Cruisers Forum
 


Join CruisersForum Today

Reply
 
Thread Tools Rate Thread Display Modes
Old 01-10-2015, 12:50   #16
Registered User
 
leftbrainstuff's Avatar

Join Date: May 2011
Location: San Francisco and Australia
Boat: Liberty 458
Posts: 1,979
Re: Is 10% normal earnest money before contract accepted?

Quote:
Originally Posted by Sailgirl58 View Post
Is it normal for a broker to ask for 10% down even before a buyer has done a survey or sea trial? What if we don't want the boat? Even if the contract stipulates that we can refuse if we don't like survey or can't get financing. Thanks! We live in Florida.
That seems to be the norm. It demonstrates you are serious.

Sent from my SM-N900T using Cruisers Sailing Forum mobile app
__________________

__________________
leftbrainstuff is offline   Reply With Quote
Old 01-10-2015, 13:24   #17
Registered User

Join Date: Sep 2015
Posts: 7
Re: Is 10% normal earnest money before contract accepted?

can you state in the contract "acceptable survey and sea trial by buyer"? If it just says contingencies are "sea trial and survey" on the contract right now?
__________________

__________________
Sailgirl58 is offline   Reply With Quote
Old 01-10-2015, 14:06   #18
Registered User

Join Date: Jun 2015
Posts: 1,173
Re: Is 10% normal earnest money before contract accepted?

@ Sailgirl #15

Right-ho :-) As I said: Be careful to use the right words. It doesn't matter that the wording of you written offer will sound stilted and unnatural. What DOES matter is that the wording is unambiguous from a Court of Law's point of view.

"Deposit" is the word to use in the offer, and you can, indeed, add in the word "acceptable" to the standard "Form of Offer" if it isn't there now. You just add it in as if you were editing a draft, and you initial the "correction".

In this jurisdiction we don't use the word "contingencies" because it is legally without meaning (in this jurisdiction).

The phrasing would (in brief) be along these lines:

"I/we Joe and Jane Bloggs hereby offer to buy the sailing vessel "Calamity" registration number XX123456, for the sum of Eight Thousand Dollars ($8,000.00) subject to the following conditions:

1) Buyer finding the vessel to be as represented in every respect
2) Buyer finding the vessel during sea trials in every respect fit for sea and for the buyers intended use.
3) Seller furnishing survey by Accredited Surveyor declaring the vessel to be structurally and mechanically sound, any deficiencies noted on the survey to be corrected by the seller prior to closing of the sale."

You can extend the list of conditions as long as you like. You then systematically go through the list and "lift the subjects" one by one until the seller has met all YOUR requirements.

Remember always that the seller's interests are DIAMETRICALLY OPPOSED to you own, and the negotiating of a contract for a boat (or a house) is merely a ritualized form of bloodless warfare, plunder and pillage. Remember also that the Agent or Broker is employed by the seller, and he is legally bound to do the best he can for the SELLER - not for you!

Remember also that the "Contract for Sale", or "Offer to Purchase" a broker may use is a "boilerplate" prepared for HIS benefit and profit - not for yours! There is nothing at all that compels you to use the brokers 'boilerplate" if you don't like it. A broker is legally bound to present EVERY offer he receives for a boat on his "listings" to the seller regardless of the form it is in. So he cannot refuse to present an offer prepared by yourself rather than his on his boilerplate. However, if you are not qualified to draft legal documents, you should have YOUR lawyer look over what you have drafted.

TrentePieds
__________________
TrentePieds is online now   Reply With Quote
Old 01-10-2015, 14:19   #19
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 19,376
Re: Is 10% normal earnest money before contract accepted?

I have bought with a much lower earnest money. Let's face it, if the broker thinks you are serious, he wants to do anything possible for a sale. Let's say he wanted $10k escrow, I would just say "oh, $5k ought to be enough". I bought a $332k boat with $5000 escrow.
Things to watch/think about on the contract: (not all contracts are written well, and not all brokers remember to fill everything out)
-You may withdraw your offer for any reason based on inspection, sea trial and survey. No obligation to buy even if repaired.
-Earnest money to be held in escrow. Broker to state escrow service.
-All offers, amendments, renegotiations etc MUST have an end date.
(ie: if you inspect the boat and decide that you will only buy it for $XXXX less than the contract amount, have a date for the seller to accept by. Ditto for your original offer)
-You can add any notes or stipulations or clarifications you want to your offer... it's YOUR offer.
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 01-10-2015, 14:51   #20
Senior Cruiser

Cruisers Forum Supporter

Join Date: Dec 2010
Location: Cruising Indian Ocean / Red Sea - home is Zimbabwe
Boat: V45
Posts: 1,282
Re: Is 10% normal earnest money before contract accepted?

