Offer Before Seeing a Boat or After

[Uisce Beo]

I am actively looking for a somewhat unique boat. I'm located in the UK and the two boats I have an interest in are in the Caribbean and Italy. I've contacted both brokers and both are suggesting I should see the boat in person before making an offer. I would prefer to get the offer accepted, in principle at least, before incurring substantial travel expenses and time.
Now I know from a sales strategy standpoint that the more time and effort I expend pre-offer, the more I'm "invested" in getting the sale to complete. All to their advantage. However, I think I'd just be wasting my time and money if I can't be reasonably sure that there is a deal to be made on my terms. The brokers both say, more or less, that the buyer will take my offer more seriously if I've seen the boat in person. For a bit of perspective, both boats are in the $750,000 range.
I'd be interested to know your opinions, suggestions and experiences.

 

[RT Firefly]

Greetings,
Mr. U. I would think the brokers should be open to some sort of "Zoom" (live) tour to potentially assuage some of your concerns. Might that work for you?

 

[Jklotz]

This one is tricky. I was interested in a boat in S. Florida. Spoke to the builder, who I had been in contact with for some time, and told him I was seriously interested but needed to see the boat before making an offer. He agreed, set up a time and I booked the trip for my wife and myself. A couple of days before we were supposed to leave, guy emails me to tell me the boat had sold. I got really mad about that one and lost a bit of money in nonrefundable travel fees. It soured a relationship with the builder, who I'd been in contact with over a year.

After that experience, I came to realize I needed somebody working for my side of the deal, so I engaged the help of a buyers broker. A couple of months ago, that culminated in the smooth closing of our boat, Carol Ann.

I don't know how it works in the UK, but my 1st recommendation would be to find a buyers broker. If it's the same over there as it is here, the commission that is paid is split between the brokers, so it doesn't change your cost. It really helps to have somebody who is working in your interest involved with the deal. That being said, the down side is some selling brokers will favor buyers who won't require their commission to be split, giving favorable treatment to buyers who don't have a broker. Trade off.

That being said, I'd not want to book an international trip without having an offer in place or a written guarantee that the boat will actually be there. Also, if you could find a respected marine surveyor, it might be worth paying them to do an initial cursory inspection of the boat before committing to the trip. I think some will do that, but I've only heard 2nd hand. Would be worth looking into.

 

[Uisce Beo]

An initial survey sounds good but I'd still be reluctant to spend money without a deal in place.

 

[mvweebles]

My, how the market has changed. Wasn't that long ago that brokers were recommending an offer unseen to secure the boat. Or maybe there are gotchas that the broker thinks you should see first.

Ask for the most recent survey and receipts for any repairs. Given the distance involved, seller should be willing to provide. I realize surveyors are a snapshot in time and not every surveyor is thorough, but it doesn't hurt to ask.

Within the last 10-days or so, @Judy at JWY posted to a thread on offer negotiation and strategy. She's a long time trawler broker and gave a handful of really good questions to ask. Apologies for not finding the thread but it was a worthwhile list.

@Jklotz shared his purchase experience on TF. Tough line to walk - making an offer before a trip. When we were looking for condos in Mexico, we made several last minute trips to see a property that popped up. Same when we were originally looking in Florida in 2005 when the market was white hot. You just may have to bite the bullet and make a short notice trip, especially since your price point would support the due diligence.

Good luck.

Peter

 

[mvweebles]

An initial survey sounds good but I'd still be reluctant to spend money without a deal in place.

Devils advocate here. Fully understand about not wanting to spend the money. But making a sight unseen offer that will be accepted is very likely to be a high offer. So your savings will be silently swept away. There's an argument you'll pay more than you would have.

Honestly, given your price point of $750k, I don't understand the reluctance to spend a couple grand on a trip. I don't mean to be flippant about money, but you're about to spend a lot of money on a depreciating asset that is expensive to keep.....and a rare bird to boot. If you're not willing to make the trip, are you sure you're playing in the right league?

Peter

 

[Jklotz]

An initial survey sounds good but I'd still be reluctant to spend money without a deal in place.

Yea, I get it. I wouldn't travel again specifically to see a boat to buy without an offer in place. If you do, you're rolling the dice. Then again, you mentioned you were after a "somewhat unique boat", and those seem to take longer to sell, so maybe your chances would be better?

