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Old 30-09-2015, 14:34   #1
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Is 10% normal earnest money before contract accepted?

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.
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Old 30-09-2015, 14:43   #2
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Re: Is 10% normal earnest money before contract accepted?

That was how my purchase went.. %10 down to show you are serious.

You really should have your financing options in order before you start putting offers. Otherwise, how will you know your budget window!
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Old 30-09-2015, 14:49   #3
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Re: Is 10% normal earnest money before contract accepted?

Yes. Pretty normal in my experience. Even when I sold privately I made this a stipulation. Shows the buyer is serious, and not just kicking tires.
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Old 30-09-2015, 15:15   #4
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Re: Is 10% normal earnest money before contract accepted?

Yup, 10% is standard.
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Old 01-10-2015, 05:27   #5
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Re: Is 10% normal earnest money before contract accepted?

Greetings and welcome aboard the CF, Sailgirl.

Yes. See para. 2 ➥ http://my.boatus.com/consumer/Forms/...-Agreement.pdf
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Old 01-10-2015, 09:03   #6
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Re: Is 10% normal earnest money before contract accepted?

Same for me - I put down 10% with stipulation that survey had to be clean. I added the "opt-out" clause to the contract using some language I got from my brother-in-law who is a realtor.
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Old 01-10-2015, 09:28   #7
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Re: Is 10% normal earnest money before contract accepted?

Quote:
Originally Posted by GordMay View Post
Greetings and welcome aboard the CF, Sailgirl.

Yes. See para. 2 ➥ http://my.boatus.com/consumer/Forms/...-Agreement.pdf
GordMay, Is this form valid in all states? Our broker used this form when we made an offer on a boat, but the form was not signed in front of a Notary. Is this agreement still valid?
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Old 01-10-2015, 09:38   #8
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Re: Is 10% normal earnest money before contract accepted?

Sailgirl:

You may want to be judicious in the use of terminology! Under Canadian (and English) law "earnest money" means just that: A gift you give to the seller, or his broker, to show that you are earnest. and IF you conclude the purchase the full purchase price is payable in ADDITION to the earnest money.

Florida law may be different, but better check it.

Make sure therefore that the cheque you give for the ten percent is annotated "Returnable Deposit" on purchase of xxxx, and that the written offer you make refers to the cheque (by number and date) as a "deposit which shall form part of the purchase price"

Provided you have acted in good faith, you are then entitled to return of the 10% if for reasons beyond your control - such as the offer being found too low by the seller - the deal is never concluded.

Discretion is the better part.... :-)

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Old 01-10-2015, 09:39   #9
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Re: Is 10% normal earnest money before contract accepted?

being normal doesn't make it 'right' IMO. We came up against this in buying a boat and a condo, despite being cash buyers and being able to prove the funds were immediately available. On the boat side we had an understanding broker working for us who made sure our offer would be accepted if we proceeeded to a full 'subject to satisfactory survey' contract.


Buying a condo we had a realtor who insisted on a full contract and 10 % up front before even asking the seller if the offer price was acceptable. we did so on one property and when we arrived with our building surveyor and our realtor, we found a tenant on site in what was supposed to be an empty, vacant posssion property, said tenant turning out to be an employee of the seller's realtor. We had to return another day for the survey AND obtain an additional written assurance there were no tenants, existing or planned, however we found multiple problems with the survey itself and finally pulled out. It took way too long to get our 10% deposit refunded and soured our relationship with our realtor who accused us of harrassment for getting angry when she was on her cellphone to the sellers realtor saying she would 'talk us round'...! We parted company and found another and more honourable realtor and bought another nearby property next day.


Asa Brit having bought many boats and homes over many years, I found the Florida way a real PITA, We Had actually sold our house in the UK the previous year and the price there was agreed with the buyer before the legal contract to buy was drawn up and completed and the buyer's 10% deposit received and held in escrow by our legal representative pending completion, final payment and handover.
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Old 01-10-2015, 09:49   #10
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Re: Is 10% normal earnest money before contract accepted?

We are closing our loan today, and it was made much trickier because the boat was in B.C. Canada. I liked their broker's form as it had "subjects:"

1. SUBJECT: This offer to purchase is subject to the following conditions for the sole
benefit of the Purchaser:
1): Walk through

2):Sea trial

3): Positive Survey

4): Trailer prep
which subjects shall be removed not later than noon on this date:
. If the Purchaser, using the best efforts and acting reasonably, does not remove all of the above subjects, then any deposit shall be refunded and this Agreement shall be at an end.
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Old 01-10-2015, 09:56   #11
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Re: Is 10% normal earnest money before contract accepted?

The brokers like 10% down, because they can hold on to it, and thats their commission. Its kind of their way of being certain they get paid. However, if the price is high, a couple thousand dollars is sufficient for a legal transaction. Be sure to read the contract about how your deposit will be handled if you don't buy the boat!!!!

Having said that, I sold my boat recently (last week). The buyer liked the boat, we went to his bank, he paid in full, I signed a receipt. Done deal. Now he has my wonderful sailboat, and all I got was money. The next day he crashed my boat onto a breakwall. Don't worry, the breakwall sustained no damage.
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Old 01-10-2015, 10:04   #12
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Re: Is 10% normal earnest money before contract accepted?

I have been a commercial vessel and commercial real estate broker for four decades.

In reality there is nothing set in stone regarding earnest money percentages. Buyers can offer anything they feel is appropriate. How earnest do you feel?

In my opinion Earnest Money is a joke. It only becomes an issue if all contingencies of the transaction have been met and the buyer simply gets cold feet. No client of mine has ever forfited their EM because I protect them by not removing all contingencies until just prior to closing.

US contract law states that for a contract to be valid there must be remuneration. This can be in any form. A dollar would suffice.
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Old 01-10-2015, 11:17   #13
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Re: Is 10% normal earnest money before contract accepted?

I was a state certified and licensed yacht salesman in California and worked under a brokers' license. I've also bought and sold many boats for myself and others
The way it works best, in my experience, is, you put a 10-20 per cent DEPOSIT down, which goes into an escrow account at the brokerages ' bank. This give you a xxx days' OPTION on the vessel subject to SURVEY and SEA TRIAL
The costs of haulout, survey, etc. Come out of that deposit. You can back out at ANY TIME until you ACCEPT the vessel, so, you see, the BUYER is safe. While you have this option, the broker can only accept BACK UP offers, who have to wait in line until you accept or reject the vessel. Do the sea trial FIRST, so you can reject the vessel and renegotiate the price. This doesn't mean any back up offers go into play, as you haven't yet done the survey. This is the safest way to buy a boat. The buyer is in control start to finish!
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Old 01-10-2015, 12:09   #14
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Re: Is 10% normal earnest money before contract accepted?

"US contract law states that for a contract to be valid there must be remuneration. This can be in any form. A dollar would suffice."

English and Canadian law no longer requires MONETARY "consideration" to validate a contract. A promise to pay (on specified conditions) given "in consideration" of an offer (to sell) validates the contract.

The long and the short: don't assume that words used in legal contexts have the same meaning in law that they have in daily, vernacular speech. And deal through a broker who stands to lose his licence, and therefore his livelihood, if he messes with the deposits held in escrow.

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Old 01-10-2015, 12:47   #15
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Re: Is 10% normal earnest money before contract accepted?

Ok. Not "earnest money", but it says it is a "deposit on account towards the purchase price"
we want to make sure in our contingencies that:

Acceptable survey and sea trial by buyer
ability to secure financing under a certain percentage

Is this unreasonable?
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