy. Play by the rules or go find one on your own. Not complicated.

[AnchorageGuy]

On making lowball offers, Once you have insulted the seller with a ridiculous offer there is very little hope in bringing the sale to completion. So why start out with something you know will not earn you a dime. The broker does not get paid until the sale is closed and does not want to spend time and energy on a non productive negotiation. He will try to guide you in the process in a way that will be good for the buyer, seller and yes the broker. If that does not happen no one wins. There are brokers out there that are better than others at negotiation. But no one will start those negotiations knowing one of the parties will be insulted and not negotiate.

[Boracay]

When I brought Boracay I negotiated the price first, then put the deposit down.

There are so many overpriced boats out there that I cannot see how it would be worth any seller's while to put a deposit down without a clear idea on what the end result is going to be.

I'd look for another broker/seller unless the asking price is clearly right.

[Stevens 47]

You may not think they are being serious, but if the offer amount is acceptable and you tell them so, what exactly have you lost? If they then proceed to put down the 10% deposit and eventually close the deal, everyone comes out ahead. If they don't, what's the big deal?

The process of arriving at a price can be stressful with many emotions involved. Many sellers really find out if they really want to sell the boat when a deal is starring them in the face, some do not. Depending on the situation some sellers do not want to disclose their bottom line to any one including the broker. If you put yourself in the sellers shoes would you be willing to work thru and agree to a price if you do not know if the buyer can perform or is in fact a real buyer. That to some extent is what the size of the deposit indicates and I agree not always. I have never seen a low ball offer with a very low deposit succeed. I have seen a buyer walk up with 100% deposit and make a very low be accepted. It is about the perception.

If you agree to a price as a seller and the buyer only has $1 on the line without any provision to up the deposit and the buyer walks at the end of the process whats left for the seller, the seller may have costs more than you estimate such as travel, time off work or repairing issues that were discovered during the trials and surveys. No broker worth their salt would advise their client accept such a deal.

[AnchorageGuy]

Originally Posted by Boracay

When I brought Boracay I negotiated the price first, then put the deposit down.

There are so many overpriced boats out there that I cannot see how it would be worth any seller's while to put a deposit down without a clear idea on what the end result is going to be.

I'd look for another broker/seller unless the asking price is clearly right.

I think you all have not figured this out yet and not sure why cause it is so simple. Not sure how they do it Down Under but here in the states it is pretty standard. Going to another broker will get you right where you were before. No one is asking you to go to your bank and get a box full of cash and bring it in and plop down a deposit. You write a check, which is a piece of paper worth about 2 or 3 cents until it is cashed. That check sits in a file until the deal is agreed on. If that is too costly or difficult, as I said before, by all means go out and find the boat yourself and negotiate the deal yourself. It is done all of the time and you want hurt any brokers feelings. When we had our business we quite often suggested someone do just that.

[bmiller]

Originally Posted by Chuck Baier

On making lowball offers, Once you have insulted the seller with a ridiculous offer there is very little hope in bringing the sale to completion.

On the other hand there are lots of ridiculously priced boats on the market. One mans insult is anothers deal closer.
Bottom line is a boat, or anything, is only worth what someone is willing to pay for it and someone else is willing to accept. And if you as a broker did not like my offer and only "presented me the door", time to find a different broker, there's lots out there.
Business is business.

[Stillraining]

Originally Posted by Boracay

When I brought Boracay I negotiated the price first, then put the deposit down.

There are so many overpriced boats out there that I cannot see how it would be worth any seller's while to put a deposit down without a clear idea on what the end result is going to be.

I'd look for another broker/seller unless the asking price is clearly right.

Boracay: Just to clarify for the OP whom is a first time purchaser...Was that a final price negotiation take it or leave it?..then I could see that.

Im going to guess not though and instead what you are communicating is making a tentative offer like saying "Well if he would come down into my price range by dropping the price 20K I would be interested in taking a look at her seriously"....The price is droped and you carry on a standard 10% deposit deal pending sea trial and surveys...

Am I close?

This is indeed what I did on my last purchase...but in reality it is still the same...I/we just cut some of the fluff off the top to begin with...and as someone stated it works usually only in a buyers market which indeed we definitely have...The only catch is you have to be either willing to walk if refused or end up eating crow and looking like a weak negotiator and a fish on a string if you dont...I see no real benifit in taking this risk for the first time buyer in our curent market ..people are willing to deal..if not you can refuse the boat for any reason and get your deposit back..There is a boat on the next dock for sale as well...They will come running down the dock after you more then likely..

Just my humble opinion

[sjpm]

I'd like to point out that (at least in my particular case) the broker wants money transferred to an escrow account. That may not be a big box full of cash, but it's still a non-trivial amount of money I no longer have until the deal completes or falls apart.

Having a check sit in a broker's folder would probably be less of a big deal to me, given certain contractual guarantees on when it would/could be cashed.

Originally Posted by Chuck Baier

I think you all have not figured this out yet and not sure why cause it is so simple. Not sure how they do it Down Under but here in the states it is pretty standard. Going to another broker will get you right where you were before. No one is asking you to go to your bank and get a box full of cash and bring it in and plop down a deposit. You write a check, which is a piece of paper worth about 2 or 3 cents until it is cashed. That check sits in a file until the deal is agreed on. If that is too costly or difficult, as I said before, by all means go out and find the boat yourself and negotiate the deal yourself. It is done all of the time and you want hurt any brokers feelings. When we had our business we quite often suggested someone do just that.

[AnchorageGuy]

Originally Posted by sjpm

I'd like to point out that (at least in my particular case) the broker wants money transferred to an escrow account. That may not be a big box full of cash, but it's still a non-trivial amount of money I no longer have until the deal completes or falls apart.

Having a check sit in a broker's folder would probably be less of a big deal to me, given certain contractual guarantees on when it would/could be cashed.

I am not aware of too many brokers that would require this. Keep in mind most listings are available through multiple listings and are available to most brokerage firms. You might suggest the broker accept and hold a check for deposit. If he refuses than I must say perhaps you should move on. You can present an offer for the same boat through another broker.