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ctsbillc 02-03-2010 11:56

Buying a Boat - Disappearing Deposits & Slit Throats
 
Folks,

I've been trying to buy a boat for over a year now, mostly in the Carribean. One of the U.S. brokers I deal with cautioned against dealing with anyone off-shore generally, and "in the French Islands" specifically. He had colourful tales of folks being unnable to get their deposits back, and (I hope he was exagerating) "Throat cutting tactics" of the brokers.

I would like to ask the panel if this is just a broker trying to slag his competition, or if there are any brokers I should stay away from.

Best Regards,
Bill

John A 02-03-2010 12:18

Anybody that makes their living on commissions, will sometimes use unacceptable tactics to feed the family.
They'd like your business, so yes they're going to dis the competition.

Some boat brokers are former car salesman who are to lazy to stand to do their jobs.

Rather than ask for a list of brokers to stay away from, you should ask which brokers to deal with, the list will be shorter.
The search for a boat is part of the adventure.

Quickstep 02-03-2010 12:39

There are a lot of good boats for sale in Grenada and Trinidad, and a lot of reputable people there selling boats- BUT, make sure you ask where the boat was during Ivan or Emily! Two VERY reputable people there would be Billy Wray (THE surveyor in Trinidad) or Neils Lund (THE rigger at Budget Rigging) and ask who they would recommend you work with.

ctsbillc 02-03-2010 12:57

It is quite an adventure, and quite a learning experience. I've had very bad service from a very large Florida based dealer - bait and switch, showing 6 year old photos of a twelve yeear old boat (taken before the current owners had a chance to neglect the vessel). Definite used car folks trying to go up-market.
There are a number of broker in the U.S., one broker in Guatemala, and one in Antillies, who seem very straightforward folks and generate a good comfortable feeling. Of course I could be wrong in all cases. It would seem wise to hang on to your deposite, and not go sending cash all over the place, until you have had face to face contact.

Hud3 02-03-2010 13:04

Anywhere you go, you'll find good, honest people to deal with, and you'll find the other side of the coin as well. But an additional issue you'll face in buying a boat in a foreign country is that if the broker or seller doesn't live up to the terms of the purchase/sale agreement, it may be a very time-consuming, expensive, and difficult process getting satisfaction.

barnakiel 02-03-2010 13:17

What you hear from a Brit broker about a French broker is a legend. Go to a French island and ask the same sort of question, you will get the same sort of answer.

You do not have to use a broker, you can buy from the owner. You do not need any deposits, you can arrange the agreement and direct payment, you can use a notary public and a bank escrow account (if the boat is expensive enough to justify this).

You can use an offshore branch of your local owner, you can assign your own broker of trust and have him/her deal with a broker you would not like to deal first hand.

b.

ctsbillc 02-03-2010 13:22

All good advice folks, thanks.

Bill

Randyonr3 02-03-2010 13:25

Boat brokers, even if they are a little slimey, are held to standards set by a governing body.. a deposit cannot be taken without a written offer for a boat..
Just had a friend who went through school to work as a salesman at the Yacht Sales Next door.. His oppenion was that its harder to get a licences to sell a boat than it is to sell a house... and you do have to have a licences and work for a legitament broker..

sailorboy1 02-03-2010 13:26

I would think that as long as you only gave your deposit to YOUR US broker (I assume you trust him/her) you are protected as to the deposit if deal falls apart.

ctsbillc 02-03-2010 13:51

The off-shore money bit is the risky bit I think. Getting a U.S. broker in the loop probably reduces risk quite a lot.

Bill

barnakiel 02-03-2010 17:41

Elsewhere I have seen broker's marghin at 6-7%, less on big boats, more on small shooters. But I found when we hire our own broker, the total remains the same, unless one of the brokers is an AH.

In the end, I think, the margin does not count, as I would gladly give 50% to a broker who can get me the boat I want at the price I want.

b.

Palarran 02-03-2010 18:02

Is the broker you talked to in the United States a well known Catamaran broker?

The process of the deposit goes like this: First you make an offer through the broker you have selected. Then, if the offer is accepted, then you pay the deposit. You pay the deposit to YOUR broker. If you choose to use the selling broker as your broker, caveat emptor.

I'm working with a french broker in St. Maarten right now. I think they are reputable having spent some time with them. They are my buyer broker and the seller broker is from the US. When it came time to pay the deposit, my broker suggested that if I felt uncomfortable sending him the deposit, to send it to the other broker, which I did. No problems.

