Question on Boat Brokers

[sailingfarmer]

My first knee jerk reaction was to get some rope and hang the broker from the mast... but if you sold the boat at a certain price and then said you would repair a few things on it would the selling price change? Suppose the buyer wanted it hauled for inspection does the hauling cost reduce the selling price? I think these things should be negotiated when the purchase contract comes in.

[Captndave1]

Greed has taken over the world

[buzzstar]

What was the amount paid by the buyer? Was it $100k? If so, the broker has an argument for a $10k commission. If it was $90k, the commission should be $9k. As with many things, it depends how the deal was structured. How do the relative costs of arbitration, including the risks of losing, the benefits of winning, and the possibility of a compromise decision stack up? Sounds to me like an economic decision, and is ripe for a non-arbitrated, direct compromise between the parties, but if he has already agreed to your interpretation, you cannot better that result.

[valhalla360]

Originally Posted by tdoster

There is no selling price until after the survey and sea trial. Either party can walk away from the deal or continue to negotiate for any reason. The buyer can make an offer, go home and research and find it was too much, then at the time of the sea trial change his offer for any reason and still have the final contingent upon the survey. Seller has the right to tell the buyer to pound salt at any point as well if the buyer changes his offer, or counter it.

This is incorrect.

Unless an issue is found during the survey/sea trial, they buyer is legally bound to follow thru or at a minimum risks losing the deposit. If the buyer goes home after a good sea trial and survey and searches the internet and finds they offered too much...they are still bound by the contract.

That's the legal part. The practical part is a buyer can almost always find an issue during the sea trial and survey.

One trick to put pressure on the buyer if they start playing games is to ask for the reason if they try to pull out or ask for a price reduction. If the reason was readily obvious or they had already been made aware of the issue, you can hold them to the contract. If they refuse, you can retain their deposit.

PS: I realize, the broker backed down but the other alternative would have been to reject the counter offer after the survey. Then have the broker inform the buyer, you would accept a NEW offer at the reduced price. Now the commission is based on the NEW price.

[undercutter]

What I want to know is how these high fees are justified. I mean where is the cost to the broker. Seems to me that there is not much difference than selling real estate especially in the age of the internet. Take a few pictures, write up a listing and sit back and wait for the boat to sell. Real estate commissions have fallen to as little as 3% back home and are never more than 6%. And those real estate agents have to run all over the place to show houses where many brokers have the boat right outside their front door.

I have a hard time seeing $10k in costs for a 100k boat and it would seem even worse for a boat that was say 400k or how about 1mm$.

We saw our boat on the internet and purchased direct although we brought our own surveyor. The surveyor did the market research as well as estimated cost to repair/upgrade deficiencies found during the survey. Resulted in a 50% reduction in the price of the boat not including repairs which added another 25% after completion by the seller. The surveyors costs was about 2% of the selling price not including travel expenses.

[tdoster]

Originally Posted by valhalla360

This is incorrect.

Unless an issue is found during the survey/sea trial, they buyer is legally bound to follow thru or at a minimum risks losing the deposit. If the buyer goes home after a good sea trial and survey and searches the internet and finds they offered too much...they are still bound by the contract.

That's the legal part. The practical part is a buyer can almost always find an issue during the sea trial and survey.

One trick to put pressure on the buyer if they start playing games is to ask for the reason if they try to pull out or ask for a price reduction. If the reason was readily obvious or they had already been made aware of the issue, you can hold them to the contract. If they refuse, you can retain their deposit.

PS: I realize, the broker backed down but the other alternative would have been to reject the counter offer after the survey. Then have the broker inform the buyer, you would accept a NEW offer at the reduced price. Now the commission is based on the NEW price.

Disagree

As my attorney friend simply stated ambiguity is the problem with contracts. a good contract defines the intent of all parties in execution.

The standard language for "acceptance" by the buyer is full of ambiguity and outs for both parties. If you read a standard agreement, there is no legal basis to force a buyer to perform or retain his deposit if he fails to do so unless specifically stated. As long as the buyer performs on the language and intent. Whether a sea trial is successful or not is subjective to the buyer, not the seller or broker. He does not have to qualify his reason to negotiate or back out at that time. Most brokers will not amend a contract with specifics for acceptance as a good one really just wants a happy seller and buyer, quick sale and get paid, referrals and reputation to perpetuate.