When looking at buying our last boat we were 'ordered' to make a 10% deposit by a couple of brokers as a sign of good faith, before even seeing the boat. This may be normal in parts of USA it is not normal to me. Add in the fact that I wanted to see a number of boats........ utter lunacy.
I am the buyer and its my money and I had no intention of getting embroiled into arguments of administration fee's, other charges or even the possibility of a broker going out of business with my funds. Yes, if someone is going to incur charges like hauling out especially for me then that is a another issue.
If they want my business then they have to deal / behave in a reasonable manner. It seems that such brokers insist on such arrangements and many people just acquiesce to the demands and then it becomes the standard. They forget that there are more boats for sale than there are buyers.

Quote:
Originally Posted by Sailgirl58 View Post
Is it normal for a broker to ask for 10% down even before a buyer has done a survey or sea trial? What if we don't want the boat? Even if the contract stipulates that we can refuse if we don't like survey or can't get financing. Thanks! We live in Florida.
__________________
Bulawayo is offline   Reply With Quote
Old 01-10-2015, 15:09   #21
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 19,376
Re: Is 10% normal earnest money before contract accepted?

Quote:
Originally Posted by Bulawayo View Post
When looking at buying our last boat we were 'ordered' to make a 10% deposit by a couple of brokers as a sign of good faith, before even seeing the boat. This may be normal in parts of USA it is not normal to me. Add in the fact that I wanted to see a number of boats........ utter lunacy.
I am the buyer and its my money and I had no intention of getting embroiled into arguments of administration fee's, other charges or even the possibility of a broker going out of business with my funds. Yes, if someone is going to incur charges like hauling out especially for me then that is a another issue.
If they want my business then they have to deal / behave in a reasonable manner. It seems that such brokers insist on such arrangements and many people just acquiesce to the demands and then it becomes the standard. They forget that there are more boats for sale than there are buyers.
That's ridiculous..... never heard of it. Walk away...
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 01-10-2015, 15:21   #22
Registered User

Join Date: Jun 2015
Posts: 1,173
Re: Is 10% normal earnest money before contract accepted?

It's wise to remember that the least amount of pressure from a broker to make you do ANYTHING should make his probity suspect in your eyes! Brokerage is by definition a parasitical "profession", and brokerage exists only because so many people are woefully ignorant of the law of contract and the common tactics of negotiation.

That said, there ARE honest brokers and they spend a great deal of time and effort to a) live down the damage done to the "profession's" reputation by those whose probity is suspect, b) organizing themselves into sundry professional organizations to try to keep out of the profession such individuals as may not be in possession of probity.

Caveat Emptor applies to the object traded, of course, but it applies a fortiori to those who do the selling!

TrentePieds
__________________
TrentePieds is online now   Reply With Quote
Old 01-10-2015, 15:51   #23
Senior Cruiser
 
Cheechako's Avatar

Cruisers Forum Supporter

Join Date: Aug 2006
Location: Skagit City, WA
Posts: 19,376
Re: Is 10% normal earnest money before contract accepted?

I have had good experiences with brokers over the years when buying. Honest smooth transactions.
One broker mistake when selling, a couple marginal brokers when selling. (they did little if anything)
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard











Cheechako is offline   Reply With Quote
Old 01-10-2015, 15:59   #24
Registered User
 
Capt Phil's Avatar

Join Date: Jun 2010
Location: Stateline NV
Boat: Prior boats: Transpac 49; DeFever 54
Posts: 2,749
Re: Is 10% normal earnest money before contract accepted?

Jreiter190 has it correct in my opinion. While 10% is normal and customary in many markets, it may be a bit high in others. Because it is currently a buyers market, you should be able to negotiate a lower amount of 'Ernest money' provided that you can satisfy the broker and the boat owner that you have the financial where with all to perform on the transaction at closing. You can put many conditions on the purchase such as sea trial, mechanical/electrical system soundness, hull condition, oil analysis, etc., the list can be almost endless but if you provide a list of issues that might void the sale, and something comes up that you haven't stated as a condition yet you feel is sufficient to give you an out, you might be stuck!
Ernest money is just that... It shows that you are 'earnestly' interested in buying the boat.
Good luck with your search... Phil
__________________
Capt Phil is offline   Reply With Quote
Old 01-10-2015, 19:55   #25
Registered User

Join Date: Jul 2015
Posts: 39
Re: Is 10% normal earnest money before contract accepted?

