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Discussion Starter #1
Looking to buy a new boat, boat is on the hard, I live in the NE. I have read that you can have the broker hold 10% of the purchase price in escrow until the sea trial in the spring. Is this fairly common in the northern climate?
 

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I can't say if it's common, but winter deals get a bit more creative, for this reason. The 10% is a standard escrow for any deal. The trick, of course, is whether the seller continues to market the boat, while you've not yet accepted it. Once I've incurred expense, I want to know it's exclusively my boat, unless I turn it down. That's sticky, because the moment you make a request for a survey squawk to be addressed, you've retracted your original offer and the seller could just move on.

Long way of saying, I'd suggest you have strong contractual rights to the boat, if they are holding your money. I'd also suggest the escrow be held by an agent, not the seller or broker, for that length of time.
 

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Not an unreasonable request but the seller doesn't necessarily have to agree since it would keep the boat off the market until spring.
 

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I would go for it as a seller. Too much possibility for a better offer over those months. I haven't bothered sea trialing a boat in a very long time, so it isn't a high priority for me.
 

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I would go for it as a seller. Too much possibility for a better offer over those months. I haven't bothered sea trialing a boat in a very long time, so it isn't a high priority for me.
I gave up sea trials for the purpose of evaluating the boat handling, at least for any production or semi production boat whose characteristics are known. However for a larger boat with an inboard engine that could be expensive to repair or replace, I think a sea trial important to run the engine up to rated rpm, look for smoke, overheating, etc. Also would be needed if the boat has autopilot.
 

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I gave up sea trials for the purpose of evaluating the boat handling, at least for any production or semi production boat whose characteristics are known. However for a larger boat with an inboard engine that could be expensive to repair or replace, I think a sea trial important to run the engine up to rated rpm, look for smoke, overheating, etc. Also would be needed if the boat has autopilot.
I think you'll get a lot more useful information from sending an oil sample to a lab. A magnet or disconnecting the rudder angle indicator from the quadrant are two ways to check an AP.
 

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Discussion Starter #7
My thought is, if the initial survey went well than I would purchase own the boat with the 10% in escrow at risk if something came up during the sea trial.
 

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dh's idea is on the right track. Perhaps buy the boat, (close on it, and sign the papers) so it is yours and off the market, but set up an escrow amount against the acceptable operation of the engine after the boat is launched in the spring. The seller has no reason to think the engine won't work, so he has no reason to think he won't get his money. He just has to wait a bit longer to get all of it. You worry that the engine won't work, and the escrow amount can serve to cover any work that it needs to operate properly. Technically, the seller pays for the repair work, if it's needed. You don't pay any more for the boat than you agreed to, and you are assured that the engine will work. The trick is to make sure the escrow amount is enough to cover what it might take to get the engine running. You'd want a bigger escrow amount for a Armenian engine that looked like it hadn't run in 6 years and had never had the belts, hoses, or oil changed than for a Yanmar that had been obviously well-maintained and was almost new. Your surveyor should be able to help you with this, and the broker should be used to setting up escrow accounts for this sort of thing (engines, galley stoves, refrigerators...) Good luck!
 

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I did a sea trial once, where the broker came along and had me at the helm. We tacked, gybed, cruised along for a while. He and the Captain ran the winches. They were selling me the boat, I didn't need to do any of it.

For me, the seatrial is solely the opportunity to see what can't be seen statically. Engine to WOT RPM under load, sails going up and down in a breeze, auto pilot holding course in actual conditions, keel bolts not leaking after swinging around a bit, just to think of a few. It's not about how the boat sails. You could only assess that one singular condition, during the trial anyway. Excluding the trip in and out of the marina, I don't think a sea trial needs to last more than 15 mins.
 
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My thought is, if the initial survey went well than I would purchase own the boat with the 10% in escrow at risk if something came up during the sea trial.
I didn't read there was an initial survey, but that's good point, if it can be done now. Too many boats are winterized already, or stripped down, so even doing a complete survey could be problematic.

If the OP can complete all but the sea trial, I like the approach. However, as a seller, I'd squeak. First, I'd need a narrowly defined list of things that could be negotiated out of that escrow. What if I disagreed with the cost to remedy? Second, I'd want some way to assure the buyer didn't cause the problem, while in their possession, and now I've got to pay for it.

Punting a deal past the winter is done, but they're tricky.
 
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Discussion Starter #11
I get the sellers view point, the broker indicated the boat has been maintained by the marina the last few years, so if there are decent maintenance records than I could forgo the sea trial.
 