 

[Uisce Beo]

Devils advocate here. Fully understand about not wanting to spend the money. But making a sight unseen offer that will be accepted is very likely to be a high offer. So your savings will be silently swept away. There's an argument you'll pay more than you would have.

Honestly, given your price point of $750k, I don't understand the reluctance to spend a couple grand on a trip. I don't mean to be flippant about money, but you're about to spend a lot of money on a depreciating asset that is expensive to keep.....and a rare bird to boot. If you're not willing to make the trip, are you sure you're playing in the right league?

Peter

But that begs the question of how many trips would you be willing to take to look at a boat without any certainty that your offer would be accepted? Two? Ten? More? At some point it simply becomes a waste of time and money - no?

 

[Uisce Beo]

My, how the market has changed. Wasn't that long ago that brokers were recommending an offer unseen to secure the boat. Or maybe there are gotchas that the broker thinks you should see first.

Ask for the most recent survey and receipts for any repairs. Given the distance involved, seller should be willing to provide. I realize surveyors are a snapshot in time and not every surveyor is thorough, but it doesn't hurt to ask.

Within the last 10-days or so, @Judy at JWY posted to a thread on offer negotiation and strategy. She's a long time trawler broker and gave a handful of really good questions to ask. Apologies for not finding the thread but it was a worthwhile list.

@Jklotz shared his purchase experience on TF. Tough line to walk - making an offer before a trip. When we were looking for condos in Mexico, we made several last minute trips to see a property that popped up. Same when we were originally looking in Florida in 2005 when the market was white hot. You just may have to bite the bullet and make a short notice trip, especially since your price point would support the due diligence.

Good luck.

Peter

Thanks. I'll see if I can find that thread.

 

[Don L]

If I was a seller the only way I would accept a sight unseen offer is
1- I had a way to void and accept another before you came and saw the boat
2- I had been trying to sell a long time

But I think people waste too much time looking at boats. When I got my first I looked at 4 in person because I already knew what was available and had looked at them online. I did made an offer on 1 that the seller dug his feet on so I got a different one. The looking at the the 4 took 4 days. My last boat I only looked at it.

 

[tiltrider1]

If the cost of an airplane ticket is stopping you from looking at a $750,000 boat, you might be in over your head. I spent thousands of dollars in travel costs looking for my current boat. I knew it was just part of the total cost of a boat. Just like surveys and rejections are part of the total cost.

On the other hand, simply tell the broker you won’t invest your time in a boat that isn’t under contract. They won’t refuse an offer but you might not like their terms.

 

[Bacchus]

You didn't say whether your trip will allow looking at both or individual trips for each.
If separate... I'd suggest maybe working on your first choice and see if seller/ broker will hold boat and not sell it out from under you while you make arrangements to get there. If that's their recommended path go look and be prepared to make an offer / negotiate while onsite.

If negotiations don't seem to be working hold comes off and you play the other card that you will look at another boat before continuing negotiations.

Try to get the same agreement to hold & view the second boat.

 

[mvweebles]

If I was a seller the only way I would accept a sight unseen offer is
1- I had a way to void and accept another before you came and saw the boat
2- I had been trying to sell a long time

But I think people waste too much time looking at boats. When I got my first I looked at 4 in person because I already knew what was available and had looked at them online. I did made an offer on 1 that the seller dug his feet on so I got a different one. The looking at the the 4 took 4 days. My last boat I only looked at it.

I sorta agree that people over-think boat selection. But you come from a cruising perspective - the boat is a means to an end. I think online forums really focus on the boat and not about the use case.

 

[ksanders]

On the other hand, you really get a feel for the layout when you see the boat in person.

The experience of setting foot on the boat is invaluable wether you buy that particular boat or not.

It's far from a waste of time and money.

 

[ksanders]

But that begs the question of how many trips would you be willing to take to look at a boat without any certainty that your offer would be accepted? Two? Ten? More? At some point it simply becomes a waste of time and money - no?

Why do you think your offer won't get accepted?

Are you trying to lowball your way into a boat, or are you planning on making what I will call reasonable offers?

Maybe our ideas about buying a boat are different.

I decide on what I want in the "looking" stage.
Then I focus on a single model and choose the best asking price Vs condition of the boat.

