US Practice of Deposit with Boat Purchase

[Doodles]

Originally Posted by Wotname

And perhaps I am mistaken, but wasn't the OP asking about international buying?

No, not really. The question was as per the title ... what is the "US Practice of Deposit with Boat Purchase." Not what are international practices or norms.

[Wotname]

Originally Posted by ErikFinn

Hi,

I'm a newbie here and would need some advice. I live in Europe but have my eyes on a sailing yacht for sale in the US. I made an offer on the yacht yesterday and today the broker replied with the following:........

Originally Posted by Doodles

No, not really. The question was as per the title ... what is the "US Practice of Deposit with Boat Purchase." Not what are international practices or norms.

I guess I see it differently: OP lives in Europe and wants to make an offer on a boat for sale in the US. In Australia we call that international buying....

Maybe time to sit on the boat and turn off the computer.

[Doodles]

Originally Posted by Wotname

Maybe time to sit on the boat and turn off the computer.

And ...

[David_Old_Jersey]

Originally Posted by Wotname

I guess I see it differently: OP lives in Europe and wants to make an offer on a boat for sale in the US. In Australia we call that international buying....

Maybe time to sit on the boat and turn off the computer.

You mean Europeland is not a suburb in the USA? Go figure

My dealings in Asia / with Asian people are probably not as extensive as some others - but nonetheless my take is that fundamentally the people are no different from folk in the west, meaning that in business weakness gets preyed upon and exploited - and with many (most?) westerners that weakness very often comes from ignorance (language and practices) coupled with being unable to deliver consequences for non-performance. FWIW it's surprising how constructive folks can be when learning that the other party's legal team fits in the back of a pick up truck ......probably why not so many local yacht brokers in Asia

[goboatingnow]

Well the euro is falling Greece has confirmed that there is to be a partial default and Italy's costs of funds is going through the roof I suspect European buyers buying boats in the US will be a minority sport for a while.

Dave

[Curmudgeon]

I wouldn't be looking to this thread to learn contract law lol. What we are discussing here is an offer, which is non-binding unless accepted by the seller on the exact terms of the offer. It is not a legally binding contract. If the seller accepts with different terms, that's a counteroffer. There is still no contract unless the counteroffer is accepted. The "good faith" deposit protects the seller against "tire kickers" who aren't serious about making a purchase.

Write a check and make a photocopy. Fax or email the photocopy to the broker. Tell the broker that you'll send the actual check if the offer is accepted. If there are price negotiations, rip up the first check and photocopy another check for 10% of the negotiated price.

The reason you send only a photocopy is not for protection against the seller, it's for protection against an unscrupulous or insolvent broker. Consider this scenario: you send a real check, the borker deposits it in his or her account, and then files for bankruptcy. Poof! Your money is now gone (well, you might get back 2 or 3 cents on the dollar four years from now).

Although 10% is customary, you can certainly negotiate a smaller good faith deposit. But IMHO 10% is better. That's the amount of the standard broker's commission, and it gives the broker some assurance that he won't get stiffed by a seller. He or she will therefore work harder to manage the seller's expectations and get the deal done.

[Capt Phil]

I'm pretty much in agreement with Curmudgeon... Although the last few purchases I made was with a couple of thousand $ earnest money to get the deal rolling, then once we had settled on a price subject to sea trial and survey, I put up the rest of the 10% deposit. Every offer I made was fused to expire in 48 hours except one was a week due to the owner being out of country. That way there was an expression of good faith up front but I wasn't exposed to having to chase down the larger refund if the deal subsequently went south. A broker was only involved in 2 of the last five deals I did, the others I dealt directly with the owner/seller and used a title company to hold the escrow funds. I mention this so that buyers from outside the US know that there is some flexibilty in US business practices. I do believe it is currently a buyers market in the US except perhaps in the PNW. Capt Phil

[Kettlewell]

Back to the OP, this is an absolutely common practice in the USA that reputable brokers insist on all the time. However, having looked at many, many boats myself, I would never place an offer on a boat, no matter what the description, price, location, or survey, without first inspecting the boat personally. In fact, I usually plan on spending at least a day going over the boat meticulously if I am getting serious, before placing an offer. If the broker balks at this, it is time to walk. It is almost unheard of for the description of the boat to be accurate, in my experience, and it takes a lot of sleuthing before I'm ready to even contemplate making an offer. There is no rush, no matter what the broker tells you--it is a buyers' market and there are tons of boats that you can look at if this particular deal falls through before you are ready. In my experience an offer should never be made until you are serious that you are willing to actually pay that amount, and the boat is worth that amount to you. If you are just fishing for the price you are better off trying to contact the owner directly, which again is perfectly possible in most cases despite what the broker tells you. Often the broker has an inflated idea of what the boat is worth while the owner knows much more about what work it needs and what he is willing to part with it for.

