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ErikFinn 07-07-2011 11:37

US Practice of Deposit with Boat Purchase
 
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:

" Before we submit any offers to the seller we request a 10% deposit of the offer price and a signed purchase agreement. Let me know if you wish to proceed and I’ll attach an agreement."

My question is: Is this the normal procedure in the US? The broker wants the deposit BEFORE submitting the offer to the seller ? To me this sounds dodgy, to say the least. What if the offer is not accepted..?

I thought the normal procedure was to require the 10% deposit AFTER the offer has been accepted...

What say you?


SaltyMonkey 07-07-2011 11:51

Re: Need help with buying a boat - common US practice with the deposit
 
I've had it both ways. Some will want to make sure you are committed up front before submitting offer, so they walk away with something. Some are informal and will make a phone call while you are there and make sure your offer is at least acceptable to submit. But they will always want 10% as escrow to hold your boat in a purchase agreement pending survey in a timeframe. That holds the boat from the market. They need some security that the deal is honest in case they loose market potential in that survey / acceptance period, and you need assurance they cant sell the boat from under your and waste your time while you track down the surveyors needed and set up an appoitment (isually 3 wks). If it doesn't meet spec of survey, they have option to correct deficiencies or you can submit another low offer or get your money back.

But if it bails, the money is in escrow so you should get it back.

But I will not work through a broker unless they are licensed and bonded and apart of something like Yacht Brokers Association of America (YBAA). I also am careful on choosing boats sold by reputable dealers. I bought one boat from a yacht yard and that went smoothly probably because I also had business with them after purchase etc. I have never bought through an owner directly - not cruising boats.

EDIT

oh forgot to add - one reason they don't want to contact their client and confirm before your signing is that the owner may change their mind, and then get into all sort of broker relationship and credibility issues, not to mention legal weirdness about verbal agreements etc. But sometimes the broker is a good feel for what the owner might accept as a low offer before signing a PA. The other side of the coin is if you made an offer that was low, they may not want to bother their client on the spot and will request the PA. The brokers responsibility is also to isolate the client from bothering all the time with pesky offers. A PA MUST be signed by both parties, so basically its useless without those signatures...in fact the owner may use it as leverage before signing to get a better offer.

Just some thoughts

SaltyMonkey 07-07-2011 12:30

Re: Need help with buying a boat - common US practice with the deposit
 
Oh heres another scenario. Boat hasn't been selling. You offer a low number. Broker wants to sell boat and knows market is soft and thinks this is a good offer. However, he can't just call up his client and say that number. Why? client will have an emotional meltdown and reject it right away. Broker can't say to client..."listen i know this is low bt I think you should take it" not while you are there in the middle of this and right on the spot like that. Its probably doomed.

If he gets your side of the agreement, then goes off and preps his client carefully and shows him, it has a better chance of acceptance and not getting the client all emotionally messed up. He has a lot more control over the negotiation process without having to manage his client being distracted by you standing nearby and on a timeframe on the spot.

pablothesailor 07-07-2011 12:45

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by ErikFinn (Post 723764)
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:

" Before we submit any offers to the seller we request a 10% deposit of the offer price and a signed purchase agreement. Let me know if you wish to proceed and I’ll attach an agreement."

My question is: Is this the normal procedure in the US? The broker wants the deposit BEFORE submitting the offer to the seller ? To me this sounds dodgy, to say the least. What if the offer is not accepted..?

I thought the normal procedure was to require the 10% deposit AFTER the offer has been accepted...

What say you?


I would tell him to get stuffed!! Its a buyers market in all departments, Property, cars, boats.......why on earth any broker would think the current world situation should not apply to his industry is beyond me!! There are plenty of brokers who visit this site by the way! Dont feel intimidated to not make an offer on a boat....and offer the price you can afford and are happy to pay, worst thing is they say no!

roverhi 07-07-2011 13:21

Re: Need help with buying a boat - common US practice with the deposit
 
Having an earnest money check with an offer is de riguer. A contract is not a contract without something of value held in the lurch. Without the deposit, the owner can walk on the offer if he gets a better one in the interim. Not very likely in this day and age but I've had it happen. Besides, an offer without you putting up earnest money could be you blowing smoke up his butt just for the fun of it. There are buyers or should I say people who pretend to be buyers who will do that.

David_Old_Jersey 07-07-2011 13:46

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by ErikFinn (Post 723764)
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:

" Before we submit any offers to the seller we request a 10% deposit of the offer price and a signed purchase agreement. Let me know if you wish to proceed and I’ll attach an agreement."

