PURCHASE NEGOTIATIONS

[meyermm]

I have been wondering based on a comment somewhere on this site. Example: You have found the boat, negotiated price which has been accepted. During the Survey/sea trial defects arise that were not obvious during pre-inspection. These defects will entail more than a little $$ and time spent but not critical problems. Do you call off the deal or renegotiate the price. Has anyone been in this position before. While a lot is written about getting surveys but none about what happens if the surveyor starts finding defects?

[cruisincanucks]

First of all, the Surveyor will always find problems because a boat will always have areas in need of improvement. If the owner represented the vessel properly you shouldn't find any big unexpected issues with the vessel. A haul-out inspection may show blisters for example..now that in some folks opinion is a deal breaker and in others not depending on how much actual damage is there. If you offer the seller a price which is based on a low ball offer and then come back on him for every little issue then you will most likely not get the vessel you want. If you offer a reasonable price and find issues on the vessel you like, it is not uncommon to either have the seller repair at his cost or arrange a cost split between either party which should be indicated on your offer to purchase documents. The sea trial is most likely your last chance to change your mind on the purchase. I have found more often then not that most sellers will give more value away to the new owners during the sea trial. Things like gear , books, charts etc... which sometimes are not listed in included equipment that will make up for things such as a burnt out bilge pump or chipped block etc. Finally you cannot expect to buy a vessel in "new" condition and pay "used" price nor can you expect the seller to pay to bring the vessel up to totally new condition. You have to be able to live with the defects based on the price you paid and the value you feel you are getting.if not ..just walk away and keep looking . Just my 2 cents worth...

[Pblais]

Do you call off the deal or renegotiate the price. Has anyone been in this position before.

You have to go into the the deal knowing there will be some defects and a used boat isn't brand new nor can it be made to be one. A surveyor has about 6 hours to find what they can. They find a lot but not everything.

If the idea is you take every defect in the survey and estimate a cost of repair then deduct that from the purchase price you may have what I would call the low ball price.

If the seller decides I'm not willing to move on the contract price you submitted and holds firm you can be tough too and walk away. You just paid for the haul out and survey plus your time to walk away from a boat you thought you wanted. Who cares that the seller didn't sell the boat at this point.

After a few times doing this you can see that there is a point between the low ball price and the price "you offered in the first place". If there are honest defects no one knew now the seller will see them that way too. You will be in a position to talk about it. Holding a few back means you are trying to overlook Minor things. All sellers want to think you would do that. At this point you need a short list that is the list of things you want. Without a real list of things you have no business discussing a new deal. You can't go back every few days with more items. One list to negotiated with the under standing this is it. You may have to give a little to get the most.

I take the approach that I won't offer a price on a boat I don't really want. I negotiate up front to get my best price before the survey. I tell the owner it's pretty much a straight up or down deal after the survey if they accept my up front price. Now when the survey comes back I have my price before I spent the survey money. You can't negotiate better after the survey than you can before you have invested into the deal.

After the survey you don't have the seller over a barrel because you already spent about $2,000 in misc. expenses. They can tell you to walk easier than you can. No one will feel hurt if you negotiate before the survey. On the last boat I sold the buyer and I did this approach. He got more than he would have any other way and I still talk to him on the phone with questions about the boat. He made out well and I had a deal that was closed quickly. Sellers want a solid offer they feel you will close quickly on. Those desires don't have to cost you any more so give them that to get your best price.

Lat advice: Don't fall in love until after the survey. You have to know you can walk away after the survey because it was not meant to be. The survey is about surprises you couldn't know before you made the offer. It's not a time to be looking for a way to re cut the deal because you don't have the advantage.

If it is a nice, well kept boat, you intend to keep it's going to be worth a lot of money to be able to call back the last owner with questions and get honest answers. It sure would be nice if they took your phone call.

[Rangiroo]

When we bought our Stevens 47 we negotiated the price then had a very thorough survey done which I was THERE for. The surveyor recommended lots of things be fixed. I went through the list and marked ALL the things that were essential to the safe operation of the boat or were major structural things. I left alone the smaller things that were more just general maintenance. I then faxed the marked list to the broker and told the broker that the owner needed to fix those things or give considereation in the price. I had the yard give me a written quote for each of the items listed and as the owner didn't want to mess with any of it the price was dropped by the total amount the yard had quoted me. It worked for me and it worked for the owner.....the price was dropped and the yard did the work and I ended up with the stuff fixed and paid all up the original negotiated price!