I do not go see boats where I feel like I need to low ball the boat in order to make it fit for me.

 

[ksanders]

I sorta agree that people over-think boat selection. But you come from a cruising perspective - the boat is a means to an end. I think online forums really focus on the boat and not about the use case.

Correct!!!

It's very easy for folks to loose sight of their goals of cruising, and cruising is why folks want a trawler in the first place.

I get to laugh a bit because Vicky and I are cruising in our Bayliner, while we know for a fact that some other folks in our same economic class are working late in life to pay for a "better" boat.

At the marinas at least in Southern California we are an anomoly, because we are actually doing it, while folks we meet are hoping to lead our life someday.

 

[ranger58sb]

I am actively looking for a somewhat unique boat. I'm located in the UK and the two boats I have an interest in are in the Caribbean and Italy.

Are you still intending to use the (eventual) boat in the PNW?

-Chris

 

[DDW]

From the seller's perspective, if he accepts an offer and freezes the market, he may have to turn down someone with cash the next day, waiting for you to show up and actually look at it. So the offer needs to have some credibility, which will be hard to show long distance. All the risk is his, since your offer will contingent on inspection, surely.

I have bought boats and machinery long distance, and it has been a crap shoot. You will see a glowing description and glamor photos, and arrive to find something worn out and beaten. Or not. Not necessarily dishonest, but people differ in their definitions and descriptions of condition. And there is a whole lot that does not show in photos, even without the intent to conceal. I've always travelled with the knowledge that the thing might sell, but I have been adamant that they phone me if that happens, up to the moment I board the plane.

I think what I would try to do is engage an agent - doesn't have to be a broker, but helpful if they know something about boats - to go look at the boat while you are on a video call. This allows you to direct them in real time: "look in that locker to your left, what is that thing on the right, go closer" type of thing. You will get a little better idea of the accommodation space (per ksanders comment) and perhaps a lot better idea of the true condition. You are paying this person by the hour, not coming out of the seller's broker fee. Three hours at $100 per will seem very cheap whether you buy the boat or not. In an hour or two video call you can examine a boat in some detail.

Finding the agent from afar will be a challenge, but if you look for boat technicians or mechanics locally, talk to a few on the phone, I'll bet you can find one to trust.

 

[SteveK]

Right of first refusal. How much are you willing to pay non refundable but part of purchase price to give you chance to get there and decide. If another offer is accepted then you buy at that price or lose the deposit.
The seller needs more than a conditional offer to hold for you.

 

[mvweebles]

Thanks. I'll see if I can find that thread.

Advice on negotiating with a broker

I am thinking about putting an offer in on a yacht in the $1-2mm range. Looking for some negotiating advice. Been tracking sales and have access to BUC Value, so I feel like I have a pretty good feel for the fair market value of the boat I am looking to place an offer on. I'm just curious the...

www.trawlerforum.com

#9 in the thread. Pretty good input.

Peter

 

[mvweebles]

But that begs the question of how many trips would you be willing to take to look at a boat without any certainty that your offer would be accepted? Two? Ten? More? At some point it simply becomes a waste of time and money - no?

How many trips? You've described that you're looking for a unicorn boat. #1 might be love at first sight, or you might have to kiss a lot of frogs. No telling how many it might take. Maybe consider a high volume production boat.

I honestly don't know how you get the certainty you're looking for without giving away a ton of negotiating leverage. As a seller, I'm not going to say "sure I'll hold it for your arrival. Interest has been flat so no chance of it being sold anyway." Or if you did put down $75k (10% of $750k), I'd say "now here's a buyer who didn't get the memo that the Covid market has shifted....." Get the best info you can ahead of time, then get your butt down to see the boat ASAP.

PS - I've never heard of "Right of First Refusal" working well. First, seller wants a deposit - normally pretty steep one. Second, requires the seller to disclose the terms of a sale ---- and disclose the "first refusal" to another buyer. Think about what you'd say to a seller who disclosed "By the way, just know that whatever offer you make, I have to shop it to another guy before I can accept."

Peter

 

[luna]

Right of first refusal. How much are you willing to pay non refundable but part of purchase price to give you chance to get there and decide. If another offer is accepted then you buy at that price or lose the deposit.
The seller needs more than a conditional offer to hold for you.

