Surprised by terms for boat purchase

[tony345]

Wow - lots of replies and I really appreciate all of the advice given here.

One interesting point raised is 'what security do I have for my deposit'.

Do I just hand over a cheque for £5k in this case to a broker who I meet for the first time and know little about. Who actually holds my money - Broker or Owner?

If the broker goes bust while he has my money - what redress do I have? Would I own 10% of the boat?

Given the number of small firms going to the wall in the current climate - can you see why I'm a bit jumpy about handing over cash in this way.

I was surprised to see that so may posters have encoutered time wasters during the course of a sale. But forewarned is forearmed here as I too have a boat to sell. I'd fondly imagined I'd be quite happy to take anyone for a short test ride who was serious enough to come and meet with me and look over the boat. - Perhaps I'm being a mug here

 

[Spi D]

Well, if you use a cheque and decide to pull out right away, the seller could hand it back. If not, you call the bank and have it cancelled.

I too sold my boat. Also experienced a 'buyer' who agreed to meet at some ramp, and left me sitting there for as long as one, keen to sell, seller will sit.

The guy who bought it in the end was nursed immensely. Looked it over, confirmed his interest, got a sea trial, overnighted in the boat and we made the papers the next day.

And, oh yes, nearly forgot: I had the keys to the boat and as we went to the ramp (an hour away) in my car, I even had his nice VW Passat...

Most importantly: We'd communicated for a long time and the whole deal was very pleasant. Even ended my 6 year ownership with a little profit

 

[Moody]

One interesting point raised is 'what security do I have for my deposit'.

Do I just hand over a cheque for £5k in this case to a broker who I meet for the first time and know little about. Who actually holds my money - Broker or Owner?

If the broker is reputable and is a member of ABYA (Association of Brokers and Yacht Agents) or similar, he should have a client account into which your deposit should sit. Frankly I wouldn't consider giving a deposit to any broker that didn't meet this criteria.

Also read the contract carefully as there may well be restrictions on the grounds on which you can reject the boat. For example 'Actually I don't like that type of boat after all' might not be acceptable.

Neil

 

[AdeOlly]

One interesting point raised is 'what security do I have for my deposit'.

Do I just hand over a cheque for £5k in this case to a broker who I meet for the first time and know little about. Who actually holds my money - Broker or Owner?

If the broker goes bust while he has my money - what redress do I have? Would I own 10% of the boat?

One way I recommend, and I have just done this, is to pay the deposit by credit card. You then have redress against the card issuer if the broker goes bust. Also it's not really necessary to pay 10%; I easily negotiated the deposit down to less than 5%. At the end of the day the main purpose of the deposit is to ensure you're a serious punter not to provide the broker with working capital, (though it should reside untouched in the broker's client account) so IMO on a £50k boat £2.5k deposit should quite acceptable.

 

[Tranona]

Wow - lots of replies and I really appreciate all of the advice given here.

One interesting point raised is 'what security do I have for my deposit'.

Do I just hand over a cheque for £5k in this case to a broker who I meet for the first time and know little about. Who actually holds my money - Broker or Owner?

If the broker goes bust while he has my money - what redress do I have? Would I own 10% of the boat?

Given the number of small firms going to the wall in the current climate - can you see why I'm a bit jumpy about handing over cash in this way.

I was surprised to see that so may posters have encoutered time wasters during the course of a sale. But forewarned is forearmed here as I too have a boat to sell. I'd fondly imagined I'd be quite happy to take anyone for a short test ride who was serious enough to come and meet with me and look over the boat. - Perhaps I'm being a mug here

There is very little risk of losing your deposit if it is placed with a broker who operates a proper client account. You will find details of how this works on the YDSA site and in the RYA publications. There is very little evidence of brokers going bust and clients losing money (either buyers or sellers).

However, if you are buying a boat from a dealer - that is somebody operating on their own account and selling a boat they own, the risk of your deposit is potentially much higher. Some dealers hold deposits in a client account, but many just pay them into their trading account. If they go bust you are an unsecured creditor and you can lose your money. There are many examples of this happening.

