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Old 25-06-2017, 19:59   #1
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Brokers looking for other buyers while under a contract

I've heard this story a couple times and was wondering if anyone knows it happens, has had it happen to them or possibly someone else?

There's a boat for sale. Buyer makes offer for a set price, signs contract, sends deposit to escrow and schedules a survey. Survey comes back, boat needs work and a couple of offers go back and forth with the proper counter offer legal paperwork.

The last counter offer from the broker/seller comes only as a verbal offer. buyer has 48 hours to respond. The next day buyer asks broker for legal counter offer doc. Broker goes silent and stalls sending legal counter offer doc.

This is where I've heard that brokers try and call other interested parties trying to make a little better deal and knock the current buyer out of the game since he only received a verbal counter offer.

Is this just another boating fairy tale?
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Old 25-06-2017, 21:04   #2
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Re: Brokers looking for other buyers while under a contract

It happens but often there are very important points that are not covered in the description you gave.

The broker would generally prefer to close with the initial buyer as the slight difference in broker commission to get more isn't worth going back through the entire process. Often when the back and forth starts after a survey, the seller tells the broker that he's reached his limit and to line up more.

Brokers may play games, but also owners start to play as well. Deals often fall apart while negotiating the reduction post survey. Sometimes sellers aren't willing to negotiate in good faith, but often buyers went about the deal in poor faith, always intending to try to negotiate a significant reduction.

Often one hears what took place and the person saying leaves out one or more critical parts.
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Old 26-06-2017, 05:07   #3
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Re: Brokers looking for other buyers while under a contract

Quote:
Originally Posted by mr336 View Post
The last counter offer from the broker/seller comes only as a verbal offer. buyer has 48 hours to respond.
As a buyer, this could not happen to me. Just like buying a house, if it isn't in writing, it wasn't said. If the broker tells me I have 48 hours to respond, my answer to him would be "Fine. The 48 hours starts when I have the written counter-offer in my hands, and not before."

If he says that he cannot get the counter-offer to you in writing then your answer is "Great. Then my last offer stands, and the seller can either accept it or reject it. Or give me a counter-offer IN WRITING. Those are the three options. There is no fourth option where we do this without a written contract."

This is also why you should not fall in love with a boat until AFTER you own it. At this point it is just a business deal. Treat it as such. Always be prepared to walk away if the deal goes sideways. If they start playing games with you like this, it is a bad sign.
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Old 26-06-2017, 06:21   #4
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Re: Brokers looking for other buyers while under a contract

Am in the market now and have been pretty disgusted with about half the brokers encountered. Sad....
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Old 26-06-2017, 08:06   #5
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Re: Brokers looking for other buyers while under a contract

First you must understand the broker works for the seller not the
Buyer. If you as buyer want representation you need to hire a
Broker to represent you. It's done all the time!
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Old 26-06-2017, 08:14   #6
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Re: Brokers looking for other buyers while under a contract

It is an eye opener to go thru the process and watch the smiley niceness of a broker slowly disappear as the negotiations get down to the nitty gritty.

Im trying to do a deal now and I would bet a full tank of diesel that the broker is reaching out to people who showed interest in the past trying to make a better deal.

I'll post my experience here when its over either way.
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Old 26-06-2017, 08:44   #7
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Re: Brokers looking for other buyers while under a contract

I have seen this happen in a cobroker situation whereby the listing broker is looking out for his client the seller. The other broker is looking out for his client the buyer. True the seller pays the commission so both brokers should be looking out for him but let's face facts, if both parties are not happy, nothing is going to happen but the listing broker is alwas going to be obligated to still show the boat and write an offer even if the boat is under contract.

One misconception is that you get a written agreed deal on a boat and that boat is "off the market". It's not off the market, it's under contract. You are just the first person in line to buy the boat. When there are multiple offers at the same time or day, All offers are presented until one is accepted by the seller. The seller controls that, not the broker. Once a deal is agreed. Every showing, offer, contract after that is a back up offer subject to the conditions of the first written contract which both parties are obligated to fulfill.

If the first buyer comes back post survey for a price reduction and the seller has another back up offer, he can reject the first buyers price reduction and move forward with the next offer.

All counter offers post survey should be in writing but it doesn't always happen due to time constraints etc but they should be.
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Old 26-06-2017, 09:09   #8
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Re: Brokers looking for other buyers while under a contract

Quote:
Originally Posted by mr336 View Post
It is an eye opener to go thru the process and watch the smiley niceness of a broker slowly disappear as the negotiations get down to the nitty gritty.

Im trying to do a deal now and I would bet a full tank of diesel that the broker is reaching out to people who showed interest in the past trying to make a better deal.

I'll post my experience here when its over either way.
As he should be. Have you made a written offer? Has it been accepted or rejected? Until the point there is a deal then the broker has an obligation to continue to pursue other potential customers.

One thing that has a huge influence on the entire process is the entire survey and sea trial contingencies in a contract for sale. This is "when a deal is not really a deal." Same thing today in home sales where you have the contingencies of survey and home inspection and financing. Basically it is a potential buyer putting down a deposit but no obligation to actually complete a sale and for that interim period of time the broker has two choices. One is to not do anything. The other is to continue to pursue other potential buyers while advising them there is a contract pending.