I think you will also find the standard broker fee is 10%.

ctsbillc 02-03-2010 18:12

The U.S. broker who slagged the French is a well know U.S. broker, who will of course remain nameless. Maybe he has'nt forgiven them for Iraq yet....

That's an interesting approach from the St. Maarten broker, He's probably well aware of our fear of moving cash to less well controlled areas (If the U.S. can be considered controlled :-) )

I've heard 10% is a normal broker's commission too.

Bill

Zednotzee 02-03-2010 18:17

Quote:

Originally Posted by ctsbillc (Post 413066)
He had colourful tales of folks being unnable to get their deposits back

That is certainly possible. I'll quote you this, from paragraph 6 of the Purchase & Sale Agreement I signed:

"...Time shall be of the essence. Unless the Total Price is paid on or before the Closing Date, the Seller, at the Seller's option, may cancel this Agreement and in such event any funds paid by the Purchaser shall be absolutely forfeited to the Seller, not as penalty but as liquidated damages without prejudice to any rights that the Purchaser may have."

I presume this would most likely occur in the case of someone failing to secure financing to complete the purchase.

AquatiCat 02-03-2010 18:23

48' Heritage designed by Chales Morgan, $70K
 
I like the idea of buying from the owner if possible. For example, this boat sounds pretty awesome and cruiserly and has just gone down more than $40,000 in price, which is pretty amazing: Rio Dulce Chisme Vindicator :: View topic - 48' Heritage s/v Vicky for sale

OTOH, we were looking for a catamaran, and the Prout we found was listed with a broker, and we have been dealing with him. We are perfectly satisfied, the owner is a wonderful man and the broker has been communicative and timely (given that this is a used boat and the negotiations cut right across the Miami Boat Show, that in itself is pretty impressive). We are going to have to put a significant fraction of the purchase price again into fixing her up to Coast Guard requirements, but basically she is sound and capable and we LIKE her! We will give her a wonderful adventure and good mechanical and wiring and plumbing updates, and she will, we trust, carry our little family safely over the "so big" sea. I think this is do-able by you, but when it comes time you have to be willing to go there and look at the boat in person, get a CVS with an accredited surveyor and with you present to see what s/he is seeing, and get the feel of the deal at that point. Working remotely is generally less reliable.

Good luck, and may you find a boat at the right price that comforts your heart!

~aCat

ctsbillc 02-03-2010 18:24

Dang, that's severe. Was this from a well, know U.S. broker too?

Bill

ctsbillc 02-03-2010 18:29

aCat,

That looks like a real nice boat. Rio Dulce sounds like a real nice place to start an adventure too.

Good luck with your Prout. She will most likely last forever.

Bill

Zednotzee 02-03-2010 18:41

Quote:

Originally Posted by ctsbillc (Post 413283)
Dang, that's severe. Was this from a well, know U.S. broker too?

Bill

Do you mean my post? It was a Canadian broker & purchase. I suppose the "damages" are because it's hard to actively market the boat while you're doing sea trials & hauling it out for the survey.

To be honest, I didn't read the whole agreement before I signed it (oops!). Financing wasn't a problem- for me, the issue was the written survey, & I have to say the surveyor was really delinquent on that! I completed the purchase after a few phone calls with the insurance company. They had also insured the PO & agreed to cover me under the old survey until I got my copy. In the end, I had to have them "persuade" the surveyor to complete the report, since my calls weren't being returned.

ctsbillc 02-03-2010 18:54

Most of us go glassy-eyed when confronted with a legal agreement.

Hope the surveyor was better with the survey than his documentation.
Bill

denverd0n 03-03-2010 10:56

Quote:

Originally Posted by Randyonr3
Boat brokers, even if they are a little slimey, are held to standards set by a governing body...

Maybe where you are, in California, but that is definitely NOT the case in all states, let alone in all countries. Here in Florida brokers are, in fact, licensed and regulated. There are plenty of states, though, where anyone who wants to can hang out a shingle and call himself a "boat broker"--no regulatory oversight of any kind. I have no idea what the laws concerning brokers are in the islands, but you can bet that they vary from country to country.

Stillraining 03-03-2010 11:12

I have found it the reverse...No broker I have dealt with will present an offer with out a deposit...I would not either...there are more flaky buyers out there then flaky Brokers.

