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Go Back   SailNet Community > On Board > Boat Review and Purchase Forum > Buyer question - Earnest money
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Thread: Buyer question - Earnest money Reply to Thread
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Topic Review (Newest First)
09-12-2008 03:03 AM
wind_magic Wow! I didn't realize the thread would bring out such deep feelings!

When it gets to this point it's probably best to stop having a discussion before tensions get too high. Thanks to everyone, and I do mean everyone, for all the great discussion. It was interesting to me and I learned a lot about contracts and what earnest money is for, as well as learning a lot about different people's views from the various perspectives in the process - especially the broker's perspective since the brokers are the ones with the big picture view. You people are the best.
09-12-2008 01:38 AM
davidpm
Quote:
Originally Posted by tommyt View Post
Face it, if the contract is written to protect both the seller and the buyer earnest money is not a big loss for a few days or weeks. If you are worried about the interest on 10% of $10,000 or $500,000 with todays short term interest rates you probably don't want to know just how expensive that boat really is.
That's absolutely a good point.

Negotiating is an art and too heavy a hand will not get the result you want.
While todays economy favors the buyer if I was selling a boat and the buyer was a little too rough which depending on the circumstances might include not being willing to part with with 10% I would be tempted to do something that would send them packing like saying the mast was not included.
There are some people that due to ignorance or narcissism you do not want to sell anything to. If you sell them something for a dollar they will extract $100 dollars of aggravation out of you.
There isn't a boat for sale that isn't a money pit and I don't want to sell my boat to someone who for the next 5 years will be threating lawsuits and knocking on my door being a pest. As a seller I want a clean sale. I don't want to adopt a child.

I'm not saying that I would refuse to sell to the OP, I assume it was a legitimate question. But that attitude if expressed in just the wrong way and combined with some sharp negotiation and a "what about me attitude" and smart sellers and brokers will say "Sorry boats already sold"

I don't have a problem with the goal. To get a boat with the least commitment. What I do have a problem with is someone not even hypothetically being able to empathize with the seller. I can almost guarantee you that the person who complains the loudest as the buyer will complain even louder only with opposite logic when they are the seller.

I did buy a house for about 30,000 under market because the seller thought my son, about eight, at the time was cute and she wanted her family house to go to a family. So there are ways to get your way but a gentle hand works best.

You may find the following scientific research interesting.
Tit for tat - Wikipedia, the free encyclopedia
09-12-2008 12:34 AM
tommyt Wind,
My response on your possibly losing the sale after investing money was a continuation of David's example of negotiating a sale without earnest money.
As a seller I would not take the boat off the market because you think you want to buy it, but not enough to put some money on the table. I would agree to sell you the boat at XXX price, and let you do the survey, etc.. , but as in David's example I and my broker would use your interest to get others that may be interested to the table. Hopefully, they would come with money!

Face it, if the contract is written to protect both the seller and the buyer earnest money is not a big loss for a few days or weeks. If you are worried about the interest on 10% of $10,000 or $500,000 with todays short term interest rates you probably don't want to know just how expensive that boat really is.
09-11-2008 11:59 PM
SailKing1
Quote:
Originally Posted by wind_magic View Post
SK1, it sounds like you are saying that the survey is totally the buyers expense up until the survey results come back and the negotiations continue to address whatever problems may or may not be present, and then the deal is in place and the boat is accepted. But after the final deal is struck, then there is an expectation on the buyer's part that the deal will go through and at that point the seller can't back out without putting his/herself at risk of being liable for part of the money spent. Did I understand what you said correctly ?
If a contract is signed, yes that is correct. A binding agreement has been made. If it is broken by either party, that party "could" be held obligated for the others expenses.