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Just a crazy thought

The Frost is not on the Pumpkin yet, If this is the boat that you want and the Survey was good. Unless it's already under a full winter cover, I'd launch the boat, re-commission the engine and sea trial it. I assume that you just want to run up the RPM, Check the Rudder, check for leaks, auto pilot etc. You don't even need the mast up, if it's down. It's not that hard to winterize the engine and re-haul, and block. I wouldn't think you'd need to use the fresh water system etc. The owner and the broker might even split the cost of the launch and re-haul with you just to get the sale over and done with. Is winter storage paid for already? Or just 50% paid. That could be a negotiating point? Owner pays to relaunch and haul , you pay for second half of winter storage. Or wait til spring. ;-)
 

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... Once I've incurred expense, I want to know it's exclusively my boat, unless I turn it down. That's sticky, because the moment you make a request for a survey squawk to be addressed, you've retracted your original offer and the seller could just move on.
...
This is in line with my thinking.

Recently, I had a situation where I put in a bid on a boat, pending the motor running well. When I first saw the boat, the motor was incomplete. I had offered to buy the missing part & install it at my expense, to see the motor run. After that, I find out that the seller has two more perspective buyers coming to see the boat & they want to see the motor run too. So much for verbal agreements. I did not provide the part & I withdrew my offer.

The deal can be anything that the buyer & seller agree to. I do believe that it is common practice to put down some earnest money if you want the boat to be held off the market pending your inspection. Amounts & timelines can vary. My recent mistake is a good example of why a written agreement can be important.
 

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I do believe that it is common practice to put down some earnest money if you want the boat to be held off the market pending your inspection.
The SOP is that you send a 10% deposit, with your initial offer. However, brokers will always continue to show the boat, while you are in contract and have not yet accepted (post survey). The honest ones will tell the back up prospect. The dishonest won't. I recently called on a boat and was told it had a verbal accepted offer. I said I wasn't interested in seeing it and interfering with a standing deal. Call me if it dies. Interestingly, it turned out to be a boat in the US that was owned by a foreign owner, with a verbal agreement to another foreign owner. They hadn't inked the deal, because neither could get to the boat and likely won't, until well into next year. I almost made an exception, but it turned out to be wired for foreign 220v house power and I didn't want to refit or deal with conversion.
 

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At least in my experience, this situation is not unusual at all. I've purchased 2 boats this way. We did the land survey on hard, closed the deal in the winter with a holdback contingent on sea trial. A good surveyor can inspect the rigging (in fact if the stick is stepped they can get get a better look), check the hull and deck, electrical systems, maybe even plumbing if it isn't too cold (may need to re-pink), etc. Even if the boat was in the water, the surveyor would want a short haul to look at the hull, rudder, keel, etc. Sails can be inspected better in a loft. Given a good survey, on a good boat, with a good owner, you buy it with a holdback. The sea trial is a short run of the engine, look around for leaks, raise and lower the sails, and accept. After the land survey, the largest risk is the engine. If the holdback would cover a re-power, most risk is mitigated. That said, if the engine looked bad on hard, game over before it starts.

In 2 transactions of this type, I've wrangled some give backs on problems discovered during the land survey, but had no issues arise during the sea trail and released the escrow. For the right boat, good surveyor, I'd do it again. Not unusual.
 

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with a holdback contingent on sea trial.
Did your contracts have any language that contained what you might discover in a sea trial? Obviously, as a buyer, you had ample integrity. Not all do and are looking for anyway to chisel down the sales price. Was the contingency contained to engines or hull leaks, for example.
 

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Gosh, it was standard language working with a well known broker with a strong reputation. I cannot remember the language, too many years ago. Mostly, I'd offer the advice I'd give anyone making any deal with anyone. You can't hire enough lawyers to paper over a deal with a scoundrel. Start with dealing with good people and making a fair deal. Start with a good broker and a surveyor with a strong local reputation. They won't work very long or hard for a seller who's behaving poorly. This "industry" is so small, it's not very hard to figure out who the good guys are.
 

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You can't hire enough lawyers to paper over a deal with a scoundrel.
That’s for sure. However, the buyer and seller rarely ever know each other, when a broker is involved.
 

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Somehow I've broken through that barrier every time, and ended up knowing the seller for years there after. Same thing on the sell side. In fact I've had buyers of my boats call me years later with a question. Always happy to help. Maybe unusual. Again, small world of sailing, wicked small, no place to hide, good guy or bad. Might be harder if you shop over a wide geography, we've always bought and sold in New England area.
 
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