I'm not defending the bad or the unscrupulous brokers, but good brokers don't stop taking inquiries just because there is an offer on a boat or even a contract.

I know personally of a situation early this year where an offer was made and accepted on a boat right before the Miami boat show. The survey was set for a few days after the show. The broker still showed the boat at the show. This was with the full knowledge of the buyer. Well, the boat went to survey and sea trial. The buyer had verbally committed to the broker that he was going to buy with no deduction unless something major found. Well, everything found to be an issue on the boat could be corrected for less than $25,000 (about 1.1%). The seller agreed to reduce the price by that amount as requested by the buyer. However, the buyer had gotten cold feet and backed out of the deal as he was entitled to do so since subject to acceptance after sea trial and survey pretty much allows one to do so for any reason or without reason. The broker ultimately sold the boat to someone who saw it at the show. The broker did his job. The seller was reasonable in every regard. The first buyer did what he was legally allowed to do.

I know the specifics of that case first hand from a representative of the initial buyer. The buyer is a person I respect, but his reason for not following through had nothing to do with anything on the part of the broker or seller. In other situations, I've known owners to be just as hard headed. Offer accepted, survey and sea trial, some items and buyer offers to split the cost with seller. However, seller has cold feet, feels he accepted too little, and rejects the offer and walks away. Buyer was even willing to give in and accept as it was but this was after the initial rejection. Broker was so disgusted with seller that he refused to represent the seller further.

Brokers essentially have to sell every boat twice. First to get an offer. Second to get an agreement post survey.

There are unscrupulous brokers, but there are also good, honest brokers caught in the middle between seller and buyer.
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Old 26-06-2017, 09:53   #9
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Re: Brokers looking for other buyers while under a contract

Excellent posts. This has helped me understand some of the processes and steps that we go thru from the first offer to the counter offers on a yacht.

I think there would be less suprises if the brokers were honest about the condition of the yachts they are selling. Less surprises and less of a "counter offer shock" to the seller. Especially an absent owner.
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Old 26-06-2017, 09:54   #10
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Re: Brokers looking for other buyers while under a contract

Brokers are paid to help the seller, period. If broker can create a competitive bidding situation, bravo! Verbal offers or contracts mean nothing. If another buyer tops your offer your options are try to beat it or call the seller's bluff (if it is one) and ask for your deposit back. As a buyer you started it by asking for a price reduction the broker apparently believed was excessive. They make money on closing deals so his seeking a competitive bid says something.
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Old 26-06-2017, 09:59   #11
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Re: Brokers looking for other buyers while under a contract

when buying a boat, no such animal as a verbal counter offer.
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Old 26-06-2017, 11:29   #12
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Re: Brokers looking for other buyers while under a contract

Wifey B: I was always told that "verbal is as good as the paper it's written on." Well, not might be the screen it's transmitted on. Still meaning in things like this it's worthless.
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Old 26-06-2017, 11:48   #13
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Re: Brokers looking for other buyers while under a contract

Quote:
Originally Posted by mr336 View Post
Excellent posts. This has helped me understand some of the processes and steps that we go thru from the first offer to the counter offers on a yacht.

I think there would be less suprises if the brokers were honest about the condition of the yachts they are selling. Less surprises and less of a "counter offer shock" to the seller. Especially an absent owner.
Shopping your offer is a function of a free market. It has happened to me: I made a sweet deal for a competing buyer sitting in the wings. If I had accepted the seller's counter offer the boat would be mine. I tried for a better deal and lost. (I've since bought a gem!). To think the broker is there for you is naive. He is there for HIS interest (commission). Most brokers want the path of least resistance to a commission. If that is another buyer then you become the conduit to a deal for them (broker and buyer). Brokers being "honest about the condition they are selling" is a sweet thought but often conflicts with a path of least resistance (aka laziness). It takes a lot of work to know the "condition" of some 100+/- yachts currently offered in the brokers neighborhood. That extra work may or may not end up as a commission since brokers work on a contingency. If a sale doesn't go through they do not get a pay check. No sale: no paying rent. It is a tough game (I spent 20 years as a commercial RE broker, I know). If you have a good relationship with a broker it is possible and fair to expect knowing that you are competing. If you have a rocky relationship you may get used.
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Old 26-06-2017, 12:26   #14
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Re: Brokers looking for other buyers while under a contract

Great insight into the process.
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Old 26-06-2017, 15:12   #15
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Re: Brokers looking for other buyers while under a contract

Quote:
Originally Posted by lesterbutch View Post
First you must understand the broker works for the seller not the
Buyer. If you as buyer want representation you need to hire a
Broker to represent you. It's done all the time!
My perspective which comes from real estate is a little different. On paper the broker is being paid by the seller a commission. In reality the buyer is the one with the money that he will be paid from and buyers are not as common as sellers, so he tends to influence the seller to accept a lesser price rather than lose the buyer. The small difference in negotiated price does not materially affect his commission.
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