Good luck with it and stand your ground...there are plenty of boats for sale...and remember...in ANY negotiation...when the deal goes on the table the next person to speak loses the deal.....

[Hyprdrv]

I do Home Inspections. As far as I can tell the procedures are fairly close to being the same.
When my client and broker arrive at the property I start of by telling the buyer I'm here to find the major things wrong with this home. There normally are 2 lists, the Home Inspection Report and the Brokers Supplemental list. The HIR lists everything found wrong, the BS list is the list that you want fixed. You're the one who has to decide what is major or what you want to ask to be fixed. You need to divide this list of problems into 3 areas.
1. Cosmetic. Those items that need to be repaired but are easy to fix or items you can repair or fix yourself with little cost but require your time.
Example: The toilet seat is cracked.
2. Abnormal Repairs. Items that require repair or replacement that effect the usability of an item or system that you would expect to be in working order but doesn't effect the safety of the property.
Example: The toilet rocks do to rusted bolts or a bad seal.
3. Life Safety/Structural issues. Those items that do effect the safety or structural integrity of the property. Items that would place someone's life in danger or the structure in jeopardy.
Example: The floor under the toilet is rotted through do to a constant leak and the floor joists are rotted as well. The Roof trusses have been cut to facilitate storage.

Items under list 1 are your call.
Items under list 2 are items we will discuss but will still be your call.
Items under list 3 are to be repaired and certified repaired by a qualified firm. In some cases they are deal killers. I found a leaking basement was do to an underground stream flowing below the slab and it was washing dirt away.

I also tell the buyer that this property may be the love of the owners life. If you pile a bunch of little things onto a list of "required" repairs he's probably going to walk away from you. Pic your battles wisely. The report will have everything listed that was found wrong. Decide on the items that your ok with. The wife will want a new toilet seat anyway. I can replace those bolts but it's a crappy job, let's look at the rest of the items and hold off. I'm walking if the floor isn't fixed or the trusses aren't replaced by a reputable firm and certified by a structural engineer.
Once the list is compiled for the Owner you can determine if the deal is a good one or not. The Inspector should be able to tell you if the repairs are doable and the property will be out of jeopardy. However a large list of items should question the seller's motive as to why he's selling. Up front the purchase contract should always be based on an Inspection. In the end the deal should be negotiated based on the report.
I agree with Paul about "not falling in love until after the report". I'll disagree about "It's not a time to re-cut the deal". That depends on the report, what level the "items" fall under and the original purchase price. If I was paying price "A" for an "A" boat I wouldn't still pay "A" for a "B" boat.
I'll also qualify this by saying I don't own a boat at this time. I will have a friend who owns a boat look at it with me the second trip. I'll pay for a Pro to look at it before I buy.

Paul, since I plan on being in the same waters as You... will you be my friend??

Steve in VA

[Pblais]

Doing your home work up front gives you the tools to weigh a deal better than anything else. You need to know what other deals are out there and what similar boats sell for. You need an idea of what the boat is really worth before you make an offer. Your homework lets you deal from the point of view that there may be a better deal out there if you would just follow up on it. If you do a good job then you know what the boat is worth and can tell if the seller is just playing games or that have asked a good price. A seller asking a fair price means they are rational people to negotiate with. You need to size up the seller based on your homework not by how they look or dress or if they have poor taste in upholstery (most do).

You can't examine or survey every other boat but you can get a feel that this 1992 whatever can be had from other sellers in a range of asking prices. On paper you can see if one has more goodies than others. It's not that hard to see where the boat you are looking at falls in line with others.

BTW, your wife really will want a new toilet seat. Thats after two boats bought and one boat sold all the wives agreed - the seat is outta here!

Steve no problem, but I won't ask for a home survey just yet.

[Hyprdrv]

Well put Paul, Homework is the first and cheapest part of a purchase.

Some may think I was kidding about the toilet seat. Right up there with changing the front door locks!

I just look forward to meeting you and others from the site out on the Bay one day!

