a reasonable offer.

[blackrose]

I wouldn't put any deposit on a boat prior to survey. The fact that you are commissioning your own survey should indicate to the vendor that you are a serious prospective purchaser. The deposit should only be paid after the survey assuming you wish to proceed. If a vendor insisted on a pre-survey deposit I would walk away. There are plenty of other boats on the market.

[Chewbacka]

38 minutes ago, blackrose said:

I wouldn't put any deposit on a boat prior to survey. The fact that you are commissioning your own survey should indicate to the vendor that you are a serious prospective purchaser. The deposit should only be paid after the survey assuming you wish to proceed. If a vendor insisted on a pre-survey deposit I would walk away. There are plenty of other boats on the market.

But if you don't put a deposit down, then it's not unreasonable for the seller to take a better offer from another buyer even after you have paid for a survey.

[Alan de Enfield]

2 minutes ago, Chewbacka said:

But if you don't put a deposit down, then it's not unreasonable for the seller to take a better offer from another buyer even after you have paid for a survey.

Agreed - basically you are paying to have it 'taken off the market whilst you decide if you want to buy it'.

[Tacet]

5 hours ago, Alan de Enfield said:

Agreed - basically you are paying to have it 'taken off the market whilst you decide if you want to buy it'.

That would be a call option.  More commonly, the deposit is the seller's security that the buyer will perform as per the contract and, if it does perform and a sale results, part payment.

 

 

[Alan de Enfield]

11 minutes ago, Tacet said:

That would be a call option.  More commonly, the deposit is the seller's security that the buyer will perform as per the contract and, if it does perform and a sale results, part payment.

 

 

That is exactly what a deposit is - the problem is that many seem to think that it just stops anyone else buying it, and it they decide not to proceed they get their deposit returned meaning the seller has not only lost their 'buyer' but any potential buyers that could have bought it during the time the original buyer was 'thinking about it'.

 

The terms in the brokers contact are generally 'fair' to both sides but that is not enough for some - they want their cake and to eat it.

[Horace42]

I suspect, in terms of sales psychology, the brokers fee can appear to be a lot less if calculated as a percentage of the sales price

and deducted from what the buyer actual pays, with the balance going to the seller.

 

By example, using round numbers to make the arithmetic easy to follow:

The boat seller wants £90k.  The broker wants £30k. The buyer has to pay £120k.

To get £30k, the broker deducts 25% from the sales price, or must add 33.3% to the asking price.

 

As a sales ploy, for those not versed in the finer points of sales techniques, a broker charging 25% sounds a much better proposition than one charging 33.3%.

 

Whereas the step-by-step route the money takes could make a big difference.

[Horace42]

8 hours ago, Alan de Enfield said:

Agreed - basically you are paying to have it 'taken off the market whilst you decide if you want to buy it'.

Yes, but that does not stop the seller from accepting a higher price or better offer - and arbitrarily returning your deposit.

This is where a good broker comes in handy.

[DandV]

A broker will only remain in business if they can continue to sell enough boats at a high enough fee to cover their costs and to provide them with a living. They must convince sellers that the fee to be paid to them, plus another 20% VAT to the Government, is worth their expertise, facilities, and labour in representing them, them in the sales process. A seller has the choice of several brokers, or conducting their own sales process. If they choose a broker it is because they think the brokerage fees plus VAT will provide value to them. A purely personal choice. A broker will probably obtain a better price then an inexperienced seller.

There is a lot of market knowledge required to correctly set the initial asking price. To high, risks risks destroying initial interest and leaving the boat languishing, in many cases finally selling at a much reduced bargain months later. Too low, and you have sold short.  Brokers, also, to greater or  lesser degree, provide mooring,  production of the sales materials,supervised viewing, handle the negotiations, provide buyers survey access, and secured money transfers. In our case were airborne back to New Zealand four hours after leaving our boat at Rugby Boats. 

Buyers actually have the choice of all the boats currently for sale, if they can find them, and then get access to view them.

Ultimately though it is the buyer who determines price, the seller is, perhaps after counter offers, only offered a binary choice, accept, or decline. A declined offer still leaves the seller with a boat they want sold, but the buyer, still has the choice of all the other boats on sale. If a sale is agreed then the seller receives that price less any fees and VAT on those fees.

Edited January 2, 2019 by DandV
Added pricing expertise

[blackrose]

10 hours ago, Chewbacka said:

But if you don't put a deposit down, then it's not unreasonable for the seller to take a better offer from another buyer even after you have paid for a survey.

Not if you put a deposit down immediately after the survey (should it be to your satisfaction and subject to negotiation). I'm sure I already said I'd hand over the deposit afterwards? That's when they take the boat off the market.

 

There's always an element of trust in any business transaction, but giving someone a deposit when you're not sure exactly what it is you're buying seems like it's frought with potential problems.