If it was in the agreement that the buyer has to pay for there own survey, which is typical.
09-11-2008 11:52 PM
wind_magic
Quote:
Originally Posted by SailKing1 View Post
Windy, that was in reference to his post on making an offer over the phone. No, A signed contract does not need money to be held valid.
You are right I misunderstood that!
09-11-2008 11:47 PM
wind_magic
Quote:
Originally Posted by SailKing1 View Post
Yes you are correct in the seller being bound to the contract. If the contract was written with the contingency of a survey at buyers expense (as it usually is) then the seller can not be held liable. On the other hand if the buyer has a survey and excepts it and the seller backs out then the seller could be held liable for the survey and other expenses.
SK1, it sounds like you are saying that the survey is totally the buyers expense up until the survey results come back and the negotiations continue to address whatever problems may or may not be present, and then the deal is in place and the boat is accepted. But after the final deal is struck, then there is an expectation on the buyer's part that the deal will go through and at that point the seller can't back out without putting his/herself at risk of being liable for part of the money spent. Did I understand what you said correctly ?
09-11-2008 11:41 PM
SailKing1
Quote:
Originally Posted by wind_magic View Post
Davidpm, great post!!!



Well except for the signed contract you have in hand, right ? Even if no deposit was made, the seller still chooses to sign the contract and accept the offer. Maybe there is some weird lawyer rule that you have to put a dollar down for it to be a valid contract, I don't know, but it isn't the buyers word vs. the seller's word when you have a signed offer that the seller has accepted by signing.
Windy, that was in reference to his post on making an offer over the phone. No, A signed contract does not need money to be held valid.
09-11-2008 11:34 PM
wind_magic Davidpm, great post!!!

Quote:
Originally Posted by SailKing1 View Post
It is common practice to get a deposit over the phone on a debit or charge card. If you have no cash deposit on the boat you have no contract in court. It's my word against yours type case.
Well except for the signed contract you have in hand, right ? Even if no deposit was made, the seller still chooses to sign the contract and accept the offer. Maybe there is some weird lawyer rule that you have to put a dollar down for it to be a valid contract, I don't know, but it isn't the buyers word vs. the seller's word when you have a signed offer that the seller has accepted by signing.
09-11-2008 11:30 PM
SailKing1
Quote:
Originally Posted by davidpm View Post
Again there is what is technically true and what happens in practice. If I call you on the phone and say I'll sell you my boat for 500,299.50 cents and you say OK I'll get a certified check Monday we have a contract, technically. Whether you can litigate it is another matter. If we both signed a written contract it is much more real. If I'm holding 50,000 of your money I suspect it is more real still.I don't know what your business experience is but I suspect that over 99% of deals go through OK, deposit or no.



Everything is negotiable. If you will sign a contract but not make a deposit the seller can chose to:
1. Sign the contract and stop showing the boat.
2. Sign the contract and show the boat and take a chance that you sue.
3. Refuse to sign and allow you to survey
4. Refuse to sign and refuse you survey under the theory that you are a pain in the rumpus.
5. Several other more creative counter offers.

Everyone is free to make their own deal. If I knew that your surveyor was your 80 year old grandpa who surveyed fiberglass boat with an awl, I'd pick option 4.
Let me say it again.
Everything is negotiable.
You may ask for winter storage.
The dinghy
Financing from the seller for all or part
Take your boat in trade. (Surprisingly this has more appeal than it might seem. I'll take your 1980 Catalina in trade for 20,000 even though I know you paid 18,000 for it last year if you buy my 250,000 36' 2007 MK II. Now I've significantly reduced my financial exposure and I can dump your 1980 for 15,000 in days and all I lost was 5 grand and made you think you are better than the Donald. Any you only have to pay sales tax on the difference.
An upgrade (New Radar maybe)
A date with his daughter (Keep it clean just a date)
He sails the boat with you to its new home.

Everything is on the table. Once you get into it the deposit is just one very small option along with dozens of others.
It is common practice to get a deposit over the phone on a debit or charge card. If you have no cash deposit on the boat you have no contract in court. It's my word against yours type case.
09-11-2008 11:24 PM
SailKing1
Quote:
Originally Posted by Davidpm View Post
I'm sure there are exceptions but I suspect that if you want out of a contract and want your deposit back many sellers and brokers will give it back in practice.

The negative karma is very high keeping a deposit. You are, however, at the mercy of the seller and have to be a convincing actor.
I will ask a broker I know who has sold thousands of boat how many deposits he has kept.
David you are correct in many will give it back but depending on the agreement between the seller and broker it may not be the brokers decision.

Many brokers will give a deposit back especially in todays INTERNET environment to keep a good name in their field. But, many are also going to keep it and even have an agreement with the seller that the deposit belongs to the broker in the event of the collapse of a sale.
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