US Practice of Deposit with Boat Purchase

[Doodles]

Originally Posted by David_Old_Jersey

If anyone is wondering why there Broker has not sold there boat (or not had any offers) - the answer may be in this thread

The 10% "rule" is simply pissing a Vendors money away - fair play to those who can afford that IMO not a serious Vendor.

By vendor I assume you mean the seller/broker. Why would they let the 10% stand in the way of a sale? It works in their favor; otherwise, they wouldn't have it. It helps eliminate those that are not serious or don't have the cash. If I'm the seller, I don't want the broker coming to me with empty handed offers. If you are serious show it with some earnest money, doesn't have to 10% but enough to should you are serious; otherwise, don't waste my time.

[Doodles]

Originally Posted by djambalawa

It seems that folks in or near the US thing that this is quite reasonable - and others think "you're kidding!?". So yeah must be a cultural reason...

When I actually decide to buy the boat then I'll hand over some money...

Yeah, its called American Capitalism.

[boatsmith]

Yes it is the norm. From some of the comments here I can see why . A broker usually knows where his client's line is or at least whether or not he is soft. You are not asking what the price is, you are dickering. Why bother dickering with a non-serious customer. I certainly don't take offers serious from someone who has only seen the boat online and wants to start working the price down. You look at the boat, maybe several times and if suits you then you make an offer subject to survey and sea trial. It is called earnest money for a reason.

[pablothesailor]

Guys, it is clear there are plenty on this forum that are either Brokers or have connections with Brokers!! So here is a clear message to all of you; we are shopping and will buy within the next 12 months, YES, we may call you to enquire about a boat, NO, we wont send you 10% to ask you about a boat or what purchase price might be acceptable! Cant be clearer than that, take it.....or leave it!! Again, a message to you if you are a seller, make sure you fuly understnd how the broker will work for you, it could well cost you a sale! If this 10% is standard practice in the USA (its not here in Spain as I checked with a broker here last night) with brokers then we will remove you from areas of interest to us!

[jacob30]

The 10% deposit and Purchase agreement are how business is done. I just bought a boat with this exact same procedure. If the broker is asking for this more than likely he already knows it will sell.
On the flip side it also protects the broker/seller from performing services for shoppers who are not serious. If the broker makes an offer and it is accepted the deposit is forfeit if the buyer backs out for no reasonable reason.
Here is an important piece for you the buyer. MAKE SURE the purchase agreement says that you can walk away from the sale with your deposit if the Survey finds undisclosed damage or extensive refit IE: it surveys badly. Re-word it if it does not read like you want it to.

[pablothesailor]

Originally Posted by jacob30

The 10% deposit and Purchase agreement are how business is done. I just bought a boat with this exact same procedure. If the broker is asking for this more than likely he already knows it will sell.
On the flip side it also protects the broker/seller from performing services for shoppers who are not serious. If the broker makes an offer and it is accepted the deposit is forfeit if the buyer backs out for no reasonable reason.
Here is an important piece for you the buyer. MAKE SURE the purchase agreement says that you can walk away from the sale with your deposit if the Survey finds undisclosed damage or extensive refit IE: it surveys badly. Re-word it if it does not read like you want it to.

It is standard procedure that the deposit is returned if the boat fails its survey, thats the whole idea of having it! There are no extra special¨services ¨a broker has to go through if he gets a potential buyer calling about a boat and asking if the seller is ¨flexible¨ regarding the price, its a YES or a NO!! If its a yes, then the next stage can begin, If an offer is made and accepted then the buyer needs to lodge his deposit subject to survey, pretty straight forward! If this does not suit you the broker........then you dont suit us and you have lost a sale! This is a bit like pulling teeth out to be honest......

[jacob30]

Has anyone on here put 10% down and a submitted a Purchase Agreement to have it be rejected by the seller?????

I think we will be hard pressed to find anyone who has done this. I may be wrong so if you have let's hear it.

The broker knows at what price the seller will go. Or should have a pretty good inclination.