FWIW...Always specify " Subject to Survey's and Sea trial findings" Gives you an out on that closing date for any reason ..with full refund of your deposit.

ctsbillc 03-03-2010 11:41

I've had both, deposit required with offer, and deposit required on acceptance of offer. I think in future I would always go for the later.
Bill

tallyhorob 03-03-2010 12:14

just like an offer on a house many of the items in the offer are already written in. Just like any contract you can cross them out before signing and summiting the offer to the seller. Or make an page with add ons you want. If they don't like what you crossed out they do not accept the offer.

sailorboy1 03-03-2010 15:35

Quote:

Originally Posted by Zednotzee (Post 413275)
"...Time shall be of the essence. Unless the Total Price is paid on or before the Closing Date, the Seller, at the Seller's option, may cancel this Agreement and in such event any funds paid by the Purchaser shall be absolutely forfeited to the Seller, not as penalty but as liquidated damages without prejudice to any rights that the Purchaser may have."


As a buyer I would never sign such a thing! And since I would be signing an offer with a broker who is suppose to working with me, I would run away from one presenting me with an agreement that said this!

Now if I was a seller, this would be like Christmas and I would start wanting a bunch of agreements to fall though!

Palarran 03-03-2010 15:59

Quote:

Originally Posted by Don Lucas (Post 413756)
As a buyer I would never sign such a thing! And since I would be signing an offer with a broker who is suppose to working with me, I would run away from one presenting me with an agreement that said this!

Now if I was a seller, this would be like Christmas and I would start wanting a bunch of agreements to fall though!

The issue is being able to get the financing finished. First you have the acceptance of the sea-trial and survey. You have to sign off on that. Afterwards, the owner must provide marketable documentation of ownership. So, what's the problem? He has title, you have money. Exchange them and be done. I've hired a document agent to facilitate mine. The seller is using the same agent.

I'll bet that every home you have ever bought is the same. After inspections are done, you either accept the home or reject it. At that point, if you don't close, bye bye deposit.

sailorboy1 03-03-2010 18:22

I've bought a boat and I didn't have such a statement. In fact mine said if I couldn't find financing under acceptable terms, or if I couldn't find acceptable insurance, that the deal was off and I got the deposit back. I've also bought 4 houses and the deal was pretty much the same thing.

Sounds someone needs to learn better deal making.

Zednotzee 03-03-2010 18:44

Quote:

Originally Posted by Don Lucas (Post 413756)
As a buyer I would never sign such a thing!

In my case the broker was working for the seller- I didn't use a buyer's broker. If I had, he may have warned me about that clause.

I've bought 3 houses over the years too, & I found the deposit on the boat was pretty steep at 10% of the purchase price. It certainly made me stop & think twice, as I've put $500 deposits on $100k houses.

Stillraining 03-03-2010 20:41

Quote:

Originally Posted by tallyhorob (Post 413656)
just like an offer on a house many of the items in the offer are already written in. Just like any contract you can cross them out before signing and summiting the offer to the seller. Or make an page with add ons you want. If they don't like what you crossed out they do not accept the offer.

Bingo!

Stillraining 03-03-2010 21:00

Quote:

Originally Posted by Palarran (Post 413771)
The issue is being able to get the financing finished. First you have the acceptance of the sea-trial and survey. You have to sign off on that. Afterwards, the owner must provide marketable documentation of ownership. So, what's the problem? He has title, you have money. Exchange them and be done. I've hired a document agent to facilitate mine. The seller is using the same agent.

I'll bet that every home you have ever bought is the same. After inspections are done, you either accept the home or reject it. At that point, if you don't close, bye bye deposit.

Nope!
That's not the way boats are bought ..It is Standard practice that anything about the boat that is unexceptable to the buyer for any reason due to findings either during a survey or a sea trial the deal is off and the deposit is returned if the buyer cares to go no further in negotiations....This can be a trivial as the way the boat prop walks.


It is for this reason I would never allow a boat I was selling through a Broker to be either hauled for a survey or taken on a sea trial with out a deposit on an accepted offer first....other wise your just setting your self up for week end joy riders to waste your time....A 10% deposit weeds out these joy rider, fender kickers to most degree...and brings you serious intrested parties...with a level of aproved financing already.

Any seller knows that an offer is subject to the buyer being happy with the boat...and is, or should be totally prepared for a subsequent lower offer to be tendered...if not!...then you as a seller better list it as is Where is and take your lumps right off the top...That's how the game is played....Sorry to say but the buyer has most of the power in the deal, the owner can just accept it or reject it.

