Pre-survey - normal practice?

[SailingHarmonie]

Originally Posted by BBill

You scratched the surface with "overlaid counter offer". Are you saying a verbal request to change something like a specified haul out or survey date is a counter offer that automatically nullifies the original contract? That is what was implied in earlier posts and what I have been responding to.

I have seen a lot of boat purchase contracts and never have I seen one with a specifc survey or haul out date hard-coded into it. Doing so would be pretty stupid since a huge number of unforeseen events could shift the survey date one way or the other. The language that is normally used in boat purchase agreements throws all your fussing out the window.

Here, for example, is the exact language used in the last contract to purchase I was involved in:

Written or emailed acceptance or rejection of the vessel must be made by the Buyer within 48 hours of survey, no later than _____________. Buyer’s failure to exercise his right of acceptance or rejection as specified shall be construed as rejection. In the event of rejection the deposit shall be returned to Buyer after all expenses incurred by Buyer against vessel have been paid.

The date is blank in the uncompleted contract, because IT DEPENDS. If you are making an offer on December 22, for example, adding an extra week to accommodate holiday shutdowns would be smart.

If the buyer can not arrange the survey within the specified time, then yes, he is in technical breach of the agreement, and if the seller wanted to he could drop out and stay whole.

I am not sure WHY you feel you need to make this harder than it is, but really it is simple. I guess if you really wanted to you could make up some bizarre scenario that would make the simple terms of the contract difficult to implement, but it would be just that, bizarre.

[Nav4425]

It's always a good ide There really isn't such thing as a pre-survey. A surveyor who does this opens him or herself up for future trouble.
Just pay for fuil survey. It sounds like you want the bost snyway,

[2greens1red]

Again, as the OP, I really appreciate the replies and different opinions. So, what happened?

We discovered the pre-pre-survey:

1) Country 1 (Caribbean): we chose a recommended surveyor, we discussed around 100 photos, both in and out of the water. He mentioned a couple of potential problems apparent from the images (boat had been ashore since Covid started). His estimate was several tens of thousand $ for deck work. We didn't go ahead. Should we have known? Well, we could see work was needed, but heavily underestimated local rates for specialised work.

2) Country 2 (Europe): Same story as above, though a very different vessel, and we knew the surveyor personally. He was particularly interested in detailed keel photos (vessel was over 100yrs old), which we obtained. Estimate was again, several tens of thousand € this time, for potential renovation. The specialist work would have involved moving the boat to another country.

[Stingo]

What a very informative thread. Thank you to all who contributed.
Now bookmarked

[Reeve21]

It worked well for me. I was 600 miles away. For $200 I got the rig inspected from deck level, the deck sounded, confirmed that the boat was as clean as it looked in the pics and no bad smells. Used another guy for the full survey, supposedly the most thorough surveyor in the area, and there were no surprises.

The “walk through” survey was money well spent.

[TheWildDingo]

Originally Posted by Hobby

This has been an interesting conversation about purchasing a boat. I have been involved in three P &S agreement recently so I can add some relevant information.

In the US, many brokers belong to the Yacht Brokers Association of America(YBAA)
This is from the standard YBAA contract addressing acceptance of the vessel by the buyer following the survey-
ACCEPTANCE OF THE VESSEL: The BUYER shall notify the SELLING BROKER of his ACCEPTANCE of the VESSEL and its inventory in writing. If said notice is not received by the ACCEPTANCE DATE, the BUYER shall be deemed to have rejected the VESSEL and its inventory, subject to the terms, if any, of Paragraph 8.

Paragraphic 8 is for additional information specific to the vessel being sold. The contract then goes on to say the buyer is to pay for the survey and all associated costs and the deposit is to returned.

This clause in the contract allows the buyer to reject the vessel for any reason or no reason. It protects the buyer because if the vessel is rejected the buyer does not have to explain themselves to the broker. It would be polite to do so but is not required. It all depends on the relationship the buyer has with the broker and how much the buyer wants to share.

This is from the yacht brokers association.

Whether you think this might be used frivolously by the buyer, the fact remains the buyer has incurred travel costs and fees for survey and hauling and relaunching the boat. The buyer has spent a significant amount of money. They are not going to frivolously reject the boat.

