Oh my... find an uncrossed "T" and reject the whole. Whew! The posts speak for themselves, and I won't join these uh, gentleman in parsing or provocation. Knee jerk responses are performed by jerkers of knees, lol, nicht wahr? To conflate said "jerkers" of knees with the epithet "jerk" is well, a very broad reach. Although based on the pack of pile-on brokers, I could be convinced to make that association...
Time to come about my friends...
Sticking to the issues, the (not) “standard” 10% down payment is a broker invention that has become all too commonplace in this minimally regulated industry. This clause is NOT standard, and does not appear on the standard YBAA (Yacht Brokers Association of America) purchase
It is also worth noting, parsers, that the great majority of states don't regulate, and as I mentioned before, it appears the regulation in Florida is sorely lacking, though I'm confident the pile-on boyz will vehemently disagree.
Nor is this invented addition a legal
requirement – a single
dollar is sufficient “consideration”, enough to make any purchase offer legal
, and it protects you against a deal gone bad. There is no requirement that you, the purchaser, must use the broker's self-serving and altered “standard” purchase offer form, which differs from broker to broker. To the contrary you can and should make an offer either using your own purchase offer document, or by negotiating and modifying the broker's form.
I suggest you submit an offer on your own PO form (they are widely available and like the broker's, can be easily amended to protect your own interests as buyer). The broker is legally obligated to forward all legal offers to the seller. The broker/buyer has every right to counter and/or modify your form (and vice versa). Simple. By keeping in your legal, one dollar down payment, and setting forth say two weeks for a survey
you are evening the risk. Your risk is paying for an expensive survey
that is not positive. The buyer is risking two weeks waiting for a survey.
Fair enough. At this point both parties want a positive survey. The sad part is that many buyers succumb to broker pressure, and may confuse what may be a considerable boat
purchase with a real estate transaction.
For example, in real estate the considerably higher “down payment”, ie earnest money
, IS very meaningful. Why? Because if the seller accepts the offer (no counter), the buyer is now obligated to proceed/close and failing same, risks losing his earnest money. In real estate, the larger the down payment/earnest money, the more “serious” the buyer. His only real out? A bad appraisal, out of his/her control. Any of us who have either bought or sold
a home are well aware of these factors. Escrow and title insurance
are essential A real estate contract
is a VERY serious document.
Now while a boat
deal may seem to share the terms, they do not share the same effects.
The alleged “standard” PO's – almost all subject to survey and sea trial – are wide open, and favor the buyers, who are under no obligation to accept any survey, regardless of what it finds. The acceptance or rejection is entirely subject to your discretion. You, the buyer, have the right to easily walk if you don't like the survey, for any or no reason at all. A survey is NOT the equivalent of a bank's real estate appraisal, and has little if any weight beyond being informational.
Generally speaking, you can accept or reject it in your sole discretion, and that's that.
With a proper down payment, you can kill the deal ten minutes after you sign it. You can kill it before the survey is due. You can kill it after the survey has been done, in your sole and private discretion, and either renegotiate or walk. Same for the sea trial. You don't like the way it handles. Walk. Get it? Even brokers will promote an offer on this basis.
Typically, and only if and when you legally accept the survey (usually in writing) and trial (or fail to timely perform them) are you then obligated, and only then do you risk your “down payment”. If you don't like the boat, don't accept the survey/trial and walk and your “down payment” is refunded. Easy peasy.
Then why do brokers try so hard to force you to sign their self-serving, “standard” 10% PO?
It's really very simple. They want to take you, the seller and the boat out of the market. They know that many buyers – knowing how easy it is to walk – may keep looking at other boats (you should until you get a good survey). They also know that most buyers either cannot afford multiple, 10% “down payments”, or want to avoid what they perceive as a time delay in getting it back. They believe that forcing an expensive survey will keep you in the deal (it won't).
Does this mean the buyer is not serious?
Not at all. The broker knows you can back out, regardless of the amount. He simply wants to tie you up for the boat he represents. He wants to run the clock, tie you and the buyer up and take you out of the market.
To me the real indicator of “seriousness” – as stated – is when the buyer, per the PO, must pay for his/her own expensive survey, and does so. Any buyer who ponies up to a thousand dollars (or more), gone forever, just to find out IF the boat is viable is a very serious buyer. “Seriousness” is not a flimsy and mislabeled “down payment”/PO that the buyer can easily cancel or walk from. Keep in mind that the seller risks little, short of taking the boat off the market (maybe). Consider that you yourself may discover serious deficiencies before the survey. Consider that you may have the skills to do your own survey (if you do, you can add a clause to your own PO that notes the survey may be your own – an excellent provision).
Ever have a broker show you a boat that has an offer on it (pending)? I have. The broker's 10% - like all the other elements of their “standard”, self-serving listing agreement and PO – are all in their own interest.
Should we be surprised? Carry on.