Aren't all the standard Vessel Purchase and Sale Agreements conditional upon a whole bunch of things (Survey, Financing, Moorage, Aunt Betty, etc.) and contain clauses that will allow return of any deposit if the purchaser has penned the subjects correctly?

Why would that change just because the Purchaser has not gotten up close and personal with the boat yet?

Isn't the boat (or house) held until either the subjects are removed or the time runs out?

The Seller can limit the time the boat is tied up awaiting inspection by adding in a clause that states that if the purchaser has not completed the inspection within x days, the agreement is void. Deposit gets returned.

 

[DDW]

The seller might reasonably surmise that the likelihood of a boat that has never been seen by the buyer has a much higher chance of being rejected on inspection than average. So if I were the seller I'd make the "x days" about 4. Of course if on the market for many months, decision making changes.

 

[Diep]

I'll echo some of the above.

If a buyer has seen the boat, the seller has a reasonable expectation that the offer price is based on the observable condition on a walk through. As a seller I would be less likely to accept an offer close to the bottom of my range in a sight-unseen deal for fear that the personal inspection could either kill the deal or result in a bunch of attempted adjustments.

I would also be concerned about locking the boat up on a long time line to close. Your offer is going to have acceptance dates pushed out to afford time to travel for the personal inspection, then time to schedule and perform surveys afterward.

I would plan to travel to the boat and be prepared to write an offer very quickly afterward if it passes muster. Like same or next day. I would schedule the trip and then a day or 2 before getting on the plane I would press the broker. Is the boat still available? Are there any offers received and under consideration? Are any offers expected within the next few days or week? I would then confirm with the broker that the trip is on. I would ask that if any offers happen to be received that they wait to consider/accept until after your walk though so that you have a chance to compete. They will see your serious interest and likely not sell it out from under you.

 

[Nick F]

. . . if you could find a respected marine surveyor, it might be worth paying them to do an initial cursory inspection of the boat before committing to the trip.

This is what I have done and would do again.

 

[SteveK]

@mvweebles

PS - I've never heard of "Right of First Refusal" working well. First, seller wants a deposit - normally pretty steep one. Second, requires the seller to disclose the terms of a sale ---- and disclose the "first refusal" to another buyer.

The seller keeps the agreed deposit. The seller discloses a previous offer in place to second accepted offer and triggers 1st offer to take it or leave it. The second offer can be for less or more, the 1st buyer buys at agreed price, not 2nd offer price.
In a previous life I made commissions writing land assembly offers, one year timeline expires and seller keeps the hefty deposit if buyer did not complete. I got commission written right, part of the deposit.
The seller accepting such offer may or may not get more than one offer, bird in hand. I suggest this as it shows earnest by the buyer and prevents a sale before a timely viewing can be arranged when travel is involved.

Has anyone wondered why a sale is made when an out of town buyer asks to hold it I am on my way? A broker almost always has a possible buyer sitting on the fence.

 

[SteveK]

@luna
If a buyer looks at the boat and then makes a deposit and contract subject to certain things, yes the money is returned. I often wondered why bother taking a deposit. But that buyer looked.
The way most boats are bought is, this is what I will pay if nothing else is found, otherwise we can renegotiate.
Any real estate conditional offers I wrote included a clause should a 2nd offer be accepted that 1st buyer has x number of days to remove subjects or deposit returned sale goes to 2nd buyer. In a sense they were all first right of refusal. If I were a boat broker that is how I would write it.

 

[mvweebles]

@mvweebles

The seller keeps the agreed deposit. The seller discloses a previous offer in place to second accepted offer and triggers 1st offer to take it or leave it. The second offer can be for less or more, the 1st buyer buys at agreed price, not 2nd offer price.
In a previous life I made commissions writing land assembly offers, one year timeline expires and seller keeps the hefty deposit if buyer did not complete. I got commission written right, part of the deposit.
The seller accepting such offer may or may not get more than one offer, bird in hand. I suggest this as it shows earnest by the buyer and prevents a sale before a timely viewing can be arranged when travel is involved.

Has anyone wondered why a sale is made when an out of town buyer asks to hold it I am on my way? A broker almost always has a possible buyer sitting on the fence.