[Doodles]

Originally Posted by pablothesailor

Guys, it is clear there are plenty on this forum that are either Brokers or have connections with Brokers!! So here is a clear message to all of you; we are shopping and will buy within the next 12 months, YES, we may call you to enquire about a boat, NO, we wont send you 10% to ask you about a boat or what purchase price might be acceptable! Cant be clearer than that, take it.....or leave it!! Again, a message to you if you are a seller, make sure you fuly understnd how the broker will work for you, it could well cost you a sale! If this 10% is standard practice in the USA (its not here in Spain as I checked with a broker here last night) with brokers then we will remove you from areas of interest to us!

Pablo I'm not trying to give you are hard time and I'm not a broker or connected to one, and I really hope you find a good boat to do your circumnavigation in, so don't get hung up on this 10% thing. If you find something you really like the broker will find a way to let you know if you are in the ballpark price wise. But if the boat is listed at $150K and you're asking the broker if the seller will take $100K, and you are doing this from Spain and the boat's in Texas, well don't be surprised if they are a bit cautious. Remember you are a foreigner and they don't know you from the Nigerian banker. He will want to figure out whether you are serious or just dickering as Boatsmith says. Nothing is cast in stone, but you need to work with the system. It may be a buyers market, but its still a two way street and there has to be good faith shown by both parties.

[cheoah]

In my boat deals, the broker takes a verbal offer and we hammer it out to make it work for both parties. Once the seller, which was me this month, agrees to a price, then the contract is signed and the 10% deposit is deposited.

There are lots of bottom feeders out there, but they're entitled to make offers. There's just no reason to waste time shuffling money around if the seller hasn't even given the nod though.

csh

[offline]

All aspects of the transaction are negotiable, this includes any documentation and deposits requested. You are always free to reject his demand for a deposit or make a counter to it.

In many cases you are dealing with high value assets and like real property transactions it is not uncommon to have earnest money involved and although you may not feel that way inquiring if the seller is willing to take less than asking price is the start of a transaction. In your mind you've already identified that boat as suitable in some manner and have started to negotiate with the price as the most important aspect.

Like others have said having skin in the game is important to showing that you are real and seriously purchasing. Believe it or not there are dreamers out there who have no possible way to actually pay for these yachts, but that doesn't stop them from "shopping".. it's a tremendous waste of time for everyone but the dreamer who likely gets some entertainment and views this as a bit of an escapist activity. There is a reason why "Lifestyles of the Rich and Famous" and luxury home tours are so popular and this phenomena only increases as the economy gets worse.

Frank if I was dealing with asking prices north of $100K I would involve a broker and my expectation would be to have earnest money involved in transactions, just as I do with any other serious business deals. Less than that I can be a little less formal.

I've had three people want to come look and "test ride", but they obviously had no resources to legitimately consummate a purchase and it was clear during the phone calls or email exchanges.... I didn't waste my time continuing with them. Could I have lost a potential sale? of course.. but I didn't lose what I value more and that is my time.

[Doodles]

Originally Posted by jacob30

Has anyone on here put 10% down and a submitted a Purchase Agreement to have it be rejected by the seller?????

I think we will be hard pressed to find anyone who has done this. I may be wrong so if you have let's hear it.

The broker knows at what price the seller will go. Or should have a pretty good inclination.

I have! I put down a 10% deposit on a Vancouver 36, had a survey and sea trials and we could not come together on adjustments to the price so I walked. My broker asked if I wanted the deposit back or just held for my next offer. I had them hold it because I knew I was going to buy something soon. The next boat (Dickerson 37) we made an offer on was rejected outright by the seller. He wanted the list price period! We move on the our third offer (Wauquiez Pretorien) which we eventually negotiated a successful deal on and the original deposit was applied to that sale. If I had gotten the money back each time if would have been a pain because the brokers insist on wire deposits not bank or cashier check (for good reasons that I understand).

By the way, the Dickerson is still for sale and at the same price and that was two years ago. He shouldn't taken my offer.

[pablothesailor]

Originally Posted by jacob30

Has anyone on here put 10% down and a submitted a Purchase Agreement to have it be rejected by the seller?????

I think we will be hard pressed to find anyone who has done this. I may be wrong so if you have let's hear it.

The broker knows at what price the seller will go. Or should have a pretty good inclination.

