Making an offer

[sighmoon]

Not that I'm this close yet, but when it comes to making an offer, subject to survey and trial sail, how is it done? Is it all a bit fluffy or are there hard and fast rules?

Is the buyer obliged to accept a lower price if he accepts an offer subject to survey, and the surveyor comes up with a list of expensive problems to fix? i.e. Is it normal (or implicit in accepting an offer subject to survey) to deduct the whole cost of putting everything right, or is it shared between buyer and seller or is it up to the seller what he takes?

Suppose I knock £5k off the asking price, and give the reason that x needs fixing, and then the surveyor says x will cost £10k to fix, would the vendor be within his rights to say the accepted price is already discounted for that? If that's the case, is it best to make an offer without saying why I want the money off, and let the surveyor work out how much it would cost to get the boat as described and knock that off the asking price?

The cynic in me thinks it would be a bad idea to use a surveyor recommended by the broker, but does anyone have experience to the contrary?

 

[Networks]

I think I would make an offer based on what I think the boat was worth as it stands, but without stating that the (presumably lower) offer is because of "xyz". Have a survey by an independent surveyor. Then whatever the surveyor comes back with, use those points to negotiate a lower price based on estimates of what it would cost to fix each point on the surveyors list. They will want to see your surveyors report to verify that the work actually needs doing. They may also offer to complete some or all of the work themselves prior to hand-over.
Well, thats what I did....

 

[maxi77]

Your offer would normally be as seen and as described, so if the boat needs somethiong done that you can see or have been told about the seller will expect your offer to be on that basis. The way we approached the problem was to first reduce the asking price to what seemed to be the market price, then deduct the jobs we needed done, say new rigging, perhaps new instrument and so on. Finally we deducted a negotiating margin so that if we had to give way we still could keep to our 'real' price. We didn't justify our price simply said that was our offer.

After the survey there were a couple of jobs needing done and we got an estimate for this and reduced the price to take this into account, though as the boat would be considered 'improved' after part of the work we rebated the VAT on that part of the quote.

I would always pick my own surveyor, reduces the potential for conflict of interest problems.

 

[Cerddinen]

The offer is subject to survey. It is a very grey area once the survey has been undertaken. I expect that the legal position would revolve around what problems it was reasonable to expect on a boat of that age, taking into account any representations made about the quality (usually none because of the "get out" clause in brokers' descriptions). Unexepcted serious problems provide the purchaser a legitimate reason to withdraw. Either party could probably claim the other was breaking the contract for unreasonable behaviour if excessive demands were made relative to expected problems. But having agreed a contract most people want to see the contract completed and, hopefully with the broker's assistance (they have to do something to justify 8%), will establish a fair compromise.

 

[Scotty_Tradewind]

Making a deposit is also a grey area.
Do you deposit a certain %age of the agreed price subject to survey?
It does seem a dodgy thing to do but if you are warding off other buyers and wish the boat to be taken off the market by the broker, what is the form here and the wisest action?
Deposits made by credit card are not always easy to get back in a hurry if things go belly up from credit card banks/companies, ( as I was hearing on radio 4 last week ), so beware. It may be worth while getting it in writing from your bank that you are effectively insured before you act.
I too am sceptical about brokers being hand in glove with surveyors. There are probably only a few in the industry that are not superbly reliable good prfessionals but I would find your own surveyor from a different area to be sure and don't let them know who the other is if you can help it. I have no proof but I may have been 'done over' by a dubious relationship between broker and surveyor about 5 years ago.

 

[Observer]

Not that I'm this close yet, but when it comes to making an offer, subject to survey and trial sail, how is it done? Is it all a bit fluffy or are there hard and fast rules?

Is the buyer obliged to accept a lower price if he accepts an offer subject to survey, and the surveyor comes up with a list of expensive problems to fix? i.e. Is it normal (or implicit in accepting an offer subject to survey) to deduct the whole cost of putting everything right, or is it shared between buyer and seller or is it up to the seller what he takes?

Suppose I knock £5k off the asking price, and give the reason that x needs fixing, and then the surveyor says x will cost £10k to fix, would the vendor be within his rights to say the accepted price is already discounted for that? If that's the case, is it best to make an offer without saying why I want the money off, and let the surveyor work out how much it would cost to get the boat as described and knock that off the asking price?

The cynic in me thinks it would be a bad idea to use a surveyor recommended by the broker, but does anyone have experience to the contrary?

There are no hard and fast rules - you and the seller have 'freedom of contract'. So you can make an offer subject to any conditions you care to add. The seller can reject your offer outright, accept your offer, subject to the conditions stated, or make a counter-offer modifying or omitting some or all of the conditions. When an offer (or counter-offer) is accepted AS MADE, the contractual bargain is made and both parties are bound.

If the contract is made "subject to survey", then, absent provision to the contrary, the seller is contractually bound to either put right (at his cost and to your satisfaction) ALL material defects found or to agree a reduction in price that reflects the cost of remedy, and you are bound to complete the purchase on that basis. (This is the ordinary meaning of "subject to survey". It may be spelt out in more detail in the written contract.) It is open to both parties, if they so wish, to agree a maximum amount for remedying defects (or a maximum price reduction) which, if exceeded, could entitle one or either party to pull out, or to share the excess or...whatever. Freedom of contract. If the conditions that you and the seller wish to agree become complex, it may be wise to seek expert advice to ensure they are drafted into the contract unambiguously and without creating a 'lacuna' where there is no clear allocation of liability or rights.

 

[jonjo]

how is it done? Is it all a bit fluffy or are there hard and fast rules?

Of course its fluffy, you live in the UK. All the various outcomes you suggest are possible. Tread carefully, the yacht purchase process is not regulated like housing transactions.

But for the majority, a purchase will progress without major legal bumps, I suggest that when making an offer to a private seller you set his expectations by clarifying what the unquantified variables are.

 

[njamesphoto]

be carefull some contracts now have a 5% clause that if the defects are over 5% of the purchase price you can renegotiate, if not its down to the buyer.

 

[BurnitBlue]

My problem is that I have to take a flight to either UK, Med or elsewhere to view a boat. There are virtually no suitable boats for sale where I live.

Some sellers or brokers are OK with a deposit after an offer is accepted subject to survey. The problem with that is that I have not even set eyes on the boat, so feel uncomfortable entering into a contract. Some will hold the boat if I fax a copy of my flight ticket. One or two will allow first refusal option. But some will not consider any hold at all because they are afraid of losing a potential sale in the short interim. The result is that in six month of searching I have only viewed two boats.

 

[maxi77]

My problem is that I have to take a flight to either UK, Med or elsewhere to view a boat. There are virtually no suitable boats for sale where I live.

Some sellers or brokers are OK with a deposit after an offer is accepted subject to survey. The problem with that is that I have not even set eyes on the boat, so feel uncomfortable entering into a contract. Some will hold the boat if I fax a copy of my flight ticket. One or two will allow first refusal option. But some will not consider any hold at all because they are afraid of losing a potential sale in the short interim. The result is that in six month of searching I have only viewed two boats.

I have every sympathy with you but I can also see it from the other side, having tried to sell both a car and a laser dinghy over the past year, far too many people agree to buy and then don't. In the present climate it seems that one has to work on the principle that until the cash is on the table no sale and no holding the goods in the hope you may pay up.