Making an offer - advice please

[teaden]

Could you shine a light on the "making an offer" process. From what I've read, it varies a lot from broker to broker.
We are looking at a yacht in Florida and are offering 17% below asking. Quite a long shot I realise but nothing ventured, nothing gained!
The broker wants a 10% deposit up front saying CAN'T present the offer to the owner without it.
Our money is in South Africa - so paying it across before we know if the sale is even a possibility, is going to cost a lot in bank charges due to exchanging currency and sending across, if offer is rejected, we will pay it all over again to come back to us.
We are totally prepared to pay the deposit when we know that seller will accept the offer by way of a signed offer agreement.
Is this unreasonable?

[Peeew]

I am not a lawyer. But any contract requires some money to change hands to be valid. An offer to buy is a binding contract, with usual limits of inspection etc. Perhaps a small “earnest money” of $1000.00 or so can be offered with the initial offer with the offer including the 10% deposit within X days of acceptance? This works with houses and should be enough to force the broker to present the offer.

[Kenomac]

What post #2 says. Send a copy of the check and explain that it will be funded within a specified time period following acceptance of your offer. Just explain your circumstances.

[S/V Illusion]

Originally Posted by teaden

The broker wants a 10% deposit up front saying CAN'T present the offer to the owner without it.

While an offer typically includes an earnest money deposit, there is nothing which requires it. An offer isn't a contract!



The broker certainly can present an offer without it; he is really saying he doesn't want to present it absent a deposit.


All you need do is ask the broker "Why cant you present the offer?" If he insists on some nonsense about a deposit being required, ask him "where such a requirement exists?"

[Checkswrecks]

I've run across this twice, when a broker would not present an offer without 10%. Not $1,000 or anything else, it had to be 10%. Bottom line is that it was the business rule for those brokerages and the individuals insisted that the brokerage never ever gave in on that.


It's easy to say that anybody having a business can establish the ground rules which their business runs on, and you can always go look for another brokerage. However, this seems to be accepted amongst them.


Which is just one more reason I deal personally with sellers.

[SilentOption]

Especially in the boat business 10% to make an offer is commonplace and rarely if ever negotiated. Once the offer is in and accepted it can be weeks before the deal is consummated. If a survey is involved that has to be scheduled and that involves logistics on the part of the broker then insurance if the buyer requires it and usually the boat has to leave it's current location as soon as it's sold. All that has to be planned and scheduled. A 10% downpayment tends to motivate the buyer to keep things moving forward.

[captstu]

An offer is a contract - if you and the broker sign it and both agree to do something, that is a contract.

Generally, a contract has more "weight" - that is everyone agrees it is a contract - if some money changes hands. There is no magic about 10%.

I bought a new catamaran in 2000, the broker asked for 10% of $530,000 and I offered $10. After some laughing, I went to walk away, explaining to the broker - new boat, lots available, what do you have to lose. Once the manufacturer signs, I am obligated to a progress payment schedule that gives lots more than 10%, more than fair.

The guy laughed some more, talked with his associate, and shook my hand saying, keep the $10, we will get the boat. I countered with the offer, "take my money and buy a beer if you wish, but no money, no offer."

I settled on the boat the day they promised in Cape Town, SA, and loved her for years until my needs drove me to a Gemini.

Offer $20 to respect inflation.

[letsgetsailing3]

There is nothing magical about a 10% deposit, except it just happens to line up with the usual brokerage fee of 10%.


A deposit does put some skin in the game for you, and the seller knows this, so it makes for a stronger offer, but it's not a legal thing.


Regardless, the broker should submit your offer, with or without a deposit. For it to be binding, it does need to be in writing.

[hamburking]

The broker wants the deposit because that becomes his commission. He hangs on to that money the whole time, assuring that he gets paid.

There are no rules. Money talks. You've got the money. You make the rules. Don't let anyone boss you around.

