Potential Buyer Asking for a "Test Drive"

[mglonnro]

I've sold two boats ($70-80k) without broker or actual sea trials but (if I remember correctly) with agreements structured like this:

1) Small initial payment at signing the contract.
2) Buyer pays for a survey and depending on the results, both parties can walk away (initial payment returned if buyer walks away).
3) About 80-90% of the boat is paid for immediately after both parties have approved the survey.
4) About 10-20% of the price is due a couple of days after the new owner has taken possession of the boat and may be withheld _only_ in case of serious newly found structural damage/other major things affecting the seaworthiness of the boat. Also here, during this window of a couple of days, both parties can walk away from the deal with all of the money returned.

There's probably a lot of things that could have gone wrong (but didn't). Still, it was very much a buyer's market when I sold these and I tried to make it as easy as possible to buy.

[valhalla360]

Originally Posted by Pinto

I am in the market for a boat and not ready to purchase yet - but, when I am - if any owner showed reluctance to me to have a test drive - I would be highly suspicious.

You are confusing the issue. No one is suggesting a sea trial/test drive is an inappropriate requirement.

This discussion is about when in the process, you can require it. A large percentage of sellers are going to want a commitment from the buyer before they put in the time and effort to take you for a ride...as can be seen from a few posts on this thread, we have people who claim to be "serious buyers" who don't even know what model they want.

[valhalla360]

Originally Posted by sailorcherry

Is there now a legal provision for putting down a deposit with a non refundable portion for a test sail/sea trial that doesn't cross the line of needing a captains license?

Because to my understanding, no there's not. Too bad, for it would weed out the all too common tire kicker. Back when I went to 6pak school we went over this scenario and the two brokers in my class confirmed the CG was pushing them to get a license for this reason.

I'm not sure...this may be a gray area but there is a difference between a broker taking a customer out for a sail and vs an owner taking a potential buyer out for a sail.

A broker is clearly a commercial business operation, so no question in my mind, to meet legal requirements, they need a licensed captain on board. I suspect but am not sure...an owner would not be considered a commercial operation as long as it's clearly documented to be a deposit (unlike the suggestion to do a charter and apply the charter cost to the price if they buy). In this case the ride is free and the payment is towards the purchase of the boat. The non-refundable part is just the penalty for not following thru on the purchase they agreed to.

Some of this is semantics but lawyers love semantics and when things go bad, don't count on the guy with no incentive telling the story that protects you, so having it in writing is best.

[john61ct]

And so as usual with an issue involving many variable, the only one true answer is, "it depends".

This thread has been very valuable in clarifying the most relevant factors.

For a motivated seller the decision may depend on just how busy they are that week, or vary from one prospect to the next.

I'm a big believer in trusting my intuition.

[valhalla360]

Originally Posted by mglonnro

I've sold two boats ($70-80k) without broker or actual sea trials but (if I remember correctly) with agreements structured like this:

1) Small initial payment at signing the contract.
2) Buyer pays for a survey and depending on the results, both parties can walk away (initial payment returned if buyer walks away).
3) About 80-90% of the boat is paid for immediately after both parties have approved the survey.
4) About 10-20% of the price is due a couple of days after the new owner has taken possession of the boat and may be withheld _only_ in case of serious newly found structural damage/other major things affecting the seaworthiness of the boat. Also here, during this window of a couple of days, both parties can walk away from the deal with all of the money returned.

The first 3 points, I agree with.

The 4th point scares me a little the way you wrote it. The survey is the time to find major structural issues and it's best to tie in the sea trial at the same time. The other part is you need to define exactly what qualifies as serious and newly found. Serious is a vague term. You may have no issue with something but the buyer may consider it "serious".

Very little incentive for a buyer not to find "serious" issues at stage 4 in an attempt to reduce the price after you've likely taken the boat off the market for a month or two and really committed to the sale. A big question is who's name is on the title at stage 4? I'm going to be hesitant to turn over 90% if I don't have a title in hand but once the title is in hand, it's hard for you to get it back if they decide something minor is "serious".

Much better to get all the inspection and testing done at stage 2 and if the buyer proceeds to stage 3, it's a done deal...anything found after that is the buyers problem.

[mglonnro]

Originally Posted by valhalla360

The first 3 points, I agree with.

The 4th point scares me a little the way you wrote it. The survey is the time to find major structural issues and it's best to tie in the sea trial at the same time. The other part is you need to define exactly what qualifies as serious and newly found. Serious is a vague term. You may have no issue with something but the buyer may consider it "serious".

Very little incentive for a buyer not to find "serious" issues at stage 4 in an attempt to reduce the price after you've likely taken the boat off the market for a month or two and really committed to the sale. A big question is who's name is on the title at stage 4? I'm going to be hesitant to turn over 90% if I don't have a title in hand but once the title is in hand, it's hard for you to get it back if they decide something minor is "serious".

Much better to get all the inspection and testing done at stage 2 and if the buyer proceeds to stage 3, it's a done deal...anything found after that is the buyers problem.

Yes, very good points!

Title was transferred at 100% paid, but control and responsibility (with required insurance etc) after 3.

Why 4 seemed less risky, I think, is because a) the survey should indeed have found these issues so quite a small chance of any new appearing, b) the wording was actually very much more qualified as to what could be considered serious enough and c) the seller's right to walk away, keep title to the boat (and yes, return the 80-90% already paid).

Also the circumstances. With the first boat I actually sailed with the buyers for the two days while we were checking the boat. The second boat was on ground when we made the contract and saw water maybe a couple months after that, so sea trials were a bit difficult (but as a seller I obviously wanted to sell it anyway ).

[john61ct]

As a motivated seller you can of course do whatever you like to clinch the deal.

But ask for that deal as a buyer, HA rots of ruck.

[mglonnro]

Originally Posted by john61ct

As a motivated seller you can of course do whatever you like to clinch the deal.

But ask for that deal as a buyer, HA rots of ruck.

Someone said it well there earlier, "it depends"

[sailorcherry]

What percentage of brokers are captains?
To my knowledge not that many and I'd wager not the majority. Now, does the brokerage ensure having 1-2 in their office? Probably. However, the two different listing agents I used (two different brokerages) were not licensed to my knowledge. Both very disappointing choices (one a referral, the other chosen due to comparible listings). With what I know now, it is interesting the only two brokers in the SF Bay I know of that I would use both are long time ticket holders - and the one does a couple of cruise outs a year with his past clients.

I totally agree with the last paragraph. It is such a shame we have to think this way. Sailing equates to most as freedom - not having to be bogged down with a litigious, could get the shaft, mindset.

Originally Posted by valhalla360

A broker is clearly a commercial business operation, so no question in my mind, to meet legal requirements, they need a licensed captain on board.

Some of this is semantics but lawyers love semantics and when things go bad, don't count on the guy with no incentive telling the story that protects you, so having it in writing is best.