CarlF 03-03-2010 21:20

As a buyer or seller, I never assume the broker is "working with me". The broker is working for the broker. In virtually all cases the broker only gets paid when the sale occurs. Brokers are in business. The fewer hours a sale takes, the better their profit. Being too honest with their client is bad for business. Instead, the brokers work closely with each other to try and figure out how to move the buyer and seller around to "get the deal done".

Now I actually have a fair bit of sympathy for brokers. Left to their own devices, most buyers and sellers will screw up even the best of deals and not many boats would be sold. But the industry would be better off if everyone dropped the charade that they were working for anyone but themselves.

I have met a few genuine buyer's consultants ( they never use the label "broker"). They charge an hourly rate and are willing to agree in writing that they will not accept any commission from anybody. This is, of course, also how lawyers work. Unfortunately, these folks have an incentive to drag out the search to maximize the number of billable hours.

We live in an imperfect world :banghead:

Carl

Pblais 03-03-2010 21:49

Quote:

Left to their own devices, most buyers and sellers will screw up even the best of deals and not many boats would be sold.
Most of the brokers that eat regularly know this fact. Bridging the distance does work if the goal is to close the deal. It is the way of buyers and sellers. Sellers want to sell and buyers want to buy. Confusion and doubt are the products of too much unproductive time. The difference between the good broker and the rest is they accept the idea that the deal is not going to close and they minimize the wasted time. In any buying or selling relationship if the time is not productive then the deal risks going bad with greater certainty.

Palarran 04-03-2010 08:06

Quote:

Originally Posted by Stillraining (Post 413876)
Nope!
That's not the way boats are bought ..It is Standard practice that anything about the boat that is unexceptable to the buyer for any reason due to findings either during a survey or a sea trial the deal is off and the deposit is returned if the buyer cares to go no further in negotiations....This can be a trivial as the way the boat prop walks.

I'm sorry if I wasn't clear enough about the haul, survey, and sea trial. You are correct that you can walk away at that point for any reason. The penalty is that you have to pay for the haul and survey. That would have cost me about $2500 plus travel for two to St. Maarten which added on another $2000.

As far as a 10% deposit on a boat, if selling, I wouldn't consider less. Look, if you can't come up with 10%, your a weak hand. Maybe if your buying a $100k boat or less you can get away with less, I don't know.

It's the same for homes or real estate. I haven't worried about financing or insurance for quite some time, but maybe its an issue. If I'm selling, that issue needs to be resolved quickly. I'm not going to put a asset on hold for an extended period of time while a buyer tries to figure out how to get money or insurance. You as a buyer can strike out what ever you want in a contract but I as a seller can reject it just as easily.

When I'm buying, I prefer to deal from a position of power, which is I have the money and can close quickly. That motivates a seller to negotiate to their lowest sell point fairly quickly, especially during this recession.

David_Old_Jersey 04-03-2010 08:48

Quote:

Originally Posted by Stillraining (Post 413876)
It is for this reason I would never allow a boat I was selling through a Broker to be either hauled for a survey or taken on a sea trial with out a deposit on an accepted offer first....other wise your just setting your self up for week end joy riders to waste your time....A 10% deposit weeds out these joy rider, fender kickers to most degree...and brings you serious intrested parties...with a level of aproved financing already.

Different "norms" in different parts of the world - many of which seem to have evolved as part of making a broker's life easier.

My bottom line (as a Buyer or Vendor) via a broker or not is that the deal / procedure has to work for me - especially when it comes to parting with money. If it also works for the other Party (and any Broker) then we may end up doing a deal - if not, so be it. Boats, cars, houses, whatever.

Appreciate the point about screening out tirekickers, but when using a Broker IMO that's his job (if not then yours) - after all it's only time being spent for a testsail if the judgement is wrong, it's not as if the boat is going to wear out :rolleyes:

FWIW I wouldn't offer someone a testsail on the same day they contacted me and then only after they had been onboard and asked some decent questions / made the right noises / was indicating the right numbers - with me making it clear that any testsail would be less about a nice day trip and more about showing what the boat can do and pick me area, weather and time of day accordingly. Downside to me is that I have a tirekicker or 2 onboard, downside for them is I have a captive audience onboard for a couple of hours to bore rigid :D But fundamentally I would accept that to sell (at the price I want) will require some effort from me and that not every one who sees the boat / sails her will buy.......on that boats not fundamentally that different from cars & houses.

If we got to the point where a formal offer was made, I would expect only a nominal deposit ($500/500) simply as a sum no one would throw away. In my book if someone is willing to pay for a Survey / Haulout then they have removed themselves from the tirekicker list. A formal sea trial?, quite happy at that point to take her out again - especially if buyer is paying for an engineer onboard.