?? This is not done in Belgium or the Netherlands. It looks a little strange for us. First is there a visit, discussion over the price and then a small trip under sail. If all works out the transaction and end story. No payments at all in advance.
__________________
KWISPEL is offline   Reply With Quote
Old 01-10-2015, 20:22   #26
Registered User

Join Date: Jun 2015
Posts: 1,173
Re: Is 10% normal earnest money before contract accepted?

@Kwispel #25

Indeed, it is not done in Benelux, or in Germany or in Denmark - at least the last I knew. That is because these countries operate under modifications of "the Napoleonic Code" i.e. French law. We in North America operate under modifications of English Common Law. Very often, when buyer and seller are knowledgeable, and there is no broker involved, things can be done a la europeenne

[/I]TrentePieds
__________________
TrentePieds is online now   Reply With Quote
Old 01-10-2015, 20:59   #27
Registered User

Join Date: May 2015
Posts: 31
Re: Is 10% normal earnest money before contract accepted?

I am currently selling a boat and 10% in escrow is very important to the seller. Not only does it show the buyer is serious, it protects the seller. If the buyer defaults the deposit becomes damages. More importantly, when the boat is hauled for survey costs are incurred which are the responsibility of the buyer. But if the buyer doesn't pay the charges they are paid out of the deposited funds. So I think it is imperative, from the sellers point, to have buyer funds on deposit.
__________________
goodnumbers64 is offline   Reply With Quote
Old 01-10-2015, 21:26   #28
Registered User

Join Date: Jul 2011
Location: Atlantic ICW 29N/81W
Boat: Beneteau Oceanis 36CC, now sold
Posts: 817
Re: Is 10% normal earnest money before contract accepted?

Quote:
Originally Posted by goodnumbers64 View Post
I am currently selling a boat and 10% in escrow is very important to the seller. Not only does it show the buyer is serious, it protects the seller. If the buyer defaults the deposit becomes damages. More importantly, when the boat is hauled for survey costs are incurred which are the responsibility of the buyer. But if the buyer doesn't pay the charges they are paid out of the deposited funds. So I think it is imperative, from the sellers point, to have buyer funds on deposit.
That is fine and dandy, But it should not IMO be necessary to pay significant 'deposit' money in advance just to see if a price offer is going to be accepted. Once that base point is established then I totally agree that a significant deposit should be paid (naturally against a proper contract and into a proper escrow account) and subject to a survey and if required sea trial. As a seller nobody would be poking and prodding my boat all over without that protection, and as a buyer I would also understand why. Not to say there cannot be some modifications agreed to the final price to be paid or reparations required after survey or the contract could be cancelled if final agreement, by both parties proves impossible. For a transaction to be made it has to be acceptable to both sides.
__________________
Robin3 is offline   Reply With Quote
Old 02-10-2015, 03:41   #29
Registered User
 
Prairie Chicken's Avatar

Join Date: Apr 2009
Location: Canada or Spain
Boat: Jeanneau SO 43 DS
Posts: 1,116
Images: 1
Re: Is 10% normal earnest money before contract accepted?

10% is what we see in Spain as a refundable deposit held by the broker. If the boat fails to meet conditions of the offer, such as a successful sea trial, the owner may make the issue right at his own expense, or the deposit would be returned to the purchaser. If the purchase goes ahead, the deposit is applied against the purchase price.


Sent from my iPad using Cruisers Sailing Forum
__________________
Prairie Chicken
><((((>`..`..`...><((((>.
`..`..`...><((((>`..`..` ...><((((>
Prairie Chicken is offline   Reply With Quote
Old 02-10-2015, 05:40   #30
Registered User

Join Date: Nov 2014
Location: SAHVERTOWN, PA
Boat: S2-7.9
Posts: 11
Re: Is 10% normal earnest money before contract accepted?

SIMILIAR TO A REAL ESTATE TRANSACTION...YOUR DEPOSIT TAKES THE ITEM OFF THE MARKET TEMPORARILY, WHILE IT PUTS INTO ACTION, THE SURVEY, FINANCING, AND THE TRUE INTENT OF THE BUYER...
__________________

__________________
CAPTNSTUMPY is offline   Reply With Quote
Reply

Tags
contract, money

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Money, money money.. and Banks Tortz Liveaboard's Forum 29 29-09-2016 18:13
Earnest money, who holds it? Clipper4730 Dollars & Cents 4 06-06-2014 11:59
An Earnest Beginners Search For Advice? Jeffrfritz Our Community 10 22-02-2014 13:23
Money Money Money loop Dollars & Cents 46 01-05-2011 18:54
'Contract Before Boarding Boat!' - ? Whispering Star Monohull Sailboats 18 16-06-2009 05:51



Copyright 2002- Social Knowledge, LLC All Rights Reserved.

All times are GMT -7. The time now is 16:18.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.