Commercial real estate has a history of buyers trying to assemble funding or waiting on development approvals or such so I could see where right of refusal night work. Still, few buyers would knowingly walk into a threesome with a #2 offer that likely triggers a bidding war. My reaction would be "sounds like you have unfinished business. When you're single, give me a call." If that call ever came, my offer would have a healthy discount. I'd also be a bit nervous dealing with a seller who'd disclose an offer to another party. Might work in some industries but I think the concept is fraught once the details are contemplated.

The OP seeks to increase his certainty prior to expending a lot of blood and treasure. Nothing wrong with that. He can minimize the risk but cannot make it zero without a hefty deposit (might get away with 5%) which happens to be refundable but diminishes his negotiation posture. So no free lunch there either.

Falling in love is never cheap. Long distance relationships can be especially expensive. The OP has been smitten and has to decide whether he wants to undertake the challenges. He's very lucky he has two boats from which to chose - sounds like he has a fulcrum of leverage, albeit a small one. Discreetly disclosing to a broker that you're off to see #Next in Greece (wherever) shows you're a very serious unicorn shopper. Presented respectfully, the leverage might more than cover his travel costs.

Peter

 

[Mako]

Devils advocate here. Fully understand about not wanting to spend the money. But making a sight unseen offer that will be accepted is very likely to be a high offer. So your savings will be silently swept away. There's an argument you'll pay more than you would have.

Thinking back, I have NEVER seen a used boat in person which looked better than the photos. Unless you're going practically new, there will be deficiencies and you'll negotiate it down. That said, if you have a contract in place first then there is the opportunity to negotiate the price down, especially after the survey/sea trials. By that point, the seller is all excited to have a buyer in hand (becoming rarer these days) and would be willing to eat some costs.

I have had offers accepted, in writing, but during the 5-day period in which a deposit was due, I would travel down to see the boat. No harm, no foul.

 

[slowgoesit]

Commercial real estate has a history of buyers trying to assemble funding or waiting on development approvals or such so I could see where right of refusal night work. Still, few buyers would knowingly walk into a threesome with a #2 offer that likely triggers a bidding war. My reaction would be "sounds like you have unfinished business. When you're single, give me a call." If that call ever came, my offer would have a healthy discount. I'd also be a bit nervous dealing with a seller who'd disclose an offer to another party. Might work in some industries but I think the concept is fraught once the details are contemplated.

The OP seeks to increase his certainty prior to expending a lot of blood and treasure. Nothing wrong with that. He can minimize the risk but cannot make it zero without a hefty deposit (might get away with 5%) which happens to be refundable but diminishes his negotiation posture. So no free lunch there either.

Falling in love is never cheap. Long distance relationships can be especially expensive. The OP has been smitten and has to decide whether he wants to undertake the challenges. He's very lucky he has two boats from which to chose - sounds like he has a fulcrum of leverage, albeit a small one. Discreetly disclosing to a broker that you're off to see #Next in Greece (wherever) shows you're a very serious unicorn shopper. Presented respectfully, the leverage might more than cover his travel costs.

Peter

Excellent points Peter! In the first case, broker statements like "we have two other parties interested, better make an offer fast!" I assume to be cheesy doublespeak for "Will someone, Anyone, PLEASE make an offer on this boat!"
Either way, I agree, step back until those "Parties" evaporate. Of course, it is possible that the parties really exist, but I've seldom been so in love with a boat/airplane/car, that I'm willing to get into a bidding war as Peter mentions.

The other point (second highlight) that I'd really like to touch on is you have a minimum of three parties involved when you consider:

1. buyer (in the UK)
2. seller (who knows where, but boat is in Caribbean, or Italy)
3. broker (from who knows where).
4. Also possibly an 4) Escrow agent.

Any offer will fall under the rules/laws of a country other than the buyer's. I'd be really hesitant to give $$ to a broker (who hopefully really IS an actual broker) in another country, before even laying eyes on the actual boat.

If you fly out there, walk through the boat, and say it's an instant dog, engines won't start, boat smells of mold, interior is shabby, etc, even in such a clear cut case, are you going to get your deposit back without hiring an attorney? In another country? I'd go look at the boat initially before dropping $$ in another country, but that's just me.

Heck, take the wife, and call it a mini-vacation!

Best of luck in whatever you decide!