Not all brokers belong to YBAA, but in my experience brokers that do not belong to YBAA will include this in the contract if you request it. You do need to change the wording as this is copywrite protected.

Good luck with your purchase.

Newbie here, and I just want to clarify "standard" purchasing practice from the buyer's perspective.

So with the majority of boat sales (let's say listed at e.g. $300k) requiring a 10% deposit ($30k), that deposit is refundable should the buyer want to walk away from the purchase?

Buyer costs (e.g. using a buyer agent/broker, travelling to see the vessel, formal survey, haul-out fees etc etc) would obviously not be refundable (buyer's expense of doing business).

Do I have this right regarding the 10% deposit?

Also, is it typical that purchase price may then be renegotiated after all due diligence (survey, sea-trial, etc) if issues have arisen with the vessel? Not that the seller is required to agree to a price reduction, but the option exists for the buyer to renegotiate or walk away?

[Cheechako]

Originally Posted by TheWildDingo

Newbie here, and I just want to clarify "standard" purchasing practice from the buyer's perspective.

So with the majority of boat sales (let's say listed at e.g. $300k) requiring a 10% deposit ($30k), that deposit is refundable should the buyer want to walk away from the purchase?

Buyer costs (e.g. using a buyer agent/broker, travelling to see the vessel, formal survey, haul-out fees etc etc) would obviously not be refundable (buyer's expense of doing business).

Do I have this right regarding the 10% deposit?

Also, is it typical that purchase price may then be renegotiated after all due diligence (survey, sea-trial, etc) if issues have arisen with the vessel? Not that the seller is required to agree to a price reduction, but the option exists for the buyer to renegotiate or walk away?

-Yes the buyer is refunded the deposit if he rejects the boat.
-I have never given anywhere near 10% deposit. Two boats in the $265k - $300k range I gave $5k deposit. One of those was just a faxed copy of a check. Brokers and owners want to sell boats. $5k indicates you are serious. If I was to give 10% I would want assurance in writing that it goes into an escrow account, not held by owner or broker. The marine industry has financial failures all the time. You dont want to get caught in a bankruptcy or some kind of holding pattern.

Remember, as a buyer YOU are in the drivers seat, you can structure things any way you want.

In the situation of substantial issues with the boat, what I have done in the past is reject the boat after inspection. Then make a lower offer. It can be done with the same contract after rejection is given in writing. Even just crossing some things off and adding new numbers with a date.

ALWAYS PUT A DEAD LINE DATE ON ANY OFFER OR COUNTEROFFER YOU MAKE! Otherwise legally, the other party has however long they want to accept or reject.

[2greens1red]

Rather a long shot, having reviewed the previous posts on this discussion, but if there's a qualified surveyor who'd initially perform a short pre-survey in Ft Lauderdale, on a 43' yacht, would you please make contact via PM?
Thanks

[2greens1red]

Long shot hit the target.....many thanks for a seriously professional assessment, Andy!

[BlueH2Obound]

Originally Posted by TheWildDingo

Newbie here, and I just want to clarify "standard" purchasing practice from the buyer's perspective. Understand that whatever you or I consider to be "standard" means nothing if it is not in the written, signed contract!

So with the majority of boat sales (let's say listed at e.g. $300k) requiring a 10% deposit ($30k), that deposit is refundable should the buyer want to walk away from the purchase? As mentioned above, make SURE that, whatever the amount of the deposit, it is held in escrow, not just in the broker's account.

Buyer costs (e.g. using a buyer agent/broker, travelling to see the vessel, formal survey, haul-out fees etc etc) would obviously not be refundable (buyer's expense of doing business). correct

Do I have this right regarding the 10% deposit?

Also, is it typical that purchase price may then be renegotiated after all due diligence (survey, sea-trial, etc) if issues have arisen with the vessel? Not that the seller is required to agree to a price reduction, but the option exists for the buyer to renegotiate or walk away?

One last item, if you chose to attempt to "renegotiate" the purchase price based on survey findings, etc, most buyer's (whether legally right or wrong, and I'm not an attorney, so I can't say) will take this as you REJECTING the original contract . . . . which will leave them free to accept another offer. So if attempting to "renegotiate" the price, just be prepared for the seller to sell the vessel to someone who may legitimately be "waiting in the wings" to see if your purchase goes through . . . .

