Money upon closing

[Ducatihottie]

Sorry I need a separate thread to keep track of one thing. What to expect and ask for upon closing.

Again, it's a 1987 CHB 42' Ponderosa Tri-Cabin

After you completed the, Marine Survey, Mechanical and Survey Haulout.... And if you found problems.....


1. What did everyone here get back upon closing, (be the owner fixed it or cash back)? How much did you get back?

2. Was it a huge tug o war? Or is it expected the owner pays for a few "broken" things? I'm not willing to lose the deal over a few hundred, thousands yes.

3. Have you ever walked away from the deal. If yes, about how much $ was it over?

Thank you all again! Brian

 

[PM]

If you are using a broker you should be furnished a pre closing statement detailing where every penny goes, buying or selling.

There really should be no deviation from the statement.

pete

 

[DavidM]

The answer to your question depends on the circumstances and the nature of the buyer, seller and broker. There are no pat answers.

But the general understanding is that when you sign the contract, it is based on the premise that all systems work. They may be old, may be worn, but they are serviceable. The buyer and the seller agree to this when the contract is signed.

But after the survey you may find thousands of dollars of stuff that doesn't work or just as likely the surveyor tells you that you need to spend thousand of dollars to make the boat safe and serviceable which isn't really the same thing. It is the surveyors opinion and not an absolute. I once sold a boat where the surveyor priced everything necessary to bring the boat up to current ABYC standards. No boat ever built meets ALL ABYC standards, not Hinkleys nor MJMs nor Nordhavns. And meeting current ABYC standards is not the definition of serviceable.

So then you negotiate. Sometimes the seller is reasonable and understands that what he thought was a serviceable boat was not and will come to a reasonable agreement. Other times the seller doesn't care, he just wants the contract price and the deal falls apart. You often never know which it will be in advance.

Brokers can play a valuable part in this. I once signed a contract and surveyed and sea trialed a sailboat. The engine excessively vibrated. When we hauled it out it was obvious that the folding prop was bent. So I told the broker that I wanted the prop fixed or a $1,500 price reduction (so I could put on a Maxprop in its place). The broker called up the seller and the seller told him the prop was fine and the broker believed him or at least said he did so I walked away. The seller also cancelled the listing agreement in a huff.

As I was driving back to Newport Beach from San Diego the owner of the brokerage called me on my cell and asked what went wrong with the deal. Turns out he had conversed with the office assistant who told him his broker and the seller were being an ass. The owner offered to put on a new MaxProp at his expense which was going to cost about $3,500.

So I agreed to his offer, bought the boat, put on the MaxProp and enjoyed a beautiful J/32 in SoCal. The brokerage made $10,000 net of the MaxProp which was better than nothing. Buyer and broker made out fine and the seller got more than he deserved.

You never know how a deal will turn out.

David

 

[Bacchus]

A lot depends on how the boats condition was presented.
If As-Is, what you see is what you get that's one thing.
If it was everything is in good working order and nothing broken inoperable that's another story.
During the purchase of our current boat after inspection I noted a list of items not working, significant issues, and the negotiations began. What I found after a lot of discussions and give & take was the owner had s bottom line $# he would take and would not go below that no matter what the item / issue was. We finally agreed on a $ concession beyond the previously agreed $ price that we both could live with.
Some items needed replacement, some I did DIY and the $ covered my out of pocket $ and could live with it. Deal was done!
They are all different and no one right way. In the end both parties have to be comfortable to make a deal

 

[GH41]

What Brian doesn't want to hear is that a survey with no exceptions doesn't mean he won't have to spend 40 grand on the boat next week. It only notes whether or not a system works as expected considering the system is 33 years old. It's not like a certified preowned warranty on a 2 year old BMW. Most sellers will give up what it takes for the new owner to get the boat safely away from the dock. Beyond that it is a crap shoot.

 

[Airstream345]

A survey should include a current market value based on the condition of the vessel under agreement compared to recent comps from the same model/condition. In some cases you may also get a value if everything on the survey remediation list was complete (basically everything fixed).

You don't need to share this data with the selling broker or the seller - however it can be valuable to share if after the survey you're agreement price and the survey value are really far apart.

For a real world example, our first trawler was listed at $115K (a 1980 Bluewater, 40' Pilot House). It was priced based on a recent sale of the same model from the same broker. We offered $90K (78% of list) as the boat was mechanically in great shape but we knew the decks and a few other areas needed attention. The sellers were relocating and motivated so they accepted.

We went to survey and found more deferred maintenance and established a survey value of $73K.

Rather than ask for repairs we shared the survey and renegotiated at survey value (now at 63% of asking) and they accepted. We took delivery and enjoyed that boat for three years, fixed everything and recently sold it for $60K. (Yes, we bought it for $73K, put another $15K into it and sold it three years later for $60K. Welcome to boating!)

You also need to consider what your "walk away" threshold is for final negotiations.

