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  #101  
Old 09-03-2009
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I'm an experienced business lawyer. I understand contingencies in a P&S.

No matter. It's not worth the effort to enter into protracted price negotiations after a survey has revealed significant defects in a boat.
You are paying for the survey in either case, aren't you?

If you think enough of the boat to seriously consider an offer, a survey before making the offer costs you nothing, since once you make the offer, you are committed to hiring a surveyor anyway.

Also, getting the survey up front allows me to take all of the significant defects into account up front. If I still like the boat enough to make an offer, I will make the appropriate price adjustments then. I'm not going to get stuck with an uncompensated problem in any event.

That's the way its done in business-- a non bindling letter of intent followed by due diligence, and if the diligence is acceptable, then a P&S with appropriate closing conditions. The residential real estate model, where the P&S is signed first, is far too advantageous for the seller, for whom the brokers work (as do yacht brokers).
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  #102  
Old 09-04-2009
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I have no axe to grind here, but recently bought a boat in San Francisco while working in Dubai. The fact was that the only boats on offer of the type I wanted were in the states.

I had a pretty good idea of the boat's condition from a lengthy correspondence with the PO, and having shown a definite interest in buying the boat I asked him if he would mind having a survey done at my expense.

He did not object having realized from the correspondence that I was serious. (In fact the very act of paying for a survey indicates a serious approach I guess.)
The air fare was $2000, and the survey fee from an accredited surveyor was $500.
For me this was a no-brainer and after the successful survey I committed, paid the deposit, then went to SF to complete, and pack up the boat for transport.
I made a good friend of the PO, and my boat arrives tomorrow!

OK - I took something of a risk buying the boat unseen except for photographs, but the survey was my insurance.

All round success so far. (The boat's still to be craned off the container ship and motored round to the marina for mast stepping.. fingers crossed)
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  #103  
Old 09-04-2009
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Quote:
Originally Posted by Curm View Post
If you think enough of the boat to seriously consider an offer, a survey before making the offer costs you nothing, since once you make the offer, you are committed to hiring a surveyor anyway.
Not exactly. You are only committed if your offer is accepted.

I think that the premise is that you negotiate to what you are willing to pay to get that boat. If it needs repairs to make it serviceable, you will deduct those costs from your agreed price. (Of course some more bargaining will go on.)

If you were offering asking price, then I would agree with you, but I think most people bargain down.

Why go through the expense of a survey if your offer is not a sure thing?

Last edited by ottos; 09-04-2009 at 09:59 AM.
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  #104  
Old 09-04-2009
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Even if an offer is not acxcepted, a majority of sellers will counter offer. No one pays full list in this market. Not on a houise, not on a boat. The broker will know this even if the seller does not.

As a practical matter, sending the surveryor first saves me time and money. My time is valuable, and so is yours.

As a legal matter, sending the surveyor first protects me in the following case: the surveyor comes back and says, there's nothing really wrong with it, but there's alot of mileage on it, and I've seen this same model in better condition for the same price. In fact, there's one in a marina 20 miles away from here that's much nicer. I surveyed that boat but the deal fell through and I know she's still available.

Try dealing with that scenario if you've already signed the standard Yacht Broker's form. If you want to get out, say goodbye to your security deposit.

Last edited by Curm; 09-04-2009 at 08:03 PM.
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  #105  
Old 09-04-2009
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Quote:
Originally Posted by Curm View Post
surveyor comes back and says, there's nothing really wrong with it, but there's alot of mileage on it, and I've seen this same model in better condition for the same price. In fact, there's one in a marina 20 miles away from here that's much nicer. I surveyed that boat but the deal fell through and I know she's still available.
Try dealing with that scenario if you've already signed the standard Yacht Broker's form. If you want to get out, say goodbye to your security deposit.
I know you are an attorney but you obviously don't know about an immutable law of boating.
Never under any circumstances will anyone tell you about another boat nicer and cheaper than the one you are looking at until you sign the contract. When the survey is done does not matter. the law states very clearly that you have to sign the contract before you can be told of the better deal.

A corollary to that law is that if you weasel out of the deal the "other boat" will be a dog and you will not want it. When you come back to buy the first boat it will have sold for less than the contract that you broke.

Even the best of attorneys can not evade immutable laws of the sea.

Last edited by davidpm; 09-04-2009 at 10:33 PM.
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  #106  
Old 09-04-2009
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Originally Posted by Naughtylus View Post
For me this was a no-brainer and after the successful survey I committed, paid the deposit, then went to SF to complete, and pack up the boat for transport.
I made a good friend of the PO, and my boat arrives tomorrow!
Just curious did you pay list. If no how was the matter of price worked out. I assume you guys came to verbal agreement before you sent in the surveyor.

If so, in better times, if the owner happed to be around when the survey was done and figured out the boat surveyed well there would be reason he could not sell the boat to someone else the next day.
With a verbal agreement he knows your highest number and is free to beat it.

In this market maybe not much of a risk though.
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  #107  
Old 09-04-2009
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Personally I would love it if someone wanted to survey my boat before putting in an offer. In fact the more they spent looking at my boat the better. Now when they put in an offer that is less than list I can ask to see a copy of the survey, since that is the basis of the reduced amount.
I now have all this time with a recent survey paid by someone else to attempt to sell it to someone else. If my contract avoider and I come to a verbal agreement on the price before that is even better. I now have a floor price I can try to beat.

The fact of the matter is that even if a contract is signed many brokers will still show a boat just in case the deal falls through. I would be interested in hearing from any brokers what percentage of deals fall through. I'll bet it is at least 10%.

