Sequence of events during purchase?

[OrangeCrush]

Hey all, need some of your collective experience here....

I've made an offer on a boat and I'm working on details with the broker. I've read the draft of the contract they sent me and it looks good, but this is my first time buying a boat through a broker so I'm trying to make sure I don't make any wrong assumptions. Also I should say that so far I think the broker is very honest and professional and the reputation of the brokerage is just that.

So I've made the offer and the broker said the owner is still considering it, and although it was roughly 20% below asking price she said that it should be at least close enough that we can work something out.

The broker said I don't need to make a deposit until survey. I'm traveling right now and can't be there for a survey for almost 3 weeks. So my first concern is that someone else comes along and offers more money in the meantime. Is it ever advisable to put down a deposit before survey, or otherwise expect that the boat will not be shown to other prospective buyers?

Second, can I expect that there will be a counter offer within a certain time frame, and if we agree on a pre-survey price at what point does this become binding?

Third, one thing I offered (at the broker's suggestion), while making a rather low offer on a nice boat, was that I would not nitpick small issues on survey to get the price down further, except in the case that major structural problems are revealed. This boat has been completely professionally refit and barring any big hidden issues I don't feel the need to haggle further as I think I'm getting a good deal already. But how should I expect for this to be represented in the purchase agreement?

Thanks so much for any advice!

Jack




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[OrangeCrush]

Also, just in case it wasn't clear... I thoroughly inspected the boat myself and I had lots of questions thoughtfully answered by the current owner before I made my offer.


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[Paul L]

No deposit with a written offer sounds strange. Offering a deposit helps to let the seller know you are real and willing to have some skin in the game during the closing process. The offer should have an expiration date in it. No matter how nice the broker seems, read the contract/offer and know that is what you are agreeing to.
Impressing on the broker that you will not nickel and dime the seller based on the survey is about all you can do while requesting that they communicate this to the seller.

[OrangeCrush]

Well it's still early in the process... I suspect that the owner hasn't given the broker a counter offer yet but she wanted to get started on drafting the contract nonetheless. I presume that if the owner counters with a number I agree to, then we would fill in the details on the contract and start sending signatures. Even so, the only protection for me in the contract is reimbursement of my deposit ($0) and any expenses for survey ($0) since they still didn't ask for a deposit until 3 weeks from now when I'll get the survey done.

Of course it does make sense that they "accept" my low offer informally and string me along until I get home. If they find a buyer that will pay more, great for them. If not then they can go through with my offer when I get home. This first scenario is what I'd like to avoid.

Normally I would insist on being there for survey, but in this case maybe it is worth having it done in my absence in order to move the process into the legally binding stage. Once again, it's obvious that the boat has been extremely well cared for and I'm relying on the survey to find hidden problems rather than assess the overall value of the boat. Even if I made a deposit now as you suggest, what's to prevent them from simply returning it and going with a higher bidder if one comes along?



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[Paul L]

You should have a signed offer, aka contract, before you have a survey. The offer will have all the needed contingencies, such as pending buyer acceptance of survey, buyer acceptance of sea trial, clear title, and possibly loan approval. If you don't have a signed contract you don't have a deal. As I said before your offer should have an expiration. If the seller dicks you around then they risk you going somewhere else.

[Terra Nova]

The broker would be a fool to accept your offer and deposit, holding up the sale of the boat for weeks. And an offer without earnest money is no offer at all.

[OrangeCrush]

Paul, thanks a lot for the help so far.

Would it be too much to ask for me to send you the preliminary draft of the contract for you to take a quick look at? I could send you a PM or email.

Either way it seems there is no way for me to prevent them from allowing someone else to buy the boat before the survey is done, because only at that point would they have up reimburse my expenses beyond the deposit, assuming there even was one.


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[OrangeCrush]

Yes you said it, Terra Nova, that's exactly what worries me. I wonder if it's worth getting the survey done without being there to avoid three more weeks of uncertainty.




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[OrangeCrush]

Alternatively, would it be naive to ask the broker for a "heads up" in case other people are making serious inquiries on the boat? I don't want to enter a bidding war with anyone, but at least then I wouldn't run the risk of having it suddenly sold off before I got home, assuming she was willing to do me that courtesy and also to not fabricate any phony competition to get my offer up higher.

Starting to seem like if I want the boat, which I do, I should go forward with the purchase without delay.


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[Paul L]

Originally Posted by OrangeCrush

Paul, thanks a lot for the help so far.

Would it be too much to ask for me to send you the preliminary draft of the contract for you to take a quick look at? I could send you a PM or email.

Either way it seems there is no way for me to prevent them from allowing someone else to buy the boat before the survey is done, because only at that point would they have up reimburse my expenses beyond the deposit, assuming there even was one.


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As long as you meet all the terms of the sales agreement they cannot back out. For the most part once the both sides have agreed to the sale the broker is going to push for it to close. They want their commission. They may take backup offeres to cover them if the deal falls through

That said, it is pretty easy for the buyer to back out of a normal sale agreement by using one of the contingencies. A seller has a harder time backing out, but they do not have to agree to any requests you make based on the survey - which then means you either eat the issues or the deal falls through. If the deal falls through, the buyer normally eats the survey and haul costs.

A PM is fine, but until you put earnest money down and get a signed deal it ain't a deal.

[SV DestinyAscen]

1. Negotiate good contingencies focusing on backing out if certain serious issues are discovered or that a good faith repair estimate exceeds a certain price.

2. Make deposit due to seller when after survey determines the clauses above haven't been activated.

3. Sign the agreement before you leave for 3 weeks.

/not your attorney
/not an attorney - just an old person with biz exp.

[Cottontop]

If the seller is paying the broker's commission, the broker is working for the seller and owes duties to the seller, not to you. Never forget that.

[Terra Nova]

Originally Posted by OrangeCrush

...Starting to seem like if I want the boat...

...I shouldn't be low-balling the seller while asking to delay the sale for weeks..

[Paul L]

Originally Posted by SV DestinyAscen

1.....
2. Make deposit due to seller when after survey determines the clauses above haven't been activated.
.......

With a broker involved I've always had the deposit stay in the broker's escrow account until closing. No way do you want the seller to have your money till the deal closes.

[OrangeCrush]

I went to see the boat a few days before leaving on vacation. Couldn't get my questions answered before I left but once I did via email I made the offer from afar. I agree that the broker mainly wants to see the deal go through and so far I think if there were other buyers in the mix I'd already have caught wind of that. But you're right, TN, that I put myself in a weak position since I can't be around for 3 weeks unless I fly home early.

Even so, I should have a signed agreement soon. I will make sure it has all the necessary contingencies in it (it already has almost all that have been mentioned, just needs more specifics on acceptance of survey I think).

The part I'm still not clear on is how (as you say Paul) that the seller will be locked into the agreement. The draft contract says if seller is unable to fulfill the terms, that I get my deposit back plus any expenses including survey. So a signed contract seems like it would only ensure that they owe me nothing if they backed out. Is that wrong?








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