Our current vessel was overpriced for years, sat on the market for a very long time, had a lot of deferred maintenance, etc but we didn't negotiate nearly as much of a percentage off asking for a few reasons:

1. This vessel's capabilities were exactly what we wanted
2. They only made 8 Kadey Krogen 54s and they rarely come up for sale
3. Historical sales data shows they aren't losing value and haven't been for years (condition vs age)
4. The survey value was above our initial offer
5. The seller didn't really want to sell (which was a huge thing to overcome in finalizing the sale)

So in this case, despite the long survey list leveraging a deeper discount, we weren't nearly as aggressive with the final negotiations (we landed at 78% of asking) because we knew blowing up the deal would mean another year or more to find the right vessel and we wanted to sell the house, get on with this lifestyle change, etc.

 

[Airstream345]

I should add...you typically won't close until you accept the vessel after a sea trial and survey. This is the time to re-negotiate or walk away.

The closing itself is simple: money has transferred, there aren't any liens on the boat, the taxes have been paid, commissions have been paid, licensing is complete, etc.

Here in Seattle most brokers us Pacific Maritime for this and they are excellent.

 

[BandB]

Think of your offer and acceptance as an option to purchase. it gives you the right to purchase at the agreed price by accepting after the survey. Or you have the option to not accept or counter.

You need to weigh several factors including having more in the boat than you wish due to deficiencies and including losing the boat altogether because you demand too much.

Here are the things that can happen.

1. You agree to make the purchase as is at the contract price. I think you should have a figure in mind going in of what you'll just let go and say, "it's minor, I'm fine."

2. Issues are found, you make a new offer which involves either a price reduction or repair. Seller agrees and sale happens after repair or based on adjusted price. Sometimes repair even requires a resurvey.

3. Issues are found, you and seller can't reach agreement. You get your deposit back and move on.

4. You decide the issues are too great for you to have any interest and walk away without further negotiation.

Understand that once you say no to the original deal then all bets are off. Some sellers may be very willing to negotiate but others may believe it's worth the original price, you're trying to take advantage, they have other buyers, or there's nothing wrong beyond normal expectatations for a boat that age and at that price.

I know buyers who prefer shopping to buying and walk away from deal after deal over minor amounts. I've seen $2 million deals fail to close over $25,000. Other buyers don't want to put the deal at risk, know it's still a good deal, would rather make their own repairs so accept a certain amount of issues.

 

[Datenight]

As mentioned in the previous thread we waked away from a boat due to survey. It was an 8 year old Mainship 390 with only 48 (red flag) hours on the cat engine. The owners wife took ill and the boat became a summer cottage.

The boat was on land so that part of the survey went first. If it passed we were going to take it from Mystic, CT to our dock so I painted the bottom on my own dime as we fully expected to buy the boat. Land part went well.

On sea trial the turbo would not kick in. No big deal I thought given the hours. However when we got back to the dock water started dripping out of the cockpit overhead. The owner had screwed cooler mounting feet to the fly bridge and not sealed the holes. Large part of the fly bridge was saturated. Freeze thaw cycles had worked their magic leaving cracks in the overhead.

This was a much bigger concern than the turbo. The owner was not willing to budge on the price or do the repairs. We walked. One day labor and about $150.00 in bottom paint. Surveyor gave me a discount that more than covered the paint. I still think it was some of the best money I ever spent.

Rob

Rob

 

[Ducatihottie]

I do have a broker. Robert Fiala.

A few more things.

The boat is listed higher than boats in this "CHB" year and length. The boat has a general appearance of a "turn key" as the price reflects.

I discovered 4 windows that will not open upon my inspection.

My broker Robert Fiala said, "that will be taken care of in the survey". As if I should not worry as problems will be taken care of?

Should I be worried about this answer or perhaps he knows the owner will negotiate?

 

[BandB]

I do have a broker. Robert Fiala.

A few more things.

The boat is listed higher than boats in this "CHB" year and length. The boat has a general appearance of a "turn key" as the price reflects.

I discovered 4 windows that will not open upon my inspection.

My broker Robert Fiala said, "that will be taken care of in the survey". As if I should not worry as problems will be taken care of?

Should I be worried about this answer or perhaps he knows the owner will negotiate?

I think what he's really saying is there may be other issues in the survey plus this one and then that will be the time to ask for compensation or repair. No point negotiating on those windows by themselves.

 

[Ducatihottie]

Should I assume he knows that the owner is willing to make repairs or compensate me, (windows have to be fixed). This before I spend thousands on the survey, engine and pull out?

 

[BruceK]

It`s a reasonable assumption the owner will repair or negotiate to keep the sale alive but that`s all, an assumption. He`s your broker, not the seller`s, who might know.
You are under contract, without seeing it you don`t have much alternative than to perform survey and then decide to walk or negotiate. Whether negotiation is pleasant and polite or a fist fight is partly in your hands, you can be assertive and persistent but courteous and pleasant at the same time.
Most owners are a little embarrassed at previously unknown defects which they learn about post survey, and will make amends. Wait and see. Hold the anxiety. Don`t jump at shadows. Am I detecting some buyers remorse? On balance it`s likely to work itself out if you let the process run its course.