As a buyer I wouldn't be giving a 10% deposit to anyone (for anything) before I had thoroughly inspected the item, after all how can I assess whether I actually want the damned thing let alone accurately value something???!! Certainly would not be risking substantial sums - bad enuf risking the money spent on inspections.

Of course that means that some boats I couldn't buy - so be it :thumb: just like any other deal requires both parties to be happy, no right or wrong to it.

Having said all that, if I was a broker (which I could be - no licensing requirements over here :thumb:) I would want the minimum of showing / testsails and the maximum of punters committing blind with large deposits they can't easily walk away from - and a sum that coincidently covers my fees :rolleyes: for either sale or aborted sale........and if it required me to tell folks that was "normal" then I probably would :whistling: at least until they expressed a strong desire to do otherwise............

Stillraining 04-03-2010 12:46

Quote:

Originally Posted by Palarran (Post 414039)
When I'm buying, I prefer to deal from a position of power, which is I have the money and can close quickly. That motivates a seller to negotiate to their lowest sell point fairly quickly, especially during this recession.

Exactly the same reason Most Brokers require one before presenting an offer to the seller. They want the seller to be assured his boats not getting "Wore out" .. ( That's for you David)..;) at his dock.

Quote:

Originally Posted by David_Old_Jersey (Post 414064)
Different "norms" in different parts of the world - many of which seem to have evolved as part of making a broker's life easier.

.

Very true Dave... Most your post is about selling boats on your own though, where you have those first impressions and gut feelings to read people with and total control as to whom, when and why...but were talking about using or buying through a broker..totally different scenario...

There is no way I would give any broker permission to take my boat from a dock with out a signed purchase agreement and a deposit...

Not to hold those people ransom to a boat that may not ultimately fit there needs, likes or desires once they have had the chance to put it through the paces ..but to make sure it really is a boat they have already considered thoughtfully, compared to other offerings and are interested in enough to follow through and pull the trigger if it indeed dose meet those needs for them.

A 10% deposit tells me your serious..have done your homework..like my boat and want to pursue possible ownership of it...:thumb: Otherwise admire it at the dock all you want.:D

David_Old_Jersey 04-03-2010 15:31

Quote:

Originally Posted by Stillraining (Post 414190)
Most your post is about selling boats on your own though, where you have those first impressions and gut feelings to read people with and total control as to whom, when and why...but were talking about using or buying through a broker..totally different scenario...

I would expect my broker to be using the same judgement as me when it comes to viewings and testsails, whether he end up onboard, or me - certainly would not be interested in paying a broker money to simply wait for a buyer to turn up with cash in hand asking to buy. Kinda like selling a s/h car, punters a PITA but yer gotta put some effort in.

Quote:

There is no way I would give any broker permission to take my boat from a dock with out a signed purchase agreement and a deposit...
As I said already, no right and wrong. But seems we would both agree that:........you wouldn't be selling to me - and I wouldn't be buying from you :thumb:

But nonetheless always interesting to hear different viewpoints.

Stillraining 04-03-2010 15:38

Quote:

Originally Posted by David_Old_Jersey (Post 414288)

As I said already, no right and wrong. But seems we would both agree that:........you wouldn't be selling to me - and I wouldn't be buying from you :thumb:

But nonetheless always interesting to hear different viewpoints.

LOL... probably not....but we might trade someday..:D

AquatiCat 06-03-2010 15:21

Quote:

aCat,

That looks like a real nice boat. Rio Dulce sounds like a real nice place to start an adventure too.

Good luck with your Prout. She will most likely last forever.

Bill
Thanks, Bill! We like the Rio Dulce folks a lot, what we've seen of them online; real, funny, and a good community. As for the Prout, thanks again, we do think she will last well, especially after a few tweaks.

So, would this "canoe" of yours be a double-ended cruiser, or are you just working on building an awesome upper body by paddling from Canada to Panama, or what? :-)

~aCat

ctsbillc 06-03-2010 19:31

aCat,

I'm embarassed to report, it is a canoe, pure and simple. I've yet to find the perfect boat for me, i.e., one that I can afford, in good order, in about the part of the world that I want to cruise.

After I've paddled down to Panama, it should be a lot easier, I think. This seems to be a decision point for many cruisers, mostly I believe, where the wife says "that enough - let's sell the boat and go home"

Bill


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