So, despite what Daka says, it is imperative that you know the nature of the contract you are entering into and the status of the other party. A dealer operates under consumer law, which has its advantages in that he is responsible for selling you a satisfactory product within the definitions of various consumer laws, but the downside is that you could lose all that if he goes bust either before or after you have completed the transaction - as well as your deposit if the transaction is not complete.

Buying from a private individual, even through a broker is outside consumer law, so you have to take your own precautions by making sure your deposit is secure and employing a surveyor to check that the boat is a sdescribed (which you might also do buying from a dealer).

 

[DAKA]

So, despite what Daka says, it is imperative that you know the nature of the contract you are entering into and the status of the other party. .

just for absolute clarity I agree 100% the status of the dealer/broker must be established before \ a contract is signed.
My comment was in relation to the op finding a suitable boat and getting a test drive without paying any cash and a private buyer would be the best chance.

the op appears less trusting than many marks and going into detail now about all the risks could well put the op off finding a boat hence my reluctance to go into detail now, it is only for that reason that I have resisted starting the usual battle with you over client account protection although I accept some minor steps forward have been introduced since the last round.

 

[Tranona]

Was not wishing to go over old ground, but a potential buyer (and seller) should understand the nature of the transaction they are going into. It is clear from many posts that this is not the case, leading people to go off half cock. If they understood the basic ground rules it is more likely that they would have a trouble free experience, rather than getting worked up about issues that are often easily resolved.

Not sure there is any inherent advantage in dealing direct with the owner rather than through a broker. There are many people I have met where I would not like to have direct dealings over something as valuable (in both monetary and emotional terms) as a boat! This applies to both buying and selling as there are equal numbers of awkward buyers and sellers.

 

[boatmaster]

If the broker is reputable and is a member of ABYA (Association of Brokers and Yacht Agents) or similar, he should have a client account into which your deposit should sit. Frankly I wouldn't consider giving a deposit to any broker that didn't meet this criteria.

Also read the contract carefully as there may well be restrictions on the grounds on which you can reject the boat. For example 'Actually I don't like that type of boat after all' might not be acceptable.Neil

If i were an acting broker, i would not want to accept terms where a buyer could have a sea trial and then pull out of the sale on the grounds that the type of boat was not acceptable, Unless of course there were some physical shortfalls proven by the trial. i believe that there are some buyers out there that will waste brokers time with sea trials and then pull out because they dont like the colour of the curtains! the very same curtains that were there before they went out for a nice sunny sunday afternoon joy ride.

 

[rubberduck]

If I were a broker I would charge a fee for a test run, refundable on move to purchase or if any major faults are found. I would sell more boats than you

 

[Tranona]

If I were a broker I would charge a fee for a test run, refundable on move to purchase or if any major faults are found. I would sell more boats than you

It is not up to the broker. He does not own the boat so he can't take you for a test run. Only the owner can agree to that, and it may well be that he will agree to a test run at potential purchaser's cost - but if he has any sense he will ask you to sign a contract first to show that you are serious. He may also insist that you pay for a professional skipper and insure the boat. There is no reason why he should refund any costs if you buy - the purpose of the test run is part of the buyer confirming the boat is as described - not to find out if he likes the boat.

It may be different if the dealer owns the boat, then he can do what he likes to promote the sale of his own property. Dealers and buyers, particularly of new boats often have different motivations from people buying used boats from other private individuals.

 

[PaulGooch]

Not been around for three months, nice to see nothing changes

 

[rubberduck]

It is not up to the broker. He does not own the boat so he can't take you for a test run. Only the owner can agree to that, and it may well be that he will agree to a test run at potential purchaser's cost - but if he has any sense he will ask you to sign a contract first to show that you are serious. He may also insist that you pay for a professional skipper and insure the boat. There is no reason why he should refund any costs if you buy - the purpose of the test run is part of the buyer confirming the boat is as described - not to find out if he likes the boat.

It may be different if the dealer owns the boat, then he can do what he likes to promote the sale of his own property. Dealers and buyers, particularly of new boats often have different motivations from people buying used boats from other private individuals.