My question is: Is this the normal procedure in the US? The broker wants the deposit BEFORE submitting the offer to the seller ? To me this sounds dodgy, to say the least. What if the offer is not accepted..?

I thought the normal procedure was to require the 10% deposit AFTER the offer has been accepted...

What say you?

I've never bought a boat in the USA (and no plans to) - but from what I can gather (on this site and others) is that many US Brokers do insist on 10% upfront before even presenting an offer to a Vendor.....so not really a scam (although of course plenty of scope for that).

But no legal requirement to pay 10% upfront (if an offer is accepted can then pay the 10% (or lesser figure as negotiated) upon signing a contract - and why would you send money to a stranger without at least a contract???) - but 10% upfront just works very well commercially for the Broker, his commission is paid and buyer less likely to pull out due to a so so survey (for fear of losing deposit or chunks of it in "expenses" / legal bills)......so plenty of Brokers will claim it is "the norm" / "required" - IMO the answer to that is a simple F#~# Off :D It's business - everything is subject to negotiation (albeit not to agreement :p).

SaltyMonkey 07-07-2011 15:26

Re: Need help with buying a boat - common US practice with the deposit
 
its not a F-O situation. I don't know how you all are reading it, but this is fairly norm.
You make an offer and the owner may come back with a counter, so negotiation is not closed. The owner might not be available at the moment to respond to your request. Might be out of town or living very far away. The broker is acting as an agent to the owner to filter requests so the owner doesnt make it another FT job. And so on.

one thing to watch for is that you put in a PA, and wait around 3 weeks for them to sign it. There should be some limit of time on getting back to you. See if you can get other receipts too, but not necessary if you have a check made out to their brokerage office as the check is a receipt.

I've also been in situations where the broker calls the owner and deals are cut back and forth, and the paper work is signed in the office that day. The owner lives near by and can come down to the office that day. So you get paperwork right away.

The purchase agreement is important,a nd outlines the rules of the closing process. The 10% is a holding escrow amount so no games are played and the boat wont loose market opportunity during that off market period. Similar to a rental deposit when you look for an apartment.

pablothesailor 07-07-2011 15:45

Re: Need help with buying a boat - common US practice with the deposit
 
We have been HIGHLY unimpressed with Brokers we have contacted for information recently! There is absolutely no chance I would pay 10% to anyone to just ask a question to a seller regarding price of a boat, my advice to ALL of you selling boats is to understand whether your broker is doing this, If he is, you 100% are loosing future buyers like us! We will buy in the next 12 months, with....or without a broker!! And we wont be bullied by the brokers either!

Doodles 07-07-2011 16:04

Re: Need help with buying a boat - common US practice with the deposit
 
The problem is there are good reputable brokers and there are ones that I would never deal with ... lazy ass bums! A good broker is not going to waste his time with buyers who aren't serious and are not willing to put up a good faith deposit. A good broker will also tell you and discourage you from putting up a ridiculous offer ... its waste everyone's time. A lot of brokers now are no more than listing agents, have never even seen the boat they are selling and are often located hundreds of miles away and rely on someone else to show you the boat. Those guys I would never trust with a deposit. I want a broker with an office I can walk into and deal with the people face to face, not over the internet or phone. Since you are overseas you need to find someone you can really trust if you want to make an offer if you aren't going there in person.

I tried to look at a boat for sale once that was in Virginia and the broker was in NY. He knew very little about the boat, couldn't get anyone to show me the boat, couldn't get the owner to respond, etc. etc. Basically, we just listed the boat on the internet and that was the end of it. I can imagine the horror if I had given him a deposit. :banghead:

Boracay 07-07-2011 16:16

Commitment...
 
For my way of thinking a deposit means that you've committed to buying the boat. Sure, if due diligence shows up problems that were not evident when looking at the boat (survey, title etc.) then the sale can be renegotiated or cancelled, otherwise the deposit could be forfeit or the owner could even sue for the sale price.

That 10% is the broker's commission and he's not going to give it back in a hurry unless he has to.

But a 10% deposit to find out the price? No way...

Doodles 07-07-2011 16:29

Re: Commitment...
 
Quote:

Originally Posted by Boracay (Post 723994)
For my way of thinking a deposit means that you've committed to buying the boat. Sure, if due diligence shows up problems that were not evident when looking at the boat (survey, title etc.) then the sale can be renegotiated or cancelled, otherwise the deposit could be forfeit or the owner could even sue for the sale price.