I've bought (and sold) 8 boats. All private sales.

When selling, I never asked for or was offered a deposit. We agreed on a price and it was paid in full on the agreed closing date. If the buyer didn't want to buy the boat, I was not going to force him.

When buying, I usually made a low offer via email conditional only on an inspection (by me). I would go down, usually within a few days of the accepted offer, with payment in full. I did this with boats ranging from $100 to $100,000.

[DockDoc]

If in the contract there is a clause that someone is held liable if the seller or buyer defaults the brokers still get a commission, that may be the reason for the 10%.
It should be held in an escrow account and does not go to the seller or their agent until closing.
My broker did not ask for this, until after both I and the seller had signed an agreement.

[Jackz]

This is broker BS, and no such requirement exists. You can agree on 10% earnest money due upon acceptance of offer, but I wouldn't give them a dime to present the offer. This kind of request would in fact cause me to seek out a different broker if the seller is using them, but I would prefer not using a broker. It really is not that complicated of a procedure to buy a boat if you are reasonably familiar with contracts and common sense.

[ArmyDaveNY]

My first boat was sold directly to me by the owner. I looked at it briefly on a Friday, and we discovered that we were both officers in the Army, and both captains. I liked what I saw and gave him a deposit. I only had two hundred dollars US on my and gave it to him. We agreed I would come back on Sunday and look at it in detail. On Sunday I went over it from stem to stern and said I'd take it and return on Tuesday or Wednesday with the balance. This is when a potential issue came up.


He was leaving at 06:00 for medical school, but we had a solution. He gave me the keys. I was to go to the bank and get a bank check and overnight it to him. Upon receipt, he would overnight me the paperwork. We shook hands. Two days later he had the bank check (cheque for my friends across the pond!) and four days later I had my paperwork!


If we weren't both officers we might not have felt comfortable doing this. I should also point out that we didn't even draft a receipt for the deposit! We had a gentleman's agreement and we honored it. In all fairness, I don't think I'd recommend this in most cases.

[sailortype]

"We had a gentleman's agreement and we honored it"
Wouldn't it be nice if business could be conducted that way still.... when your word was your bond, and honour meant something. Now it just seems it's a scam a minute and I find it so very sad.


"cheque for my friends across the pond"
also for your friends north of the 49th
(and the other half south of the 49th ; )

[seadago]

Originally Posted by teaden

Could you shine a light on the "making an offer" process. From what I've read, it varies a lot from broker to broker.
We are looking at a yacht in Florida and are offering 17% below asking. Quite a long shot I realise but nothing ventured, nothing gained!
The broker wants a 10% deposit up front saying CAN'T present the offer to the owner without it.
Our money is in South Africa - so paying it across before we know if the sale is even a possibility, is going to cost a lot in bank charges due to exchanging currency and sending across, if offer is rejected, we will pay it all over again to come back to us.
We are totally prepared to pay the deposit when we know that seller will accept the offer by way of a signed offer agreement.
Is this unreasonable?

10% seems to be customary in many places, including the UK where I am. Which does not mean it is a legal requirement. There risk of FOREX is unavoidably yours. I do not know your circumstances, but if you are buying in the US, and your money is in ZAR, might as well bite the bullet and have the deposit amount in USD in in a CC in the US. If this deal goes south, a deposit is refundable, and you'll still have ready in USD for the next opportunity.

[ArmyDaveNY]

Originally Posted by sailortype

"We had a gentleman's agreement and we honored it"
Wouldn't it be nice if business could be conducted that way still.... when your word was your bond, and honour meant something. Now it just seems it's a scam a minute and I find it so very sad.

"cheque for my friends across the pond"
also for your friends north of the 49th
(and the other half south of the 49th ; )

It makes life so much nicer when people are trustworthy.

Would you believe me if I said that I was thinking of Canada as part of the Empire, and thus didn't really forget you?! I wouldn't believe me either. I apologize for the oversight.