I'm sure its not beyond a good broker to agree terms with sellers to arrange this upfront in order to increase the chances of a sale.
As far as contracts are concerned, I for one would not be happy with a contract that says I must buy any goods after trial unless I can prove the goods are faulty, regardless of whether I like it or not. I want to try things to make sure I have it right in my mind, particularly in the case of big ticket items like boats. I had this with EBY when I was seriously considering a Targa 44. Once out on the boat my wife & I decided a hard top with a big sunroof just wasn't for us, nothing wrong with the boat, just not right for us, had I have signed a contract I would have had a problem. At least EBY have the right attitude in most areas. In business you have to adapt to what the customer wants, not the other way round, in order to be more successful than your competitors. Those that run their business to suit their lifestyle rarely break any records, at best they just about survive.

 

[Nick_H]

the purpose of the test run is part of the buyer confirming the boat is as described - not to find out if he likes the boat.

It may not be for you, but it is for me. The seller can't describe how much the boat slams into a head sea, how noisy it is at the helm at crusing speed, what the view out is like at cruising trim, how much it rolls in a beam sea etc. These are all things you can try to find out on a sea trial, but under the standard contract you're expected to commit to buying the boat before hand.

 

[PaulGooch]

It may not be for you, but it is for me. The seller can't describe how much the boat slams into a head sea, how noisy it is at the helm at crusing speed, what the view out is like at cruising trim, how much it rolls in a beam sea etc. These are all things you can try to find out on a sea trial, but under the standard contract you're expected to commit to buying the boat before hand.

I agree 100% Nick.

I'd never sign a contract or pay a deposit where i could not simply change my mind if i found i didn't like any of the above. I would be happy to pay genuine costs of the trial, such as fuel. Brokers time, tough luck, it's what he gets paid for.

When selling a boat i'd be happy to allow a sea trial, with or without a deposit and the seller paying for fuel. To be honest though, mine uses about 25 litres an hour, so i'm not sure i'd bother about the cost of fuel.

 

[Spi D]

I love the term 'cancel at buyer's sole discretion'.

Mandatory to all contracts until tests, trials and survey ascertain the state of things.

 

[Tranona]

I'm sure its not beyond a good broker to agree terms with sellers to arrange this upfront in order to increase the chances of a sale.
As far as contracts are concerned, I for one would not be happy with a contract that says I must buy any goods after trial unless I can prove the goods are faulty, regardless of whether I like it or not. I want to try things to make sure I have it right in my mind, particularly in the case of big ticket items like boats. I had this with EBY when I was seriously considering a Targa 44. Once out on the boat my wife & I decided a hard top with a big sunroof just wasn't for us, nothing wrong with the boat, just not right for us, had I have signed a contract I would have had a problem. At least EBY have the right attitude in most areas. In business you have to adapt to what the customer wants, not the other way round, in order to be more successful than your competitors. Those that run their business to suit their lifestyle rarely break any records, at best they just about survive.

The broker is there to protect the sellers interest as well as to ensure the buyer has the opportunity to assess whether the boat is what he wants. Of course the seller could give permission for "tests" without a contract, but as many have already commented, in practice this is not a good idea. Experience has shown that obtaining a commitment through signing a contract is better for both parties. It ensures that the seller will not lose anything and that the potential buyer has a commitment that the boat will not be sold to somebody else. You don't have to "prove" that it is faulty to withdraw from the sale. If you talk to brokers you will find that it is very rare for a seller to try to force somebody to buy against his will. Part of the reason for this is that a seller normally only enters into a contract with a serious buyer - and that seriousness is demonstrated by making a commitment.

You also need to recognise that in a private purchase the onus is on the buyer to ensure that the boat is as described before he completes the purchase, so there needs to be time for any tests or inspections the buyer wishes to make before completing the transaction. The contract allows for this while still giving room for re-negotiation.