 

Anyway, if you or anyone else wants to put a deposit down on something that could turn out to be a lemon and then have to get your money back that's up to you, but that's not the way I've done it when I bought a used boat privately without a broker.

 

If a vendor doesn't want to accept my offer and my deposit after the survey then of course they are free to sell the boat to someone else and I'm free to look elsewhere. Paying for a survey is never going to guarantee that a deal on the boat will be concluded. From the buyer's perspective the survey fee is always a risk and you may have to walk away with nothing minus what you spent on the survey, but that's always been the case no matter what sort of terms and conditions you set up beforehand.

Edited January 2, 2019 by blackrose

[blackrose]

10 hours ago, Alan de Enfield said:

Agreed - basically you are paying to have it 'taken off the market whilst you decide if you want to buy it'.

I don't think a deposit actually stops a vendor from selling the boat to someone else. Not unless you also have a legal contract to that effect. Even with a contract they could still sell the boat to someone else and just hand your deposit back (hopefully prior to the survey). What are you going to do, take them to court? It's not worth the hassle. Personally I just wouldn't get involved in handing money over until I know exactly what I'm buying, but of course everyone's free to do whatever they want with their own money.

[WotEver]

9 hours ago, Horace42 said:

By example, using round numbers to make the arithmetic easy to follow:

The boat seller wants £90k.  The broker wants £30k. The buyer has to pay £120k.

Putting aside the actual figures you’ve used, I have never known of a transaction such as this.

 

The boat is worth x. If x is £120k then that’s what it’s marked up at. If x is £90k then that’s what it’s marked up at. The seller is (as others have said) using the broker for his expertise and experience and will pay him for that out of the proceeds of the sale. The sale price isn’t inflated to cover the commission. 

[Tacet]

16 hours ago, Tacet said:

That would be a call option.  More commonly, the deposit is the seller's security that the buyer will perform as per the contract and, if it does perform and a sale results, part payment.

 

 

 

15 hours ago, Alan de Enfield said:

That is exactly what a deposit is - the problem is that many seem to think that it just stops anyone else buying it, and it they decide not to proceed they get their deposit returned meaning the seller has not only lost their 'buyer' but any potential buyers that could have bought it during the time the original buyer was 'thinking about it'.

 

The terms in the brokers contact are generally 'fair' to both sides but that is not enough for some - they want their cake and to eat it.

I am unclear which of the two positions that you view as exactly what a deposit is.

 

If you are (unusually for a boat) buying an option, the consideration will be the purchase price (for the option) and not a deposit.  The option consideration may, or may not be deductible from any agreed price for the boat, but it would be a very unusual option that provided for a refund if the option was not exercised.

 

A deposit is more commonly both security and part-payment for a contract - the full terms of which will/may be fulfilled later.  Most simply, the final payment will be next week, when the boat will transfer.  Or it could relate to a conditional contract when, subject to satisfactory survey (or, perhaps, subject to no unsatisfactory survey) the final payment will be next week, when the boat will transfer.  A conditional contract ought to make provision for the conditions not being satisfied.

 

When you hand over a lump of money, you need to understand the terms of the contract you are entering.  As Blackrose identifies, some thought should be given to the realistic remedies available if the other side does not perform.  And some thought as to where you will be if you can't or don't perform.    

 

 

 

[carlt]

22 hours ago, Alan de Enfield said:

Agreed - basically you are paying to have it 'taken off the market whilst you decide if you want to buy it'.

Not if it non-returnable unless there are problems with the survey.

 

I have had a survey done and pulled out, not because of defects, but I simply changed my mind.

 

I hadn't left a deposit and I sold the survey to the vendor so only lost about £100 due to my fickleness.

[yabasayo]

A couple of points. A contract is legally formed when there is an agreement to sell and buy, irrespective of this being in writing or not. However it would obviously be more difficult to prove the existence of the contract if it's not held in writing. Take the example of an auction. A contract to buy and sell is formed at the fall of the hammer but is rarely in writing.

On the subject of pre purchase surveys, it would be normal for the seller and buyer to agree a transaction and provisional price, both to be conditional on 'a survey being to the satisfaction of the buyer'. Any other form of words (such as 'conditional on survey' or 'conditional on satisfactory survey' -  is meaningless). Requirements for any up front payment and penalties on the prospective purchaser should be declined. I certainly would not sign anything or pay anything until I was fully aware of the condition of the boat and there was an agreed sale and purchase price.

Caveat emptor ! 

 

[Tacet]

1 hour ago, yabasayo said:

A couple of points. A contract is legally formed when there is an agreement to sell and buy, irrespective of this being in writing or not. However it would obviously be more difficult to prove the existence of the contract if it's not held in writing. Take the example of an auction. A contract to buy and sell is formed at the fall of the hammer but is rarely in writing.

