Earnest money deposit

[BobHorn]

We have bought, and sold, boats in TX, MD, NC and almost in FL. In all those cases the earnest money deposit was made after buyer and seller agreed on a price. I am now dealing with a broker in LA who insists that I submit a 10% deposit with my original offer before he will even contact the buyer.


Seems fishy to me, why pay the wire charges if you may never agree on a price?


Bob

[Shrew]

10% of offer price (At the time of offer) is fairly standard. Subject to acceptance on the sellers part and subject to survey and seatrial on the buyers part.

That is how it works with all the boats I've bought and sold.

[Caribbeachbum]

Your prior experiences are inconsistent with mine; and with all that I've read as well. Put in an offer with some money behind it to prove you're serious. Otherwise sellers would waste much time with tire-kickers dickering for the fun of it.

[Shrew]

My bank doesn't charge me for wiring money. However, most of my purchases/sales are in person. I hand a check over at the time of the offer.

[BobHorn]

There's no dickering involved. I make an offer, the seller agrees or counters, I agree or counter, can all be done in less than a day, then if we finally agree on a price I make the deposit.


Last boat we almost bought, turned it down after survey, my bank charged a wire fee on sending and the broker's on receiving it.

[thinwater]

Several have said they always sent a deposit with the offer. Really? I have bought and sold boats through brokers as well.



So you offer $50K and send $5K. The seller counters with $60K. You offer $55K and send another $500. He says go away and send your $5500 back, all of this without a contract. Is that the way this goes? Not in my experience. I would not send the money until there was a contract that states how the deposit will be handled and under what conditions it will be returned. To have a contract, you must first agree on a price.



Dickering is done though a broker with the understanding that the final agreed price will be secured with an agreed upon deposit (10% is common) and a purchase contract. Surely you would not send your $5K blind, without a purchase contract?


Who's jerking who around, asking for money before even having a conversation?

[olaf hart]

Here in Oz we generally pay the deposit once price is agreed.

Had one broker who wanted a deposit to put the price to the owner, she said it was “their policy”

I told her what I thought and didn’t go ahead with the offer.

Shame I didn’t know the owner, I would have let them know what happened as well if I could.

[Mike OReilly]

Around here a formal offer only happens with an earnest money deposit — most commonly 10%.

It’s true there can be back and forth price negotiations before a formal offer is made. But no seller I know would consider these actual offers until the receipt of a 10% deposit.

[JDeachman]

It may simply a matter of practice in the local jurisdiction. There is nothing that prevents a broker from demanding the 10% up front. If however, you learn who the seller is then there is nothing that prevents you from going around the broker to get the deal started.

[Caribbeachbum]

Originally Posted by BobHorn

There's no dickering involved. I make an offer, the seller agrees or counters, I agree or counter, can all be done in less than a day, then if we finally agree on a price I make the deposit.

Last boat we almost bought, turned it down after survey, my bank charged a wire fee on sending and the broker's on receiving it.

Offering and countering IS dickering. How easy would it be to waste everyone's time while trying to discover the seller's lowest price, and then walking away when you didn't like it? The world is full of not-serious buyers like this. Requiring a deposit to present an offer simply makes it more likely that you are serious and worthy of negotiating with.

That having been said, it's not like it's the LAW or something. Everything, including the initial deposit, is negotiable...

[zboss]

We negotiated before we put down a deposit. The deposit was only put down after we agreed to a price.

[BobHorn]

The offer and counter offer, dickering (negotiating?), can be done in 15 minutes. I make an offer, the broker calls the seller, the seller counters, I agree to split the difference, broker draws up contract and I wire the money.


What could be simpler?


I wire money with original offer, no agreement on price, then I have to deal with the broker to get my money back. Not going to happen.

[Lake-Effect]

Originally Posted by BobHorn

The offer and counter offer, dickering (negotiating?), can be done in 15 minutes. I make an offer, the broker calls the seller, the seller counters, I agree to split the difference, broker draws up contract and I wire the money.

What could be simpler?

I wire money with original offer, no agreement on price, then I have to deal with the broker to get my money back. Not going to happen.

Depends how bad you want the boat, I guess.

Everything's negotiable, of course (as the Caribbean person just said), and maybe some brokers would relay a verbal offer without requiring a deposit. But, imagining myself as a seller of a valuable asset worth like $50k or more, I might say yay/nay to an initial verbal offer, but unless there were positive references or a good gut feel about the buyer, I would probably not waste any more time in a serious negotiation unless there was a deposit down.

This is for a remote negotiation - email or phone. If it was face to face, I (or the broker) could get a better read, and would then be inclined to start a negotiation without a deposit.

As a buyer I would certainly want references from the broker, and a written contract regarding deposits and when/how they get refunded, before I would send any money.

And personally, I would NEVER use one of the commercial wire transfer companies. Too expensive, and not as accountable.