I suspect our new lawyer friend is looking for a very limited edition boat so he has to search a large area. After he does everything he can by phone, spending the $500 makes sense. The advantage of not signing a contract is he doesn't have to worry about getting his 5,000 deposit back. If he looses the boat, not likely in this market, oh well.
For those of us who are looking more locally and maybe not spending as much on a boat the contract first approach might work better or at least will not matter much.

There are three risks:
  1. Getting your money back from the deposit (It should be a no brainier but you never know. Brokers I have talked to say that they return deposits for what they consider trivial reasons all the time because they don't want the hassle of forcing a sale on an unhappy customer.)
  2. Finding a better deal after you have a contract
  3. Loosing the deal you have because you don't have a contract
Frankly all three are possible but unlikely.
Folks will do what causes them the least worry.

The bottom line is that that no matter how careful you are buying the boat is just the first of hundreds of decisions you will make to manage risk.

I would find it interesting if our lawyer would read a standard contract and report back to us (no charge of course). I always understood that the contract was binding on the seller. They could not sell the boat I had a contract on even if they were offered more money. The contract was binding on me the buyer in theory only as all I had to do was find something that was not exactly as specified in the listing or found on the survey and I could walk.

I believe the reason why brokers and sellers like the contract is purely physiological not legal. Buyers are 10 times more skittish than sellers and the act of signing a contract and putting down money shows they are serious and emotionally commits them.
Has anyone ever heard of someone not being allowed to walk away from a boat sales contract. I have not. I'm sure some salesman are tougher than others. It's like the federal penalty for ripping of the tag on your mattress.
(Yes I know it does not apply to the end user)

Last edited by davidpm; 09-04-2009 at 11:15 PM.
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  #108  
Old 09-04-2009
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Quote:
Originally Posted by davidpm View Post
Just curious did you pay list. If no how was the matter of price worked out. I assume you guys came to verbal agreement before you sent in the surveyor.
The asking price came down considerably over a period of about three months when the PO and I were communicating. This was a 'limited edition' boat, and so the PO and I knew of pretty much all the others currently on offer.

He was being cornered by a broker specializing in these boats who was looking for a 6 month exclusive contract, meaning even the PO wouldn't have the right to sell it, and expecting him to transport it across the States to their local yard, at his expense. In addition they were going to raise the price considerably.
The eventual outcome might have been that the boat could have taken months to sell, and maybe the price would have come down again.
Take off the brokers cut and he would have been worse off.

He eventually reduced his price enough to avoid that situation, and made me an acceptable offer, at which point I agreed, subject to getting a positive survey result.

I should comment that the brokers concerned are reputable, professional, useful as a central information resource for these boats, and have to make a profit , but for a buyer and seller who had already been in contact for a period of time, their input was unnecessary.
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  #109  
Old 09-05-2009
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Well there are two downsides to doing the survey first. 1. You have to pay for it. 2. There is no "standstill" arrangement. Until you sign the P&S, another buyer could come along and grab the boat.

I am happy to give the seller a copy of the survey whether I choose to make an offer or not.

As for the surveyor, of course he will tell you about other boats. He works for you, the buyer, not the seller. Also, I look for a surveyor who is familiar with the model in which I am interested and has done recent surveys of that model.

I used this procedure in two cases. In the first, a boat in NC, the surveyor told me that at some point the cabin had been full of water, even though they had disguised it nicely. I did not make an offer. Several months later the surveyor told me that the next boat in which I was interested was in "cherry" condition. So I made an offer that was 12% below asking (a good offer in today's market) and it was accepted immediately. The only negotiating was what equipment would be included in the boat i.e. the inflatable. I got that too, even it was not mentioned in the listing.

IMHO instead of trying to learn how to be a surveyor, a buyer should spend his or her time very carefully going over the listing and making sure that everything you want is included. What about the inflatable, the outoard, the oars? Galley equiment? Fenders? The flat scxreen TV? Extra sails? Map chips for the chartplotter? Engine spares? Let your sureveyor deal with structural or mechanical issues.
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  #110  
Old 09-08-2009
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Quote:
Originally Posted by Curm View Post
Try dealing with that scenario if you've already signed the standard Yacht Broker's form. If you want to get out, say goodbye to your security deposit.
Curm,

I get the impression that you've never read the standard purchase agreement used with boats sold through brokers.

In the standard boat broker purchase agreement, the contract language is tremendously advantageous to the buyer. As I previously mentioned, the language allows the buyer to survey and sea-trial the vessel, after which the agreed purchase price may be accepted by the buyer, or it may be subject to renegotiation or rescission.

If the buyer does not like the shine of the gelcoat, or the way the boat sails, or its speed under power, etc etc, the buyer may walk away or renegotiate-- at the buyer's sole discretion.

Provided you meet your obligations under the purchase agreement, there is absolutely no problem getting your deposit back. It is held in escrow by the broker -- the seller never touches it -- and in most cases your check does not even get deposited until the purchase is consummated (in the case of both boats we've purchased, our deposit checks were returned to us and we wrote a second check at closing for the full amount.)

Your approach -- surveying first -- seems devised to address a problem that doesn't exist. Either that or you have -- as some do -- circumstances where previewing a vessel yourself is problematic. But most folks can and want to have a look at a boat themselves before making an offer -- and will save themselves the cost of the survey if they and the seller are unlikely ever to come to terms on a purchase price.

_________


Okay, those are just my opinions as a Sailnet member. But this thread was supposed to be a repository of helpful advice and tips for folks that plan to preview/inspect a boat themselves prior to making an offer. So now, as a moderator, I'm going to suggest that we take this other discussion to a new thread. If somebody wants to start a new thread titled along the lines of "Survey Before or After Making an Offer??", have at it. Let's not derail this one any further.
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