That 10% is the broker's commission and he's not going to give it back in a hurry unless he has to.

But a 10% deposit to find out the price? No way...

That's all fine and well, but how do you separate the serious from the not serious. Would you as a broker run to the seller every time someone emails or phones in a potential offer? Should a broker in the US go to his seller and say hey this guy in Europe emailed me and wants to know if your will take xx for you boat and sorry but that's all I know about him/her? If I'm a broker, I'd say "show me the money"; otherwise, you're just on a fishing expedition and wasting everyone's time. It's a buyers market but they still need some skin in the game.

pablothesailor 07-07-2011 16:40

Re: Need help with buying a boat - common US practice with the deposit
 
It is utter nonsence for any broker to expect me or anyone else to pay 10% to ask what the seller may be prepared to accept!! Lets imagine my budget is $100,000 and I see several boats I quite like that fit my search being offered in the $125,000 price range, I would want to ask the broker if any of these boats would be prepared to drop their price? It does not mean he has a sale, it is the 1st stage, I would then expect him to come back with an answer! If there was a boat that was happy to reduce their price and it did come within my budget, I would want to look closely at the boat to see if I liked it...........it would only be at the next stage if my offer subject to survey was accepted would I even consider paying a deposit!! Brokers need to wake up a bit and smell the coffee.....or they will loose business, as they are doing everyday for both them and the seller!!

Bash 07-07-2011 16:44

Re: Need help with buying a boat - common US practice with the deposit
 
I was once in a situation where a broker wanted 10% earnest money, and I responded that I wasn't willing to make that much money liquid at that point, but that I'd be happy to write a check for $1,000. That was fine with the broker.

They just want to know that you're a serious enough buyer to make a commitment to the deal.

Doodles 07-07-2011 16:53

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by pablothesailor (Post 724006)
It is utter nonsence for any broker to expect me or anyone else to pay 10% to ask what the seller may be prepared to accept!! Lets imagine my budget is $100,000 and I see several boats I quite like that fit my search being offered in the $125,000 price range, I would want to ask the broker if any of these boats would be prepared to drop their price? It does not mean he has a sale, it is the 1st stage, I would then expect him to come back with an answer! If there was a boat that was happy to reduce their price and it did come within my budget, I would want to look closely at the boat to see if I liked it...........it would only be at the next stage if my offer subject to survey was accepted would I even consider paying a deposit!! Brokers need to wake up a bit and smell the coffee.....or they will loose business, as they are doing everyday for both them and the seller!!

I've done exactly what you are describing pablo, and what my broker did was make an inquiry but they (seller & his broker) never give you a firm answer like ... yea, its listed for $125K but we will take your $110K offer. It's going to be a vague ... yea, we can probably do something in that range. Nobody is going to show their hand until they have a valid offer to buy.

pablothesailor 07-07-2011 16:54

Re: Commitment...
 
Quote:

Originally Posted by Doodles (Post 724000)
That's all fine and well, but how do you separate the serious from the not serious. Would you as a broker run to the seller every time someone emails or phones in a potential offer? Should a broker in the US go to his seller and say hey this guy in Europe emailed me and wants to know if your will take xx for you boat and sorry but that's all I know about him/her? If I'm a broker, I'd say "show me the money"; otherwise, you're just on a fishing expedition and wasting everyone's time. It's a buyers market but they still need some skin in the game.


Hmmm...and how do you know that this guy in Europe is on this so called ¨fishing expedition¨? How do you know he is ¨wasting everyones time¨?? Says who?? You?? One thing that sort of mentality does is close the door 100% on any deal, you 100% will not sel to that guy!! I myself may be that guy from Europe, why would I waste my time emailing if I did not have some interest? Ive seen boats that are out of my price range by a liitle, there is absolutely nothing wrong in calling to ask the broker where he thinks the seller mat be prepared to drop to, but i would tell him to get stuffed if he asked me for 10% payment to do this....whats the big secret, its not there in the property or used car market....I am selling a property at the moment, every caller asks me the same question, ¨what would I be prepared to accept¨, I dont ask them for 10% to answer the question, sure, ive had the odd time waster, but that surely is part of the whole thing!! I treat EVERY enquiry with respect!

Doodles 07-07-2011 16:55

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by Bash (Post 724009)
I was once in a situation where a broker wanted 10% earnest money, and I responded that I wasn't willing to make that much money liquid at that point, but that I'd be happy to write a check for $1,000. That was fine with the broker.

They just want to know that you're a serious enough buyer to make a commitment to the deal.

