Deposit to Make an Offer 'Valid?'

[sjpm]

At what point in the buying process would you expect to have to make deposit on a boat you are interested in buying? My understanding was something along the lines of:

-Make offer/counter offers/etc until buyer and seller agree on a price.
-Put a deposit down to take the boat of the market, sign contract
-Do what it is you wanted to do before agreeing to buy (survey, sea trail)
-Close sale, pay for boat and take delivery of it as agreed in contract

Now... I just made an offer on a boat and the broker says that in order for the seller to consider my offer "valid" I need to sign a contract and put down 10%.

Now... Let me get out of the way: I've never bought a boat before. If this is how things are done, well, "when in Rome" and all that.

I might be paranoid but I can't shake the feeling that the broker just wants a not inconsiderable amount of my money in an escrow account so that I'm more "motivated" and less inclined to walk away if the negotiations are not progressing.

Anyway, any advice much appreciated!

Thanks!

[AnchorageGuy]

Broker is correct. That is the way it is done if you want the broker to present the offer and is standard in the industry. Otherwise they would have a hundred people making offers that had no intentions to buy. Most brokers will hold the check until an agreement is reached on the price then you adjust up or down, but usually up and the broker deposits the check. But that is the choice of the brokerage. High end brokerages will deposit the money at the time the contract is presented to the seller.

[Stillraining]

Chuck is right

Also Some brokerages will not deposit the check at all but just hold it in a safe..then when things close give you the option to write one check for the agreed on amount and give the deposit check back to you..

[AnchorageGuy]

We owned our own Brokerage on the Chesapeake for 10 years and had dealings at one time or another with probably every brokerage firm on the eastern seaboard.

[sjpm]

Wow that's... different. Don't get me wrong, I'm not questioning you as you obviously know what you're talking about, being in the business for 10 years but.. Wow!

Conjures up images of car dealerships demanding 10% deposits before letting you on the lot to look at the cars.

Thanks for putting me straight, certainly not what I was hoping (or expecting, for that matter) to hear, but... it is what it is.

Thanks and happy holidays.

Originally Posted by Chuck Baier

Broker is correct. That is the way it is done if you want the broker to present the offer and is standard in the industry. Otherwise they would have a hundred people making offers that had no intentions to buy. Most brokers will hold the check until an agreement is reached on the price then you adjust up or down, but usually up and the broker deposits the check. But that is the choice of the brokerage. High end brokerages will deposit the money at the time the contract is presented to the seller.

[sabray]

I think the last boat I bought I made an offer that was contingent on survey etc... The owner informally accepted and a contract was drawn up. I deposited money in escrow and the boat was surveyed I countered with a lower offer based on the survey. We closed I think both owner and I walked away thinking we could have done better but it was as close to fair as possible. Im still happy and I assume the past owners are content. I did go back as some equipment was missing and the past owner asdmitted selling it prior to closing the eqipment was replaced. I should have checked better.
Prior to that I had bought a boat and the owner was in tears. I thought he was distressed over selling his beloved boat. several months later I discovered they were tears of joy for unloading the rotten rig.

[marty9876]

From what I've read this is the normal process in the US. Funny part is what I've read is people not from the US look and laugh at us for the process, the deposit part. Generally my understanding is the contracts are so open ended for the buyer it's possible to back out of the deal for any or no reason.

I've never bought a boat either, and when in Rome. I've also read and believe boats can be some in any number of ways and there is no -one- right or wrong way.

[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

[jens_elsborg]

Together with friends I bought a boat in the US in may 08 and accepted putting down a deposit which ensured that we were first in line to finish negotiations. We ended up agreeing on price and finalized the deal. We were a bit surprised that the owner removed things like lamps and life wests and other things claiming they were personal items. We are from Denmark and this is not practise here, but what can you do after paying up... Just make sure you put everything in writing and insist on a inventory.
We are very happy with the boat and are currently getting it ready for a circumnavigation.

[Pblais]

The deposit is also meant to keep a buyer from competing with multiple sellers on multiple boats at the same time knowing full well they will only buy one of them. It ties up the losing sellers since the boats under contract won't be looked at as much by other would be buyers.

Signing multiple contracts to purchase when you knew ahead of time you would not buy them all is criminal fraud even if you didn't know which boat you would buy. You could then be made to forfeit your other deposits. The deposit keeps this possibility to a minimum. Brokers do know each other. They may compete but they talk to each other too.

Trying to string out multiple boats deals all at the same time is masochistic any way. You need to be focused to do a proper job when purchasing a boat. It is a lot of work.

[stevensc]

"We were a bit surprised that the owner removed things like lamps and life wests and other things claiming they were personal items. We are from Denmark and this is not practise here, but what can you do after paying up... Just make sure you put everything in writing and insist on a inventory."

It is a good idea to get a "What is NOT included" list from the owner, as soon as possible to avoid any surprises.
Steve
We are very happy with the boat and are currently getting it ready for a circumnavigation.

[irwinsailor]

All of my offers have said a $$$ deposit will be deposited with broker when offer is accepted by seller. My broker did not like it much but he did sell the boat. I just don't like to tie up my money while negotiating.

[AnchorageGuy]

IS, That is a decision made by the broker but you will find most will not. I have done this on occasion with people I knew very well and repeat customers over the years but they were the few exceptions. In most cases the first question the seller ask was if I had a deposit. As for items removed, every sales contract should be accompanied by an equipment list and is part of the contract. Any item not on that list is not part of the contract and the seller may or may not remove it.

[Pelagic]

Merry Xmas to all! I think the 10% is reasonable if put in an escrow account by a reputable broker.

Especially if the boat is overseas, you don’ want to waste your time, The deposit guarantees that your accepted offer with inspection subjects is usually good for 30 days and will give you the time to seriously inspect the purchase in detail.

I am a strong believer in making the Owner compile a list of what is not part of the purchase, at that time so as to avoid any issues later.

Selling Broker’s tend to resist that for some reason but inventories are notoriously incomplete and perhaps they see that as a final negotiating ploy for their client. ( I remove that issue right away before making a deposit and usually negotiate the price down after inspection)

[Bash]

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