A sample standard Florida FYBA Sales Agreement link below:

http://www.fyba.org/docs/memberdocs/..._agreement.pdf

[valhalla360]

Originally Posted by tdoster

Disagree

As my attorney friend simply stated ambiguity is the problem with contracts. a good contract defines the intent of all parties in execution.

The standard language for "acceptance" by the buyer is full of ambiguity and outs for both parties. If you read a standard agreement, there is no legal basis to force a buyer to perform or retain his deposit if he fails to do so unless specifically stated. As long as the buyer performs on the language and intent. Whether a sea trial is successful or not is subjective to the buyer, not the seller or broker. He does not have to qualify his reason to negotiate or back out at that time. Most brokers will not amend a contract with specifics for acceptance as a good one really just wants a happy seller and buyer, quick sale and get paid, referrals and reputation to perpetuate.

A sample standard Florida FYBA Sales Agreement link below:

http://www.fyba.org/docs/memberdocs/..._agreement.pdf

Perfect example of why you should always read stuff before you sign. You are a sucker if you sign that and your lawyer friend isn't worth the money you pay him if he let you sign it.

Just signed a sales agreement. Admittedly, not in Florida but it had nothing like that language and I wouldn't have accepted the Florida language (and yes, you can demand they change the language).

In the one I signed, it specifically states that if the buyer doesn't perform, the owner and broker get to split the deposit as liquidated damages. Unless he provides a reason for not accepting the survey and sea trial, the buyer hasn't performed if he doesn't buy.

I hedged my bets by providing a marked up copy of the last survey with all known changes to the condition (either new issues or issues addressed). If he comes back and claims any of the items already provided to him, nothing has changed since the offer, so he is still not performing. The trick is not to say anything until he provides his reason. If he's not smart, he will list items already confirmed prior to the offer and he has no justification to get out of the agreement.

Now realistically if push comes to shove, it's not worth the trouble to take to court but that doesn't mean it wouldn't hold up and you can't apply a bit of pressure if he's jerking you around, so that if he's on the fence, he might go for it.


PS: I really wonder who wrote that Florida contract. Whoever did is an idiot letting it be completely at the buyers sole discretion if they actually want to buy. It has no business being called a "sales agreement", more like a "what would you think of this kind of an offer" agreement.

[dannc]

Originally Posted by GoingWalkabout

Can't agree more. Casts a cloud of doubt on the honesty of the whole unregulated boat broker industry. Even a used car salesman wouldn't try to pull this shtick.
...

I have to disagree with you.

I had one salesman refuse to give me the price on the car UNTIL I put down a deposit to BUY the car. I did not even WANT that particular car.

When I found the car I wanted at a different dealer, the salesman tried to charge the sales tax on the list price of the car not on the selling price. He was going to pocket the difference. He then tried to charge me for the floor mats and trim on the side of the car.

Well, you might be right, these were new cars and not used.

Later,
Dan

[reed1v]

Not sure how many boats we have bought over our lifetime, but probably at least a dozen or more. Never had a problem with buying nor with selling. Some with contracts, some without anything more than a handshake. Of those times that we used brokers, never had a problem. Think that is probably the same for most folks. The boating world is local and small. Folks tend to know each other, and reputation goes far.

[Cheechako]

The result of the survey establishes what the boat is really worth. The brokers fee should be based on that. I contracted to buy a boat for $115k once. When survey was complete we agreed on $65k. Otherwise I would have walked. The brokers fee was based on the $65K. BTW, It cost me $40k in yard work to make the boat what I expected it to be.

[tdoster]

Originally Posted by valhalla360

Perfect example of why you should always read stuff before you sign. You are a sucker if you sign that and your lawyer friend isn't worth the money you pay him if he let you sign it.

What he said is that MOST contracts are too vague. Lawyers want everything they can covered. For a sales contract, the basis is the intent of the buyer and seller to perform on the transaction. The language determines what each party agrees to perform upon. Utilizing standard Broker Association forms as a basis help keep everyone in check, as the language has already been legally vetted.

Originally Posted by valhalla360

Just signed a sales agreement. Admittedly, not in Florida but it had nothing like that language and I wouldn't have accepted the Florida language (and yes, you can demand they change the language).

Normal language in the Florida Agreement found about everywhere in the US. In fact I have never seen or would ever sign one as a buyer that didn't have the normal and customary contingencies: Sea Trial, Financing, Survey, and a buyer should add Insurability.