Yes, its definitely negotiable but they want something.

SaltyMonkey 07-07-2011 17:09

Re: Need help with buying a boat - common US practice with the deposit
 
exactly. show some seriousness if you want the boat by putting down an escrow. they can come back and reject the offer and give you a counter.

The bottom line is if you really want the boat make an offer on what you think the boat is worth or how much you are willing to spend (make that clear), give them something for escrow, and see what happens. But I agree with everything doodles say especially that you should:

1) see the boat in person
2) the broker should have an office and be local to the boat.
3) if possible check on the reputation of teh broker in the community

Not sure we are allowed to plug, but I've had good success in Annapolis with:
Bernie Jakits out of RogueWave RogueWave Yacht Sales - Annapolis, Maryland Blue Water Sailing Boats and Yachts for Sale - Valiant and Outbound Yachts Dealer
Martin Bird and Assoc Martin Bird and Associates - Annapolis, Maryland Yacht Brokers and Dealers

Others might agree or disagree or provide some testimonials of their own.

pablothesailor 07-07-2011 17:21

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by SaltyMonkey (Post 724028)
exactly. show some seriousness if you want the boat by putting down an escrow. they can come back and reject the offer and give you a counter.

The bottom line is if you really want the boat make an offer on what you think the boat is worth or how much you are willing to spend (make that clear), give them something for escrow, and see what happens. But I agree with everything doodles say especially that you should:

1) see the boat in person
2) the broker should have an office and be local to the boat.
3) if possible check on the reputation of teh broker in the community

Not sure we are allowed to plug, but I've had good success in Annapolis with:
Bernie Jakits out of RogueWave RogueWave Yacht Sales - Annapolis, Maryland Blue Water Sailing Boats and Yachts for Sale - Valiant and Outbound Yachts Dealer
Martin Bird and Assoc Martin Bird and Associates - Annapolis, Maryland Yacht Brokers and Dealers

Others might agree or disagree or provide some testimonials of their own.

We are getting a bit off track here......the original question was regarding a broker asking for 10% just to ask what the seller might be prepared to accept , otherwise how do you know the boat is in your price range? Once you have an idea that the seller is prepared to reduce his asking price you can go to the next stage!! I dont get asked to pay 10% when I walk into a used car show room, there is no guarantee I will buy, why should I?? But I still want to know what the best price may be, what extras, etc, etc!!
The used boat market is in its worst condition in many a year, Many adverts now show ¨motivated seller¨ or even ¨highly motivated seller¨ then there is the ¨further reduction¨, Many houses, boats, cars are going for 30 and 40% less than asking prices, it is certainly not the time for brokers to have airs and graces, they need to chase every bloody lead they can find!

SaltyMonkey 07-07-2011 17:38

Re: Need help with buying a boat - common US practice with the deposit
 
how do you know?? How do you know?? You have the money - its either in your range or not. Its up to you to decide what you think you are willing to spend for the boat you see, and follow up with a survey. Its not the brokers or the owners responsibility. Again if you want the boat you make an offer - even a lowball offer - and put your money where your mouth is, and see what happens. He either accepts its, or rejects it and then you bargain. Thats it. Thats how you find out. If they acccept you can negotiate also in the survey process given what the surveyor finds.

Like I said I've had brokers give me a thought on what their client might agree to, and I thought the price was also reasonable given my own analysis. But its always a 10% escrow with a PA, and either a sign in the office, or in a few days if the owner is away or non local. Its always through the broker, never directly talking to the owner.

Also I never give an offer the day I see the boat. Never. I don't take my check book. I look at a lot of boats and then come back again to spend more time for a serious self survey/review.

I like working with brokers. I don't have to deal with pesky emotional owners who overrate their boats and inflate prices. A good broker WANTS to help negotiate, but there is a careful balance between getting inventory out the door quickly and compromise vs acting for his clients best interest and getting a commission.

MarkJ 07-07-2011 19:15

Re: Need help with buying a boat - common US practice with the deposit
 
Quote:

Originally Posted by ErikFinn (Post 723764)
My question is: Is this the normal procedure in the US? The broker wants the deposit BEFORE submitting the offer to the seller ? To me this sounds dodgy, to say the least.

It is dodgy.

Its a ridiculous rip off because to whole money in escrow cost foreigners money. I think it was about $250 per $10,000 when I was doing it. Every offer that is not accepted you lose $250. So I didn't do it.

You can get around it but its a little difficult.

