Deposit to Make an Offer 'Valid?'

[AnchorageGuy]

Originally Posted by sjpm

A very kind offer Chuck and in fact probably not a bad idea at all.

Can I ask you a question though? If I engage a broker to look for a boat for me, am I at that point contractually obligated? In other words if I walk past my dream boat at a marina and it is for sale by owner, am I free to negotiate directy with that owner?

To answer your question, I am currently living in Denver. When all our loose ends are tied up, we intend to head to the boat selling mecca of the US: South Florida.

Thanks and have a great new year.

You are under no obligation if you find a boat thru a private sale or even another broker.

[Stillraining]

Originally Posted by sjpm

If I engage a broker to look for a boat for me, am I at that point contractually obligated? In other words if I walk past my dream boat at a marina and it is for sale by owner, am I free to negotiate directy with that owner? .

Yes you can...and just to add to what Chuck said,

if you ask a broker to FIND you a boat regardless of rather its listed or not..he is entitled to sue you for his commission if you close the deal behind his back...and will most likely win.

[hellosailor]

"am I at that point contractually obligated? "
That would depend on your state laws, and whether you made an oral contract under those laws, or signed a written contract. Oral contracts are often hard to enforce, any broker with any experience will probably ask you for a written contract and signature for just that reason. But if you 'engage' a broker, that sounds like an oral contract, and the only question is if he can or will enforce it against you.

[otgadventures]

Pardon my cynical 2 cents in this long thread, but buyers must also remember that the 10% "earnest money deposit" although contingent on a satisfactory survey and sea trial also happens to be just about the same amount as the broker's fee. They are in business after all, and like regular paychecks, groceries, mortgage payments, etc. Again echoing an earlier post it definitely IS a buyers' market, and if a broker fails to present ANY offer, it is probably grounds for a license review by the appropriate agency. The end result however is that if YOU want a boat, put your money where your heart is or don't waste people's time, or insult a professional broker.

BTW we just sold "Off The Grid" without a broker involvement, and it actually was quite a smooth process. The new owner is a young exhuberant man with the energy to take on a new project, and we wish him happy sailing.

Happy 2009!

Originally Posted by Chuck Baier

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.

[Cheechako]

Originally Posted by Chuck Baier
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.....

You would have likely lost a couple big sales from me, athough I would never offer a dollar. What occurrred on some of my sales is I filled out an offer sheet and the broker immediately called the seller to see if we were going to get close enough to make a deposit. After an hour of haggling, if it was going to work I would give a deposit, subject to the usual stuff. Get 'em while their hot! While inspecting a boat, if I see the owner's name on the registration or other papers I usually write down the info. If the Broker doesn't want to forward an offer I can contact the owner and just tell him I made an offer. Never had to do that though, although I have contacted owners with questions etc if the broker was making communication too difficult etc.... I've found talking directly with the owner you get better info, If you ask an owner directly about blister history, you will ususaly find out more... sometimes the nuances change seller to broker to buyer.... if you know what i mean.

[Palarran]

When I'm buying, I try to think like the seller. If I was selling, I want the deal done quick and I want the money. So putting 10% in a escrow account shouldn't be a problem if your serious. What I am going to do also if have my banker supply a letter of deposit/credit also so the seller knows I have the money to actually purchase. Today this is a huge issue. I can't believe there will be a better time to purchase a boat then in the next 6 months.

[Norm]

I think CarlF mentioned it first in this thread, but what yacht brokers commonly refer to as an escrow account is only a client trust account. The broker has complete control of that account.

Escrow should be a completely neutral party, not buyer, seller, or broker.

I would like to make an all cash offer on a $50k boat at the moment accompanied by a bank account statement showing sufficient funds to complete the transaction.

The broker is insisting on a 10% deposit to be placed in his psuedo "escrow" account and won't present an offer without it.

I know the seller really needs to sell this boat and he's going to lose a serious buyer who could close the deal quickly. I think I'll send him copies of all my emails with his broker and let him decide what's in his best interest.

[Cheechako]

Another broker inhibiting a sale. You should pay some deposit, but there is no reason it has to be too big.... just enough to know you're serious. I agree, if you know the sellers info go to them. The way boats sit, I dont understand this... Let's see: "I can let the boat sit for another few months, or I can let it go to survey and see what happens...." Doesn't take a brain surgeon. At this point it's just an offer. The best brokers I used for buying and selling got right on the phone after the papers were filled out with an offer and bounced it off the seller. I've personally had to close the deal on two boats I sold that the broker said had fell apart. I always structure my offers so I can walk for any reason. So if I dont like the survey /further inspection I can get out even if the seller is willing to fix the problem. Let's face it, not all problems can really be fixed long term with confidence and the instructions from the broker or seller on how to fix it make a huge differnce in cost and quality.