On the subject of pre purchase surveys, it would be normal for the seller and buyer to agree a transaction and provisional price, both to be conditional on 'a survey being to the satisfaction of the buyer'. Any other form of words (such as 'conditional on survey' or 'conditional on satisfactory survey' -  is meaningless). Requirements for any up front payment and penalties on the prospective purchaser should be declined. I certainly would not sign anything or pay anything until I was fully aware of the condition of the boat and there was an agreed sale and purchase price.

Caveat emptor ! 

 

As a seller, I would say that a sale subject to the survey to the satisfaction of the buyer is close-to meaningless. He might never commission a survey or be unreasonably dissatisfied with its results.  Coupled with no financial penalty, it is  a very limited commitment.

 

If you want the seller to be committed to selling the boat to you - it is a reasonable to expect to make fair commitment of some sort in the other direction.  Or you make no commitment either way - and bear a small risk of the boat being sold elsewhere whilst you arrange a survey or finance or whatever it is that is preventing you making a commitment to buy.

 

 

  

[yabasayo]

17 hours ago, Tacet said:

As a seller, I would say that a sale subject to the survey to the satisfaction of the buyer is close-to meaningless. He might never commission a survey The buyer may decide to survey the boat himself and be content with that. or be unreasonably dissatisfied with its results. The potential buyer and the buyer alone is perfectly entitled to make a decision to purchase or not to purchase. It certainly is not for the seller to decide if the purchaser's decision to go ahead or not, is reasonable in the opinion of the seller.  Neither is it in any way reasonable for the seller to expect some payment from the potential buyer if the buyer decides not to go ahead with the purchase, provided neither party is in breach of contract.  Coupled with no financial penalty, it is  a very limited commitment.

 

If you want the seller to be committed to selling the boat to you - it is a reasonable to expect to make fair commitment of some sort in the other direction.  Or you make no commitment either way - and bear a small risk of the boat being sold elsewhere whilst you arrange a survey or finance or whatever it is that is preventing you making a commitment to buy.

 

 

  

 

[Markinaboat]

On 27/12/2018 at 07:58, frahkn said:

 

I bought mine from Rugby (albeit in Dominick's time), there was no difficulty in negotiating the 10% down. They have to put some figure in the contract but are very open to negotiation on the actual figures in each particular case. I'm not saying that this would be the case for every broker.

I've queried this with three brokers over the years and all gave me (in writing) confirmation that if certain areas weren't to my satisfaction (mainly hull related) then I would receive my deposit back in full. I'm no lawyer but would imagine that this 10% or any % term may not hold water if it were challenged in a court of law.

[Tacet]

If, as a buyer you are happy to accept that the seller might change its mind, after survey for example, and decide to sell the boat to someone else, or not sell at all - or maybe ask for a higher price, then fair enough.

 

But if you are expecting a commitment from the seller to stand-by the provisionally agreed deal whilst you obtain a survey etc, then you will need to make some form of commitment yourself.  Both in practice and law.

[Alan de Enfield]

19 hours ago, yabasayo said:

On the subject of pre purchase surveys, it would be normal for the seller and buyer to agree a transaction and provisional price, both to be conditional on 'a survey being to the satisfaction of the buyer'.

The last boat I decided to buy was as a result of travelling around much of the Europe to try and find one, and even visiting Singapore & Malaysia and looking in the USA.

 

I eventually found one in Croatia, went to visit and start negotiations with the broker, the broker would not accept offers (or said the seller would not accept offers) but I managed to find the sellers details from the registration papers on board.

The seller was quite happy to sell at my offer, and when I found that the VAT & RCD paperwork was missing I reduced my offer by a further £60,000 which he still accepted.

he then told the Broker to 'sling his hook' and appointed a new Broker in Serbia.

The new broker was quite happy to operate under the sellers instructions, but absolutely refused to sell it to me without an out of water survey. I insisted that I didn't want a survey, he insisted I needed one - In the end the Broker took the boat to Italy to have it lifted out (as nowhere closer could lift her size) he paid for the survey and I got the boat at my revised offer price.

 

A small 'contribution' to the Croatian Customs & Excise 'coffee fund' resulted in a back-dated VAT paid certificate being issued.

A phone call to the French manufacturers provided a copy of the RCD certification 

So all was now 'legal to leave Croatia - except - she had to be de-registered by the Croatian Government and the de-registration certificate authorised by the 'Maritime Minister' and a Notary. The Broker paid for all of this.

 

Sometimes a broker will go above and beyond to get a sale.

[carlt]

18 hours ago, Tacet said:

 

 

If you want the seller to be committed to selling the boat to you - it is a reasonable to expect to make fair commitment of some sort in the other direction.  Or you make no commitment either way - and bear a small risk of the boat being sold elsewhere whilst you arrange a survey or finance or whatever it is that is preventing you making a commitment to buy.