Why would the broker know where the seller is prepared to go?? Things change on a monthly basis, I was contacted by a guy here in Spain regarding a boat he has had for sale for the last 6 months, the boat did not suit our needs but we have stayed in touch and met a few times!! He sold this boat 3 weeks ago for 40% less than the price he put to us, why? well, he told me he could just not afford the mooring and maintanance anymore! The Broker told him that he could have sold the boat 6 months ago at this price, he asked the broker why he had not told him that, the broker replied he did not realize the guy was so keen to sell...........A broker wont know the ins and outs of a sellers everyday life which can be changing on a monthly basis......I would think a seller would not want the broker to know everything anyway!! Again, I would not be prepared to pay 10% to anyone just to ask if a boat that I liked the look of would go for less than the listed price or if the seller was flexible! I would have thought most sellers who have had a boat on the market for a while would want to hear from the broker of ANY enquiries made about thier boat, these would be greatly reduced in my opinion by brokers asking anyone enquiring about a boat price for a 10% deposit!!

[cheoah]

Pablo, remember that they're in this for money and there are often more buyers out there besides you. No doubt some of the brokers are screwing it up for the seller, but lots of times they just aren't going to give you much time if you're offers are low. Sellers often have more time than you think to wait out a sagging market.

I just sold a Cape Dory 30 after 6 weeks on the market. When it was for sale by owner, I had two offers- one German, one Irish, that were way below the price I sold the boat for. The broker would have screened these buyers, who really did take loads of my time and may never actually buy a boat. All of the buyers that kicked the tires on my rig are still boat-less after at least a year. How does someone shop for a basic 30 foot boat for over a year and not have a boat to sail? Some like to shop, some like to sail. Just because it is a "buyers" market does not mean all owner are looking to give their yachts away.

If you make a decent offer, rarely will a broker turn it down. Sellers often have a clear idea of value in their minds, right or wrong. Go too far below that and they'll blow you off. Nothing wrong with making low offers, just be prepared to not be taken seriously.

Good luck-

csh

[Doodles]

Originally Posted by pablothesailor

Why would the broker know where the seller is prepared to go?? Things change on a monthly basis, I was contacted by a guy here in Spain regarding a boat he has had for sale for the last 6 months, the boat did not suit our needs but we have stayed in touch and met a few times!! He sold this boat 3 weeks ago for 40% less than the price he put to us, why? well, he told me he could just not afford the mooring and maintanance anymore! The Broker told him that he could have sold the boat 6 months ago at this price, he asked the broker why he had not told him that, the broker replied he did not realize the guy was so keen to sell...........A broker wont know the ins and outs of a sellers everyday life which can be changing on a monthly basis......I would think a seller would not want the broker to know everything anyway!! Again, I would not be prepared to pay 10% to anyone just to ask if a boat that I liked the look of would go for less than the listed price or if the seller was flexible! I would have thought most sellers who have had a boat on the market for a while would want to hear from the broker of ANY enquiries made about thier boat, these would be greatly reduced in my opinion by brokers asking anyone enquiring about a boat price for a 10% deposit!!

I serious doubt the seller was prepared to take 40% less six months before. If he was he sure as hell should have told the broker! Wouldn't you be letting the broker know something like that? Sounds like the seller was in a bind, wanted a lot more but couldn't hang on due to financial problems and finally gave in.

[Vasco]

Originally Posted by pablothesailor

Guys, it is clear there are plenty on this forum that are either Brokers or have connections with Brokers!! So here is a clear message to all of you; we are shopping and will buy within the next 12 months, YES, we may call you to enquire about a boat, NO, we wont send you 10% to ask you about a boat or what purchase price might be acceptable! Cant be clearer than that, take it.....or leave it!! Again, a message to you if you are a seller, make sure you fuly understnd how the broker will work for you, it could well cost you a sale! If this 10% is standard practice in the USA (its not here in Spain as I checked with a broker here last night) with brokers then we will remove you from areas of interest to us!

I'd be very interested if, when you do buy a boat, you come back and tell us how it worked out for you. You can't even buy a used car from a dealer without a deposit with the offer.

The offer (with a deposit) is the usual starting point for negotiating a final sale price. With any high ticket item, there usually is negotiating, a deposit with the offer shows you are a serious buyer.