[Capt Phil]

Good advice, Kettlewell... cheers, CP

[Doodles]

I think an important distinction was pointed out quite a few posts ago but bears repeating. Some of us are talking about a legitimate "offer" to buy and others (mostly the Europeans) are talking about trying to get an "idea" of what the seller will take. They are assuming, since its a buyers market, that a healthy discount will be available but aren't sure how much. They want to know for example, can I figure on 15, 20 or 25% off your asking price, and they want to know this without putting up a deposit. Whereas, others are thinking ...make you actual "offer" and you will find out then. An offer that requires a deposit is very different from trying to get an idea of the discount available. On requires just putting up your offer and money and the other requires some negotiation skills. The idea of what a seller might accept is not given out freely; otherwise, they might as well just change the listed price to that amount.

Even if the broker/seller gives you an idea of what price might be accepted, its worth nothing until you make a legally binding offer as Curmudgeon points out.

[savoir]

Originally Posted by Doodles

I think an important distinction was pointed out quite a few posts ago but bears repeating. Some of us are talking about a legitimate "offer" to buy and others (mostly the Europeans) are talking about trying to get an "idea" of what the seller will take. They are assuming, since its a buyers market, that a healthy discount will be available but aren't sure how much. They want to know for example, can I figure on 15, 20 or 25% off your asking price, and they want to know this without putting up a deposit. Whereas, others are thinking ...make you actual "offer" and you will find out then. An offer that requires a deposit is very different from trying to get an idea of the discount available. On requires just putting up your offer and money and the other requires some negotiation skills. The idea of what a seller might accept is not given out freely; otherwise, they might as well just change the listed price to that amount.

Even if the broker/seller gives you an idea of what price might be accepted, its worth nothing until you make a legally binding offer as Curmudgeon points out.

There is no such thing as a legally binding offer and there never was.

To make an offer legally binding you need four things:

1. No counter offer
2. Confirmed acceptance of the offer by the seller, written is best
3. Signed contract
4. Paid deposit

In theory on point 3, you could go ahead on an oral contract but you would have to be a fool.

[Doodles]

Originally Posted by savoir

There is no such thing as a legally binding offer and there never was.

To make an offer legally binding you need four things:

1. No counter offer
2. Confirmed acceptance of the offer by the seller, written is best
3. Signed contract
4. Paid deposit

In theory on point 3, you could go ahead on an oral contract but you would have to be a fool.

True, I was just trying to draw the distinction between two concepts. I think for a binding agreement all you need is an offer and acceptance (#2). The rest is gravy or implied in the case of #1 (no counter offer).

[savoir]

Not quite. The buyer must hand over $$$$$ but no rule about how much.

In legal jargon - consideration

[Curmudgeon]

Originally Posted by savoir

Not quite. The buyer must hand over $$$$$ but no rule about how much.

In legal jargon - consideration

No, if you promise to paint my house and I promise to pay you when the work is done, we have formed a legally binding contract, even though no cash consideration will change hands until the end. Mutual promises are perfectly sufficient as consideration.

The reason that contracts are in writing is something called the statute of frauds. This statute was passed by parliament in the 17th century and was imported to the U.S. (and to Canada and every other common law jurisdiction) as part of English common law. The rules vary from state to state, but in a nutshell, certain types of contracts must be in writing, including contracts above a certain dollar amount.

The standard U.S. yacht broker's purchase and sale agreement calls for a deposit, but it doesn't say how much. Once both parties have executed the agreement, the buyer is required to deposit whatever amount has been agreed.

[GordMay]

Generally, the owner has a right to ask for a cash deposit at the time you sign a formal purchase agreement.
10% is customary from dealers and brokers (escrowed), but direct sellers usually ask for less. Include the deposit amount in the sales agreement, and the fact that it will be refunded should serious problems crop up from the survey.

See ➥ http://www.cramermarine.com/images/f...rch_n_sale.pdf