Another dodgy bit is when the broker won't refer your offer to the owner they will try to pass you onto another cheaper boat at the same high cost.

That sort of activity (holding back offers) is illegal in Australia where we have consumer laws.

Beware and play hard-ball. It will work out in the long term.


Mark :)

Boracay 07-07-2011 19:24

Re: Commitment...
 
Quote:

Originally Posted by Doodles (Post 724000)
That's all fine and well, but how do you separate the serious from the not serious. Would you as a broker run to the seller every time someone emails or phones in a potential offer? Should a broker in the US go to his seller and say hey this guy in Europe emailed me and wants to know if your will take xx for you boat and sorry but that's all I know about him/her? If I'm a broker, I'd say "show me the money"; otherwise, you're just on a fishing expedition and wasting everyone's time. It's a buyers market but they still need some skin in the game.

A broker must have some way of qualifying buyers. Asking a 10% deposit is one way, but there are many others.
Assuming the boat has been accurately described, photos have been posted, emails have been exchanged and phone calls made then the next step is to view the boat.
The broker should have spoken to the seller already and should know if a particular offer is acceptable. If they don't then they should find out.
Even when living next door looking at a boat is a time consuming business. Keys need to be arranged and marinas checked. Its going to be a few hours, maybe 4 or more.
So what's wrong with the broker making a quick call to the owner? Takes only a few seconds. Could save half a days work if the offered price is way out of line with what's expected.
If my reading of the original post is correct they're being asked to put a deposit down on a boat they've never seen, just to find out if their offer is acceptable.
If I were coming to the states to look at boats I'd want to have at least a dozen potentially good boats to look at. Would I need to put 10% down on each of them?

SaltyMonkey 07-07-2011 21:38

Re: Need help with buying a boat - common US practice with the deposit
 
Again the owner may not be available for a quick call, or even set the rule that they want an offer in writing before being disturbed. They might just say i dunno yet...submit your pa and i willt hink about it so what have you gained? If you want a gut feel about your offer chances of success, ask the broker.

As for 10 boats, look at em first and then submit to your best bet. Maybe some will play the game in your viewing but most might not. And do you honestly think those 10 boats are gonna wait around till your plane lands anyway?

Wining about "do you think its acceptable" makes you sound weak in negotiations.

I offer you 10k do you think it's in range?

What do you think my reply is going to be 100% of the time?

Doodles 07-07-2011 22:59

Re: US Practise of Deposit With Boat Purchase
 
The OP's question was ...

Quote:

My question is: Is this the normal procedure in the US? The broker wants the deposit BEFORE submitting the offer to the seller ? To me this sounds dodgy, to say the least. What if the offer is not accepted..?
The answer is YES it is normal in the US. Some don't like it but its normal. And if the offer isn't accepted you get your money back. You can whine all day about how it SHOULD be in this buyers market, but the fact remains this is still normal today.

You either play by their rules or negotiate something better which is always a possibility. It up to you. To say the brokers need to "wake up", they need to do this and that is not going to help you one bit. It is what it is.

MarkSF 07-07-2011 23:08

Re: US Practise of Deposit With Boat Purchase
 
I keep hearing about how it's a buyers market and you should expect 30% to 40% off. I do not believe it is true. Around here nice examples are selling fast and at close to asking price (provided they are priced realistically of course). Now that realistic asking price may be 30% lower than 5 years ago. But to say you should then expect another 30% on top of that is not reasonable.

chucks 07-07-2011 23:18

Re: US Practise of Deposit With Boat Purchase
 
Everything is negotiable here. When we bought our boat I looked at it in person several times, then we made offer/counteroffers over the phone. We were 200 miles away from the broker. Pacific coast. The broker wanted it this way. When we agreed over the phone to the price, they sent a purchase agreement by fax for us to sign. They suggested the deposit amount-- 2% of the 80K purchase price and we mailed a check to hold it.

The broker had the check go to a marine escrow/documentation firm that handled collecting our money and paying off the seller. It was a documented vessel with loans outstanding but the process was completely professional.

If you want a survey you will need to pay for the haulout and surveyor and you will need to pay that on the day of the survey.

Any legitimate broker will work with you and discuss price and present offers and counteroffers if you present yourself as a serious buyer with a reasonable deposit.

djambalawa 07-07-2011 23:20

Re: US Practise of Deposit With Boat Purchase
 
I don't care if this is the norm in the states - it sounds ridiculous to me. After all its a simple question you want an answer to. I'm not asking you to take it off the market whilst you find out if the seller will consider a certain amount - even if it takes weeks. Just let me know if he would sell it for X amount - and if he does we might have a deal.