Originally Posted by valhalla360

In the one I signed, it specifically states that if the buyer doesn't perform, the owner and broker get to split the deposit as liquidated damages. Unless he provides a reason for not accepting the survey and sea trial, the buyer hasn't performed if he doesn't buy.

Most all of them say that, but what constitutes performance? Again, as a buyer I have performed on the agreement by going on the sea trial and I now have second thoughts about buying the boat, I do not accept and have performed. Return the Deposit - BY LAW. Remember, your first argument was "LEGAL"

Originally Posted by valhalla360

Now realistically if push comes to shove, it's not worth the trouble to take to court but that doesn't mean it wouldn't hold up and you can't apply a bit of pressure if he's jerking you around, so that if he's on the fence, he might go for it.

PS: I really wonder who wrote that Florida contract. Whoever did is an idiot letting it be completely at the buyers sole discretion if they actually want to buy. It has no business being called a "sales agreement", more like a "what would you think of this kind of an offer" agreement.

As a seller you have an opinion on a one-sided contract. The process that you have called the author(s) idiots is normal and customary in most large transactions, be it; cars, boats, aircraft, real estate... The opposite could be said about a buyer entering into your agreement as being the idiot. The contract is fair for both parties for the intent of the transaction. You want to sell a boat, you want to find a buyer who wants to purchase the boat and is qualified to buy it. There are contingencies for both parties to perform on the contract.

Regardless of whether you call it an offer to buy, sales agreement, purchase agreement, etc. It is an instrument to set up both parties with an intent to sell and intent to purchase, then sets the guidelines and contingencies that both parties agree to perform upon. The baseline is the standard industry forms that are vetted fair to both parties.

It is always worth going to court when you are right, but if the contract stipulates arbitration...

[valhalla360]

Originally Posted by tdoster

What he said is that MOST contracts are too vague. Lawyers want everything they can covered. For a sales contract, the basis is the intent of the buyer and seller to perform on the transaction. The language determines what each party agrees to perform upon. Utilizing standard Broker Association forms as a basis help keep everyone in check, as the language has already been legally vetted.

The document provided in the link to absolutely did not keep things in balance. When an offer is made, the intent is that the sale will go thru unless an unknown issue is found. The contract you provided gives the buyer complete freedom to walk away from the deal even if the survey & sea trail go perfectly. Unless it was written by a buyers agent, they are incompetent. The fact that it is commonly used doesn't mean its a good document.

Normal language in the Florida Agreement found about everywhere in the US. In fact I have never seen or would ever sign one as a buyer that didn't have the normal and customary contingencies: Sea Trial, Financing, Survey, and a buyer should add Insurability.

This is totally different from what was suggested. Contingencies are acceptable. If you put an offer in on a boat that was presented as being in good condition and during the survey, you find all the bulkheads are rotted out, you have found something that was previously unknown and covered by the contingency. What you suggested was that the buyer can walk away with no risk even if the survey/sea trial goes perfectly and that is false (assuming you don't sign the idiotic contract you found).

Again, I just signed a contract and it allowed for new issues found during the survey and sea trial but it absolutely does not allow for the buyer to simply change his mind.

Most all of them say that, but what constitutes performance? Again, as a buyer I have performed on the agreement by going on the sea trial and I now have second thoughts about buying the boat, I do not accept and have performed. Return the Deposit - BY LAW. Remember, your first argument was "LEGAL"

Unless you can point to what did not perform and that item was unknown prior to the agreement, you have not performed. With a production boat, if the boat performs similar to other boats of the same model, it would be presumed to be normal and not a reason to reject the boat to say you didn't like the ride.

As a seller you have an opinion on a one-sided contract. The process that you have called the author(s) idiots is normal and customary in most large transactions, be it; cars, boats, aircraft, real estate... The opposite could be said about a buyer entering into your agreement as being the idiot. The contract is fair for both parties for the intent of the transaction. You want to sell a boat, you want to find a buyer who wants to purchase the boat and is qualified to buy it. There are contingencies for both parties to perform on the contract.

But that's the point. The language in the contract you provided is one sided in favor of the buyer. The buyer makes and offer, so the boat is taken off the market potentially missing out on additional buyers yet, the buyer takes no risk with your one sided contract as they can walk away without reason. For all practical purposes, there is no contract as a contract has requirements on both sides and this document has no requirements for the buyer.