 

 

  

I don't quite get this "commitment to buy". 

My commitment to buy is made when my wallet is opened or the bank transfer is taking place (with the exception of an auction which is different). 

As far as I am concerned the goods belong to the seller until it is paid for and is free to sell to someone else. 

If you have ever been gazumped then you know how meaningless a deposit is and better it stays in my pocket than some stranger's. 

[Tacet]

1 minute ago, Markinaboat said:

I've queried this with three brokers over the years and all gave me (in writing) confirmation that if certain areas weren't to my satisfaction (mainly hull related) then I would receive my deposit back in full. I'm no lawyer but would imagine that this 10% or any % term may not hold water if it were challenged in a court of law.

It will depend on what the contract provides.  But one where it is entirely in the buyer's gift as to whether it is satisfied (reasonably or otherwise ) by a survey is a nonsense.   Hence, the common provision that if the survey shows that there is not all that much wrong with the boat (i.e. work required is less than 10% of the price), then the survey is deemed satisfactory and the contract is no longer conditional on that issue.

 

It won't be appropriate where the boat is known to be in poor order and the agreed price therefore reflects that condition.  You might then have to restrict the 10% to unexpected issues - (e.g. thin plating) which would need to be specified.

 

[Tacet]

7 minutes ago, carlt said:

I don't quite get this "commitment to buy". 

My commitment to buy is made when my wallet is opened or the bank transfer is taking place (with the exception of an auction which is different). 

As far as I am concerned the goods belong to the seller until it is paid for and is free to sell to someone else. 

If you have ever been gazumped then you know how meaningless a deposit is and better it stays in my pocket than some stranger's. 

Essentially, you can either have an unconditional completion of the transaction.  Ie. no preceding contract and the boat transfers when you hand over the money.  Same as buying a newspaper in a shop.  Whilst both parties may well be moving towards an expected transaction - there is no commitment from either of them to the expectation.  This is often fine, as neither changes their mind during the process - but they might do. 

 

Or, if you both prefer, you can have a conditional contract - E.g. I will buy the boat if it has a satisfactory (as defined) survey.  Much the same as the usual exchange-and-completion for a house, which is conditional (or at least subject to) the seller executing the  transfer, redeeming any mortgage and delivering vacant possession.  Sometimes conditional on survey or planing permission. 

 

Obviously it takes two parties to contract - so they must agree.  What you can't have is a binding commitment by the seller to sell, without some counter-commitment from the buyer.  This will commonly be in the form of agree-to-buy-subject-to-a-satisfactory survey.  For the pedantic, even an option to purchase will require commitment in the form of consideration for the option agreement.  Good luck with a claim for promissory estoppel - you might be able to show that your commitment was in the form of commissioning the survey in return for which, the seller agreed to transact if you decided to proceed, but it won't be easy.

   

[yabasayo]

Not a 'conditional contract' but a contract with conditions.

[yabasayo]

4 hours ago, Tacet said:

It will depend on what the contract provides.  But one where it is entirely in the buyer's gift as to whether it is satisfied (reasonably or otherwise ) by a survey is a nonsense.   Hence, the common provision that if the survey shows that there is not all that much wrong with the boat (i.e. work required is less than 10% of the price), then the survey is deemed satisfactory and the contract is no longer conditional on that issue. Any potential buyer who signs a contract with such wording or similar is to put it politely, extremely naive.

Also you are totally incorrect regarding the potential buyer. The decision to proceed with the purchase or not is entirely that of the potential buyer and nobody else. The potential buyer can not be fined by the seller for making a decision not to proceed, unless he has been naive enough to prematurely sign a contract with such punitive terms. Even in the latter case, in my opinion, a court be would unlikely to find in favour of the frustrated seller unless he could show real damages had occurred directly as a consequence of the potential buyer not proceeding. In practice, the cost of a civil case, the outcome of which would be far from certain, would preclude any claim against the potential purchaser anyway.  

 

It won't be appropriate where the boat is known to be in poor order and the agreed price therefore reflects that condition.  You might then have to restrict the 10% to unexpected issues - (e.g. thin plating) which would need to be specified.

 

 

Edited January 3, 2019 by yabasayo

[carlt]

4 hours ago, Tacet said:

Good luck with a claim for promissory estoppel - 

   

 

Why would I make such a claim?

 

I have already said that I would be prepared to take the hit if I pulled out after a survey or if the vendor decided to sell to someone else.

 

In fact I have only ever dropped out of a sale post survey once even though there were no significant defects and sold the survey to the vendor so only lost about £100.

 

I don't mind paying a surveyor for his work but I won't risk thousands on a deposit for a boat I may never own.

 

There are plenty of other boats out there for me to buy and plenty of other buyers out there for vendors who insist on a deposit.