[kaz911]

Here are my thoughts - after buying and selling a lot of boats in different countries.

Each country has different standards. But overall you are dealing with human beings. I have just been turned down on an offer - as sellers broker seem to have been the "management" company as well.

I did a hired pre-inspection - and it uncovered a LOT to be done - somewhere around 20+% of the advertised value of the boat. Quite a few things was opposite to "described" in the sales blurb. Boat was in "mint as delivered" condition so no upgrades done just "light maintenance" over 15 years - no track/ducumentation of any scheduled normal maintenance done.

We offered a price to cover the repair and way-way overdue maintenance. But sellers broker got angry (of course - he had misrepresented the boat) and I don't even think the seller was presented with the offer.

I have now decided for future offers - I will go the other way. Even if I know something is wrong - I wont disclose I know. It is no different to seller not disclosing known defects.

I will put in a reasonable offer with contingency of faults, repairs and maintenance being up to date (with some exceptions) - or any repair cost > $XXXX will be discounted from the agreed sale price.

Then the seller is more likely to accept - and I can let the full survey, sail condition report, rig inspection and sea trail impact the price push downwards.

Psychologically - once a seller has accepted selling the boat at the initial offer - the price adjustments or needed repairs are easier to "accept" - especially if seller already knew about the faults but had not disclosed them.

Pay close attention to Standing Rig - many boats up for sale now is "past" the Rig lifetime (according to many insurance companies). So make certain your purchase offer has a clause that says boat must be in a seaworthy and full standard insurable condition. I think that would cover "expired rig" but I have a lawyer working on it now to "waterproof" it.

If rig age is NOT mentioned - assume it is past it sell-by-date. If broker is honest - rig-age is disclosed but pay attention now to anything up to made in 2008'ish without replacement - or at least talk to your insurance company about insurance to include damage from Rig.

Apart from that our offer letters always state that the offer-letter intent trumps any legal agreements in the sales agreement in case of disagreement unless explicitly accepted by purchaser in written clear language. That is accepted by many courts as binding especially on complex "standard" contracts that normally favour the seller. Make certain seller signs the offer letter!

[boatpoker]

Not unusual at all for us to be hired to do a walk-thru for an out of town buyer for a minimal cost. Would you call that a pre-survey ?

After several thousand surveys over 30 years we know where the weak spots are on many models. We also know the most common areas where amateurs cut corners and are most likely to have messed things up.

On our "walk-thru's" it rarely takes more than 15-20 minutes to find the deal breakers. In some cases less than a minute on some models.

Our report consists of phone conversations, sometimes video calls while we walk-thru, a few photos of the major issues and our opinion on whether a full survey is worth the time and effort. This gives the buyer some solid information as to whether an offer or a trip to see the vessel is worth it.

[2greens1red]

boatpoker: "Our report consists of phone conversations, sometimes video calls while we walk-thru, a few photos of the major issues and our opinion on whether a full survey is worth the time and effort. This gives the buyer some solid information as to whether an offer or a trip to see the vessel is worth it."

That's it in a nutshell, but 15-20 mins might be a bit on the lean side? Plus estimates of what any work is going to cost (and the time factor) locally. i.e. stripping out an aging teak deck....compression post probs.....chain/knee plates....

[2greens1red]

This was interesting, and from an experienced surveyor's website in Rio Dulce, Guatemala:

"We are occasionally asked to look at a boat for a potential buyer and determine if it is worthwhile to travel to Rio Dulce to pursue the purchase further. To facilitate these requests we offer what we call a “Photo Survey”. At your request and permission of the owner we will go aboard the boat and photograph as much as possible to give you an idea of what the boat looks like now and write a very brief report on any significant findings."

We're not yet in contact with Capt. Brandes, but soon will be; Rio Dulce isn't the most straightforward destination for a quick visit, and his offer makes absolute sense.

https://www.riodulcesurveyors.com/

[2greens1red]

Revision to previous post: Capt Brandes has temporarily(?) handed-over Photo Surveys to Chris Wooley (W/App +502 4572 6803) at Rio Dulce.