Regardless of whether you call it an offer to buy, sales agreement, purchase agreement, etc. It is an instrument to set up both parties with an intent to sell and intent to purchase, then sets the guidelines and contingencies that both parties agree to perform upon. The baseline is the standard industry forms that are vetted fair to both parties.

But there is no guidelines or contingencies. The buyer can walk away with absolutely no reason. Even though it is titled a "sales agreement" there is no real agreement as the buyer can walk away at any time prior to handing over the cash.

It is always worth going to court when you are right, but if the contract stipulates arbitration...

You clearly haven't dealt with Contracts if you think it's always worth going to court when you are right. More often than not, it's not worth going to court. Going to court typically means everyone loses, so unless it's big bucks, it's typically not worth going to court.

[tdoster]

Originally Posted by valhalla360

You clearly haven't dealt with Contracts if you think it's always worth going to court when you are right. More often than not, it's not worth going to court. Going to court typically means everyone loses, so unless it's big bucks, it's typically not worth going to court.

I apologize, but the first part of the statement is blatantly incorrect albeit not as slanderous as the idiot statement. I would bet money in Vegas that as you stated - holding a deposit on a contingency sales agreement on non-acceptance - would only require ~$500 attorney fees and a letter typed by a $30 per hour paralegal and served directly to the broker to set straight if the deposit was not returned after stipulated notice of non-acceptance if dealing with a shed of decency.

Ambiguity leads to litigation, but personally I would not sign a contingent sales agreement under the stipulations you stated, nor would anyone who actually has an attorney vet the contract prior. I would also use the attorney to hold in escrow the deposit if I didn't feel the other party would uphold the intent of the agreement and contingencies. When your definition of failure to perform does not match mine, then the deposit stays in escrow until both parties are in agreement or via litigation. Someone wins and someone loses.

Buyer contingencies are just that. The seller protection is that they are performed upon in a timely manner and notification made within the timeframe and in the manner stated in the agreement. As the seller you are welcome to stipulate your own rules and counter the normal and customary contingencies and force the buyer to define the result and acceptance, but my attorney would tell you to pound salt and walk.

[valhalla360]

Originally Posted by tdoster

I apologize, but the first part of the statement is blatantly incorrect albeit not as slanderous as the idiot statement. I would bet money in Vegas that as you stated - holding a deposit on a contingency sales agreement on non-acceptance - would only require ~$500 attorney fees and a letter typed by a $30 per hour paralegal and served directly to the broker to set straight if the deposit was not returned after stipulated notice of non-acceptance if dealing with a shed of decency.

Ambiguity leads to litigation, but personally I would not sign a contingent sales agreement under the stipulations you stated, nor would anyone who actually has an attorney vet the contract prior. I would also use the attorney to hold in escrow the deposit if I didn't feel the other party would uphold the intent of the agreement and contingencies. When your definition of failure to perform does not match mine, then the deposit stays in escrow until both parties are in agreement or via litigation. Someone wins and someone loses.

Buyer contingencies are just that. The seller protection is that they are performed upon in a timely manner and notification made within the timeframe and in the manner stated in the agreement. As the seller you are welcome to stipulate your own rules and counter the normal and customary contingencies and force the buyer to define the result and acceptance, but my attorney would tell you to pound salt and walk.

You keep trying to confuse "contingencies" with what you originally said.

Yes, having a contingency if the survey turns up unknown issues is completely legitimate and fair.

But that wasn't what you espoused. You said the buyer can walk away without reason or change the offer without reason. That's as ambiguous as it can get and totally unacceptable in a contract.

I'm not sure why you keep bringing up ambiguity as I said I would never have accepted the ambiguous contract you showed.

If you followed your lawyers advice and demanded a contract that let you walk away at any point, I would add a statement that if someone else makes an offer, I reserve the right to sell to him even if you just paid for a suvey because your offer is completely ambiguous.

Trust me, I write and enforce contracts for a living and my legal department would smack me around if I ever accepted that kind of language.

[denverd0n]

Originally Posted by boatymcboatface

A lesson to be learned: If the terms of the contract change, insist on a new contract.

This.

If the buyer does not accept the survey and complete the transaction at the original agreed-upon price, then the whole deal is off. Now you start over from square one and negotiate a whole new contract, with a whole new selling price.

As to the broker, my vote is for very, very shady. So give with some details. Who are we talking about? This is someone that everyone here should know to avoid. His attempt to frame it as the same selling price, but with a "survey allowance" is simply a way to try to cheat the seller.