You talk about "competition" - the seller does not have competitors in a conventional sense. He only has one boat to sell, and cannot offer an alternative if the buyer does not like the boat - unlike a dealer. So a seller is only interested in entering into a contract with somebody who has decided they want the boat. If that excludes people who are not sure, so be it. The only issue then is whether the buyer is satisfied the boat is as described - which is the purpose of the sea trial and survey, as the relationship between the buyer and the seller ceases once the boat changes hands.

A broker does have competitors, but he competes on the quality of service and price he charges - not on the boats he sells, unlike a dealer who makes his money on the boat he owns and may therefore use different methods to promote his business.

If you don't like this way of doing business, don't get involved. It clearly works for many people as thousands of boats change hands each year using this method. Of course, not every transaction is completely trouble free, but understanding the process should minimise difficulties.

 

[rubberduck]

You do it your way, I'll do it mine. I would of thought however that in the current climate a broker / dealer should do anything to give him an edge over his competitors. This is what I have done in my business, listened to what people want & then provide it, we are currently in excess of 80% up on last year. You don't appear to agree, each to their own.

 

[Tranona]

You do it your way, I'll do it mine. I would of thought however that in the current climate a broker / dealer should do anything to give him an edge over his competitors. This is what I have done in my business, listened to what people want & then provide it, we are currently in excess of 80% up on last year. You don't appear to agree, each to their own.

Think you are looking at this in "conventional" business terms. Private sellers are not "in business" - so don't expect them to behave in the same way as a conventional business.

It is, however, different for dealers who are in business and as you have found use different methods. Expect you will find some very accommodating dealers and builders at Southampton next week, keen to shift stock (both new and used) and keep their production lines working.

Just don't confuse that with buying used boats privately where motivations are different.

 

[rubberduck]

My mistake, I thought we were talking about brokers / dealers. Surely most private sellers would have the boat readily accessible, often in the water at a marina, making a test run less of a problem. I was referring to brokers who site the problems of getting the boat in the water etc as reasons for the contract 1st followed by a test drive. I have looked at some boats where this was the case & simply walked away. I ended up buying new instead for peace of mind. There was a nice Sunseeker 47 on the south coast that I would seriously have bought if it had not been for this attitude. Glad I didn't, the Absolute is superb & the perfect combination of size, economy, accommodation & performance. Apart from the fact that the swim platform teak wasn't laid properly & Absolute washing their hands with it because they don't sell in the UK anymore, the boat has been pretty much faultless.

 

[Tranona]

My mistake, I thought we were talking about brokers / dealers.

You seemed to have missed my previous posts which (I thought) clearly explained the difference between BROKERS and DEALERS. They are not the same animals, although an individual person or company can act in either capacity, depending on the ownership of the boat.

If you are buying through a broker, you are buying from an individual private person and the broker is his agent. So the structure of the transaction ius through a contract direct with the owner - the broker is merely his personal agent. All my comments about the nature of the contract and the timing of different stages relate solely to this kind of transaction. You will find that in most cases a contract to buy is required before a test. The assumption is that you have already decided the seller's boat is the one for you. Look at this kind of transaction if you were the seller - would you give somebody else carte blanche to offer anybody a test drive in your boat without your express permission? Of course there may well be circumstances where you as a seller may want to relax this condition - but the starting point is contract first.

If, however, you are buying a boat direct from a dealer who owns (or builds) the boat, he may well behave in a different manner and see giving demonstrations as part of his marketing policy for his business. He owns the boat and can make his own assessment as to whether he wants to do this. Many new boat dealers do this, because they are indeed, unlike a private owner, in competition with other dealers and builders.

Once you understand this difference (and the differences in the law that covers each type of transaction) you will appreciate why the conditions and process are fundamentally different.

Don't get the impression (as some people here seem to) that these processes are anti buyer in a general sense. If they were, nobody would buy and this is clearly not the case. You can tell from many of the comments here that misunderstandings arise from misunderstanding the relationships. A broker is just as keen to sell a boat as a dealer - just in different ways. And some brokers are not very good at it, just as some dealers are bad. So are some buyers and some sellers. But that is because they are people, not because of any fundamental deficiency in the mechanisms.