Is 10% normal earnest money before contract accepted?

[yachtcowboy]

The accepted "normal" deposit is 10% of your offer. Most of this is perception, if you want the yacht you need to display your sincerest intent. Staying with the normal 10% shows the seller that you aren't just fishing.
Remember to read the contract word for word and don't be afraid to get explanation of paragraphs like "seller breach" or "buyer breach," disposition of the deposit etc.
Just because you write an offer does not mean that you have an "option" to hold the yacht off the market. The seller has rights according to the contract read his/her rights. Many contracts allow the seller to accept a "better" offer if the seller returns your deposit and pays any expenses.
If you offer the seller a "counter offer" to renegotiate the deal for any reason you have let him/her out of their contractural obligations, he could refuse your counter offer and take the next buyer's offer by just letting the counter expire.
I am retired now but have 40 years selling yachts, reading and negotiating contracts, I have owned brokerages in Florida and California.
Glad to be of any help I can, keep the process fun this should be a fun time in your life. If it doesn't feel right back out and go to the next boat. I can guarantee there are more boats.

[denverd0n]

Originally Posted by goodnumbers64

...if the buyer doesn't pay the charges [for the haul out and survey] they are paid out of the deposited funds. So I think it is imperative, from the sellers point, to have buyer funds on deposit.

Good point. If the buyer tries to screw over the yard or the surveyor, they are going to place a lien on the boat. That's the only thing they have available that they can place a "mechanics lien" against. So it behooves the seller to make sure escrow is enough to at least cover that cost.

This is in the United States. As mentioned multiple times already, laws and conventions are different elsewhere.

[Steven UK]

Just going through this now this was a particular shock, but it’s starting to look normal. Problem is I need to look at several boats when I visit the east coast (fly in from MN) and can’t be leaving deposits on several boats. If you are going to the trouble of a survey at $22/ft then surly that counts as being earnest...? At that point the deposit would be to make sure I had secured the boat for myself. At what point is the deposit actually required?

P.s. I guess I’m buying at the lower end of the scale which may be a different experience from the $100K’s buyers...

Originally Posted by Bulawayo

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.

[syPhilos]

Originally Posted by KWISPEL

?? 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.

When talking boats around 50k and up, there usually is.

My BF had to pay 15% -- IIRC --, on a 130k boat.
That is after seeing the boat, when the offer made is accepted, but before survey etc.
The folks who just bought a friend's boat paid 10% on a 125k boat.
Another guy at our marina will have to pay 10% on a 40k boat if his offer is accepted.

All boats are sold using a broker.

[hamburking]

Originally Posted by Steven UK

Just going through this now this was a particular shock, but it’s starting to look normal. Problem is I need to look at several boats when I visit the east coast (fly in from MN) and can’t be leaving deposits on several boats. If you are going to the trouble of a survey at $22/ft then surly that counts as being earnest...? At that point the deposit would be to make sure I had secured the boat for myself. At what point is the deposit actually required?

The whole "deposit" thing is a scam. The 10% deposit you give a broker is actually his commission. He wants to have that in hand to ensure he gets paid.

I've bought and sold 8 big sailboats (including one well over $100,000), and never put down or asked for a deposit. All private sales. If the buyer does not want to buy my boat, I don't want to force him to buy it. When I go see a boat I bring payment in full. I've bought several boats sight unseen, or with just pictures, with payment in full after I've inspected the boat myself.

If the buyer is paying for a survey, that's all the assurance I need. Brokers instantly complicate the whole transaction...because their goal is to get paid. Everyone else is thinking about the boat.

[Cheechako]

I've never given that much. They just need to know you are serious with your offer. Just tell them what you are willing to deposit. They need to sell boats.

[StuM]

Originally Posted by hamburking

The whole "deposit" thing is a scam. The 10% deposit you give a broker is actually his commission. He wants to have that in hand to ensure he gets paid.

Nope, the deposit is the buyers security that the seller won't sell it to someone else until the buyer either completes to deal of pulls out.


If you don't put down a deposit you don't have a legal agreement. They can sell to someone else at any time, even if you have paid for a survey, haulage in and out of the water, your travel costs to inspect the boat etc, etc etc. And they are not obliged to accept your offer price after all that either.

[john61ct]

The contract rules.

Some sellers may be persuaded to accept a token $1 deposit just to make it legal.

[flyingfin]

There is no Normal. I have bought boats with $100 deposits and others with $1,000 deposits, but never put down 10%. If the Seller or their Broker pushes for more, watch out. Plus most marinas prefer you pull out your credit card and pay them direct for the haul out.

The market for used boats is soft and financing hard to come by, so you are driving this train

Having said that, you must be a good Buyer and schedule your survey, haul out and sea trial quick, preferably within one week. The Seller is pulling the vessel off the market, but he/she still has dockage/insurance costs.

[john61ct]

But dicking around, when it's a super-great deal, seller who values their time is motivated to be rid of it quickly, is also not a good idea.

Nothing's close to firm until the contract's signed, and even then. . .

[Scott Berg]

Exactly as noted; the reason for a 10% (refundable) deposit is that you are taking the boat off the market. Once the offer is made the seller can't sell the boat to anyone else for any price. Makes sense to me if you want to reserve your right to buy the boat, consider it an 'option' contract if you prefer

[bluenomads]

Not in the US, but in the Caribbean, we have a signed contract with 10% deposit fully refundable. There are clauses subject to survey and other things, with a time period for decision. There's a clause whereby if a survey cannot be arranged for some days prior to decision date, then the decision date can with agreement be extended. At decision date, the boat is either sold (remainder paid after a number of day) or rejected by me (deposit refunded, after a number of days I bet).
To us this 10% is the same in the Med/Europe and Australia/NZ. It gives the seller some benefits as it locks in the purchase amount AND takes the boat off the market (according to the contract), gives the buyer some surety as there is a contract to purchase (with conditions!), and gives any other conditions (such as condition of the boat, or where it is "as-is", etc).

[denverd0n]

Originally Posted by Steven UK

...can’t be leaving deposits on several boats.

You're not going to be leaving deposits on several boats. You don't leave a deposit until you have made a legally-binding offer on a boat, and signed a contract to that effect. That legally-binding offer is going to be subject to certain contingencies (probably survey and sea-trial), but it is still a legal contract. You only do that once you've found the boat that you are 99% sure you want to buy, and have settled on a price with the seller.


The deposit is what makes it legally-binding. It is binding on you, and it is binding on the seller. Once he has accepted your deposit, the seller cannot sell it to someone else.

[Fore and Aft]

As a surveyor I like the 10% deposit. It means I get paid when a buyer trys to stiff me if he pulls out of a purchase. Just last week I witnessed a buyer tell the slipway the owner was paying for the slipping. The owner thought the buyer was paying and there was a fair bit of tension the slip even asked me if I knew who was paying. Then the owner paid the bill so the boat could go back in the water. You can bet that slipping fee is going to be deducted from the deposit. The real issue was the buyer was not happy wih my findings so was going to back out of the sale and was trying to cut his losses. That is a worry but most brokers give me a call and do not release the deposit until I have been paid. You would be suprised how often my bill got accidently "deleted" or ended up in junk mail!
Cheers

[Hobie_ind]

When I had our boat for sale, you would have been free to put an offer in without a deposit and schedule your survey and haulout. No problem.

However..... there's no way I'd have ever agreed contractually to take it off the market in the interim or even give you first rights on the boat in the event of another offer. Why would I? Especially when it sounds like you're planning on 'locking up' multiple boats to survey them and determine which one you really want.

If you don't want to put down a deposit, the boat would remain for sale to the first person who puts their cash where their mouth is.