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PalmettoSailor 03-03-2008 06:07 PM

Ernest Money
 
How much is typically put in escrow with a broker when an offer is made on a boat?

Is 10% standard or does it vary? I know it's refundable for most any reason but at a certain point 10% seems like a fairly large amount to risk when you don't even have an agreed price.

chucklesR 03-03-2008 06:12 PM

In todays market, try nothing.

Bottom line, only as much as you want to lose or have tied up by a unscrupulous broker.

PBzeer 03-03-2008 06:22 PM

You first come to a provisional price, subject to survey. This should reflect what you are willing to pay for the boat if no problems come up on the survey. Generally you will then put up 10% of that amount, to be held in escrow.

If the provisional price isn't close to what you are willing to pay, then I would walk away from the deal.

sailingfool 03-03-2008 06:26 PM

Quote:

Originally Posted by midlifesailor (Post 275798)
How much is typically put in escrow with a broker when an offer is made on a boat?

Is 10% standard or does it vary? I know it's refundable for most any reason but at a certain point 10% seems like a fairly large amount to risk when you don't even have an agreed price.

If you make an affer, you have an agreed price...its the selling price in your offer. Don't go into a purchase assuming you'll come up with a new price after the survey...maybe yes, maybe no...If you are lucky, you'll have a clean survey and no need or opportunity for renegotiation.

If you are going into the purchase intending to buy the boat, the deposit amount is of no matter, just ensure the Offer provides for it to be returned in full if you terminate the deal up to the expiration of your survey contingency. 10% is common, but it can be anything the broker is willing to present to the seller.

teshannon 03-03-2008 06:27 PM

I put up 10% when I bought my boat. That was after we agreed on price.

PalmettoSailor 03-03-2008 06:55 PM

I know what I think the boat is worth and the broker agrees its a good offer.

However, the seller has not agreed to anything at this point. As per the ususal process, the offer is presented when they have a signed sales contract and some amount of earnest money. The seller can accept, reject or counter your offer, but the broker is holding your money at that point.

As Chuckles points out, you really have no idea of the financial footing of the broker. They could declare bankrupty the day after they get your check and you're SOL. Or more likely they may just take their time getting your money back to you.

The broker suggested 10% and that is what I seem to remember from our 1st boat, but it was a lot less expensive than this one will be. I was just wondering if anyone went in with less than the 10% the broker asked for.

I plan to buy the boat and don't expect the survey will get ugly but you never know.

Anyone that's had to reject a boat care to comment? How long did it take to get your earnest money back so the search could resume?

JohnRPollard 03-03-2008 07:09 PM

I've never rejected a boat due to survey, but I've had a seller reject my offer (what can I say, I'm a cheapskate). The e.m. deposit was returned immediately (in fact, the check was never cashed or deposited).

PBzeer 03-03-2008 07:17 PM

When I bought my boat, I made an offer after a visual inspection of the boat. The broker then presented my offer to his client, who then counter offered. We split the difference, and then the offer was accepted, contingent on survey. This was the amount I put up 10% of. The final price was negotiated down to satisfy shortcomings revealed by the survey.

I don't know if there is any statuatory limit, but it would be reasonable to expect your deposit back within five business days of formally withdrawing your offer.

Schuckerman 03-03-2008 07:23 PM

10% sounds like an awful big deposit. Think it may have something to do with the broker's commission being 10%http://smileys.smileycentral.com/cat/36/36_1_15.gif

Scott


sailingdog 03-03-2008 07:33 PM

My, isn't that a strange coincidence... :)
Quote:

Originally Posted by Schuckerman (Post 275852)
10% sounds like an awful big deposit. Think it may have something to do with the broker's commission being 10%http://smileys.smileycentral.com/cat/36/36_1_15.gif

Scott



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