[Hyprdrv]

Let's say your buying a boat for $200k. I would go to my attorney and tell him to set up paperwork for a Promissory Note for $20k. It's as good as gold if I fail to meet the contract requirements and the money stays in my account. Period. I've used this means of "deposit" for properties far more expensive than a boat and had no one bulk at the note.
Here's what happened on my first boat buying experience. I found a boat in Tampa we were interested in. I told my broker I was thinking of making an offer around $20k lower than the asking price and he contacted the seller's agent to get a feel who contacted the seller and we made the offer contingent on a personal inspection first. This required a field trip and a promissory note of $20k the deal didn't go through do to my lovely wife thinking it was to small. Go figure.. Anyway it cost me $500 by the time all this was done in airfare, car rental, and such, none refundable. That sounds like a pretty serious buyer to me. It's taken 2 months to locate our new to us boat and probably won't be another month by the time all is completed. Now if the money was sitting in the brokers office I wouldn't be making anything on that money. But who would? The Broker of course. In most cases if I know the buyer is spending the time and money to purchase something the deposit is the least of my concerns as a seller. Now what if it's a sellers market and I got offers for 20% more than my asking price? Then the rules are different. I've had everything but the rights to their first unborn on some deals. I believe it's the time factor that's more important to the seller. It's the maintaining the open communications with the seller and buyer (something most Realtors and Brokers don't want) which make a deal float along smoothly. You get the Broker involved when it's time to do the paperwork.

Steve

[Cheechako]

and always, always, always put a deadline on an offer or counter offer. I had to pay attorneys fees once as a seller when my borker didnt put a deadline on a counteroffer and the potential buyer claimed he still had first right of refusal. (the boat sold out from under him at full price when he didnt respond to the counter!)

[hellosailor]

Hypr, how much did your attorney charge you to set up the promissory note? And did your bank charge you too?

[Hyprdrv]

It's a legal document administered by the Attorney. Since it only required his signature and a notary it was normally a freebie but I have a long term relationship with him. Once I believe I saw it come up on closing costs as $50 when I used an out of state Attorney. The bank never charged me for securing money in an account that they were still making money on.

Steve

ooh I just noticed I need to change my tag for "boat"!

[RigelKent]

I think I may have found a used Beneteau 350 to make an offer on. The owner and his wife seem very nice and he'd like to save the cost of the broker. We discussed the process: deposit, survey at my expense, and sea trial - and that I can opt not to go through with the purchase and my deposit would be refunded. But since this is an owner selling without broker, do any of the rules and guidlines change? Has anyone purchased from an owner 'sans broker' and had the deal go sour? Any lessons learned you can share would be appreciated.

[Dockhead]

Why don't you look at it this way. You have a certain amount of bargaining power, or bargaining chips, if you want to look at it that way. This is finite, whether you're in a strong position (a buyer today) or a weak position (a buyer a couple of years ago, for a boat in much demand). What do you want to get for your chips? A great big slice off the price? Or the convenience of not putting any significant money on the table in the first stages?

I would give and give away everything which is not so important to you, especially something symbolic like how much money goes onto the table at the beginning, and concentrate on the price, using all your chips for that.

[CarlF]

Rigel,

It's easy to forget that brokers are salespeople not counsel. They get paid only on a sale. And then they are paid by the seller. From a buyer's point of view, these are two serious conflicts of interest.

I've bought two boats without a broker. One for $5000 one for $500,000. I've also used brokers. I always use an attorney and insist that the deposit is held by an attorney (either mine or the seller's). Do not let the seller hold the deposit.

Since the seller is saving as much as 10% by not using a broker, it's reasonable to insist on a discount to cover your attorney costs and then some.

If you have an attorney you trust that's fine. If not, a great tactic is to simply find an attorney near the boat. Any attorney in a coastal town will have done many boat sales and they may have (or be able to learn with a few calls) some useful information about the boat or the seller. They won't take you on if they feel there's any conflict of interest. Be sure to agree in advance with the attorney about their fees - a "not to exceed" seems to work best.

Carl