Steve

[stevensc]

A knowlegable boating friend recommends if you find a boat you are serious about you spend a night on the boat before proceeding with the survey. While onboard, take a shower, run the generator, a/c, a good while, use the heads, galley etc. Some major problems might arise (a generator problem did in his case) which would not do so during the survey and sea trial. I have not bought a boat since his comment so don't know how a seller might react to this request. I guess it would depend on how serious or desperate he is, I am selling my boat and wouldn't have a problem with it. But then my boat is perfect.
Maybe offer a hundred bucks or so for the trouble if the deal does not go through.
Steve

[Randyonr3]

Remember that the negotiation is in your arena , its up to you to decide on the offer.. then its up to them to accept or not.. And its wide open......
When we purchased our boat, we wanted it on the west coast, so doing our homework, we figured the price of the boats here, (which there arn't many on the west coast) and the price on the east coast and what it would take to haul one out here.. Ours was on a lake in Idaho, so in our Negotiation, we figured the break down of the boat, hauling it to the west coast and putting it back together...
And that was after figuring the price of the boat...
I agree with doing ALL your homework.....And keep notes..
A little horror story..
A number of years ago we purchased a 30 foot Catalina, took it on a sea trial and had a good survey, and came to a price that was good for them and myself, I purchased it from a dealer.. They delivered the boat a few days later and when I went below, the boat had been STRIPPED of all the goodies, leaving blank spots on the walls.. radios were gone, insturments were gone, and I felt I had been shafted, but the owner had told the dealer he was removing them for his new boat., and because it was NOT on any paperwork, I was screwed..
When taking it on a sea trial, everything that is in the boat at that time, should stay in the boat... AND PUT IT ON PAPER.....
and be very clear of what gos and what stays.........

[Nauticatarcher]

A couple of things, make sure you choose the surveyor not the broker, be there for the survey

[Hyprdrv]

"Any and all items permanently affixed or listed below shall convey with the purchase." On the West cost refrigerators normally don't convey for some reason. I did a house inspection. A few months later the Realtor calls and relays this story about the house.
They were doing there final walk-thru prior to closing and in the middle of the dining room there was a rectangular whole cut in the carpet down to the plywood. Remembering there was a large Persian rug there, the owner had had the rug dropped down into the carpet because it was so thick. No one noticed it at the time. The new buyer calls his lawyer friend who shows up at closing. They demand that the rug be returned and reinstalled. Turns out the damn rug was worth $10,000. They were in there rights to have it reinstalled even though they hadn't gone to closing. It was "permanently affixed" They ended up settling for all the carpet replaced at no cost through out the first floor. For a while I checked under throw rugs.

Steve

[Pblais]

if you find a boat you are serious about you spend a night on the boat before proceeding with the survey.

Most sellers won't do this. I wouldn't do it. You also don't get to sail the boat before the sea trial either and even then you may not sail much.

As far as equipment and goodies go they should already be in writing before you make the offer. It then becomes part of the purchase contract subject to survey. You never should assume anything is included. Most contracts state anything not listed is not included.

[Weyalan]

I think that you have to be realistic about the purchase process and the negotiations associated with the purchase. If you go in with the attitude that you are going to try to screw the seeler down on every dollar and cent that you can, your purchase might not go as smoothly as it would if you go in with the attitude that you want to get a "fair" price.

When you buy a second hand boat, obviously, it isn't going to be perfect, which will be reflected in the price. The "wriggle room" in the price is, for me, for "significant" issues that are either (a) not commensurate with the age and generacl condition of the vessel, or (b) items that are not as described in the vessel description / advertisment, etc.

For example, I bought a 1984 built boat. I didn't expect it to be "as new". However, since the stove described in the advertisement was described as "2 burner with oven & grill", but only 1 burner worked and the oven and grill didn't work at all, I negotiated a $1000 dollar price reduction, in consideration the cost of purchase & installation of a new stove...

[waterworldly]

Paul,
I am curious as to why you would be so against a serious buyer spending a night on the boat. I would also ask if it would be ok to really poke around, flush toilets, try faucets, stand in the shower, lay on the bed, look in EVERY cabinet, turn on all lights, radios etc, look under cushions, in the bilge, engine compartment, etc BEFORE an offer is made? The reason being that fixes on a boat tend to be much more complicated than a structure (such as plumbing etc) Thanks

[rebel heart]

Usually you can't get it insured until you've fixed a few things that the surveyor finds. I don't think it's unreasonable to knock those repair costs off the agreed price. I mean it's not "agreed" until it's paid.