If I miss out because I haven't paid a deposit and someone else got it in the meantime too bad for me.

So you might get some people "fishing" with false offers etc - maybe that should just be considered part of the business and its associated annoyances that you have to deal with? And with experience a broker would be able to better judge when a query is just this.

Buyers market or not - nothing to do with it - a unreasonable practice in my opinion.

Doodles 07-07-2011 23:47

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by djambalawa (Post 724177)
I don't care if this is the norm in the states - it sounds ridiculous to me. After all its a simple question you want an answer to. I'm not asking you to take it off the market whilst you find out if the seller will consider a certain amount - even if it takes weeks. Just let me know if he would sell it for X amount - and if he does we might have a deal.

If I miss out because I haven't paid a deposit and someone else got it in the meantime too bad for me.

So you might get some people "fishing" with false offers etc - maybe that should just be considered part of the business and its associated annoyances that you have to deal with? And with experience a broker would be able to better judge when a query is just this.

Buyers market or not - nothing to do with it - a unreasonable practice in my opinion.

:deadhorsebeat::deadhorsebeat::deadhorsebeat:

Guess what ....life ain't fair sometimes. :flowers:

bangkaboat 07-07-2011 23:54

Re: US Practise of Deposit With Boat Purchase
 
Wow, why all the controversy? Tell the broker, "yes, please send me the purchase agreement." When you receive it, read it through & decide if the terms are agreeable, make your offer subject to survey, rig inspection, whatever else, and fax the offer back along with a facsimile of a check that represents 10% of the offer. Speak to the broker to find out when he/she wants the actual check. Continue with negotiations, etc. .

The deposit simply shows your commitment to buy the boat IF you are satisfied with survey, price, etc. . On my recent purchase, I did all of this, then revised my offer after the survey. Why would one expect the broker & owner to negotiate with anyone who calls up but shows no commitment to buy? We use the same process in Canada & it saves much, otherwise wasted, time & effort. Nothing "dodgy" about it. It's the same when you buy a car & similar to buying real estate. There are laws in every state to protect you from being ripped-off.

David_Old_Jersey 08-07-2011 03:02

Re: US Practise of Deposit With Boat Purchase
 
If anyone is wondering why there Broker has not sold there boat (or not had any offers) - the answer may be in this thread :p

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

djambalawa 08-07-2011 03:17

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by bangkaboat (Post 724189)
Wow, why all the controversy? .


Hmm maybe its a cultural thing I dunno...

Here's a few reasons;

1. I don't think I should have to bereft of a significant amount of money (for probably weeks at least) for the "privilege" of negotiating. This time taken to get money back if it doesn't go ahead would mean for most mortals you couldn't "ask" about any other boats prices in the meantime.

2. If I only want to buy the boat at a certain price - why would I want to go through all the complexities of getting 10% to the broker (this could involve bank loans, international transfers, changing exchange rates and all sorts of things) only to be told that its not available at that price and have to undo all that work?

3. I might be looking at a couple of boats which knowing what can be negoiated will decide it for me - lets put 10% on each shall we... :banghead:


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

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

Doodles 08-07-2011 03:21

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by David_Old_Jersey (Post 724220)
If anyone is wondering why there Broker has not sold there boat (or not had any offers) - the answer may be in this thread :p

The 10% "rule" is simply pissing a Vendors money away - fair play to those who can afford that :thumb: 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 08-07-2011 03:28

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by djambalawa (Post 724222)


It seems that folks in or near the US thing that this is quite reasonable - and others think "you're kidding!?". :D 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. :thumb:

boatsmith 08-07-2011 03:29

Re: US Practise of Deposit With Boat Purchase
 
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 08-07-2011 03:39

Re: US Practise of Deposit With Boat Purchase
 
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 08-07-2011 03:54

Re: US Practise of Deposit With Boat Purchase
 
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 08-07-2011 04:03

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by jacob30 (Post 724232)
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......:banghead:

jacob30 08-07-2011 04:11

Re: US Practise of Deposit With Boat Purchase
 
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 08-07-2011 04:13

Re: US Practise of Deposit With Boat Purchase
 
Quote:

Originally Posted by pablothesailor (Post 724227)
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. :flowers:

cheoah 08-07-2011 04:21

Re: US Practise of Deposit With Boat Purchase
 
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 08-07-2011 04:22

Re: US Practise of Deposit With Boat Purchase
 
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.


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