 

[Ducatihottie]

Thanks. Not buyer's remorse. Just new buyer. If I was selling my boat I'd feel embarrassed to upon problems I didn't fix.

When you day he's my broker. Aren't the brokers working for the seller?

 

[ranger58sb]

Not entirely on point, but maybe close...

Were it me, I'd prefer to do (or have done) some repairs myself after purchase. Negotiate a likely discount, proceed. Especially true when a needed repair is well-diagnosed...

And then when problems are less easily pinpointed, when diagnosis isn't easy or complete or when many factors could be the "cause" of the problem but it's not obvious which of those factors might be at play currently... seems better to require the seller to fix all that first.

-Chris

 

[tiltrider1]

Thanks. Not buyer's remorse. Just new buyer. If I was selling my boat I'd feel embarrassed to upon problems I didn't fix.

When you day he's my broker. Aren't the brokers working for the seller?

If Robert is the listing broker for the boat then he is the sellers broker. If you engaged Robert to find you a boat then he is the buyer’s broker. If you engaged Robert to find you a boat and he shows you a boat that he has listed then he is the seller’s broker and not trust worthy. Now if he just happens to have the perfect boat listed and asks you if you would like to be handed off to a different broker in his office for this opportunity then he should be trustworthy.

 

[smitty477]

I do have a broker. Robert Fiala.

A few more things.

The boat is listed higher than boats in this "CHB" year and length. The boat has a general appearance of a "turn key" as the price reflects.

I discovered 4 windows that will not open upon my inspection.

My broker Robert Fiala said, "that will be taken care of in the survey". As if I should not worry as problems will be taken care of?

Should I be worried about this answer or perhaps he knows the owner will negotiate?

"The boat is listed higher than boats in this "CHB" year and length. The boat has a general appearance of a "turn key" as the price reflects."
Does the advertising or the communications with the owner or broker say that all the boat systems are in 'turn key' condition?

"I discovered 4 windows that will not open upon my inspection."
I would ask the owner or the broker who will be fixing these before spending any money and get a clear answer in writing unless they are not important to you. Similar with any other conditions on the boat.

"My broker Robert Fiala said, "that will be taken care of in the survey". As if I should not worry as problems will be taken care of?"
This is unclear and has no value either way in your transaction.

"Should I be worried about this answer or perhaps he knows the owner will negotiate?"
Based on your inputs here you have no indication who may or may not fix this. If this worries you then you would need to secure a clear response.

 

[smitty477]

Should I assume he knows that the owner is willing to make repairs or compensate me, (windows have to be fixed). This before I spend thousands on the survey, engine and pull out?

No - there is never a reason to assume anything in a sale of any sorts.

 

[BandB]

Thanks. Not buyer's remorse. Just new buyer. If I was selling my boat I'd feel embarrassed to upon problems I didn't fix.

When you day he's my broker. Aren't the brokers working for the seller?

The majority of deals don't close. Nothing wrong with that. The best deals in your life are often the ones not made. However, you can't nickel and dime yourself out of deals. If you closed today and those windows were the only problem, then so what and if you're making them into a big deal that's your problem. You'll get a list of issues and must determine those truly important to you. I'm not sure the surveyor will catch the windows but what I hope they catch is the water in the hull and the shafts that need replacing and the engine about to need a rebuild and the generator that's dead and needs to be buried.

You're buying a boat. You're about to start spending big dollars. Notice I said "start spending" because it's a lifetime path of spending. I'm worried a bit about your preparation and ability to handle that as you're worried about the windows and about the cost of surveying all the same day. I hope you know that even after the best surveyors you'll find more things that cost you. I hope you consider paying for a survey that keeps you from a mistake is a worthwhile insurance policy.

I know you're nervous with this being your first boat, but you must be comfortable with the fact you'll pay for surveys of boats you don't buy and you'll have expenses after the purchase. The surveyors don't have the luxury of using the boat for a year and during that first year other things will happen. And during the second year, more.

I'm not saying that wanting to spend reasonable amounts or catching the windows isn't important, just that you need to be sure you have perspective of what is ahead.

 

[Ducatihottie]

Thanks BandB.

Others: My broker Robert Fiala he is the boat owners broker and he is using Pacific Maritime.

My surveyor is Cale Mather's

Some say take the money and save by doing my own repairs. While I plan to learn simple repairs, simple engine maintenance and staining wod, buffing and polishing items:
I won't be able to to most items, (clueless with tools).

 

[Ducatihottie]

No, the advertising does NOT say Turn Key. I dropped the ball when I said that. The add wasn't complete including photos when I stepped in and made an offer.

 

[smitty477]

No, the advertising does NOT say Turn Key. I dropped the ball when I said that. The add wasn't complete including photos when I stepped in and made an offer.

There is nothing in this add that I can see that says that anything is in any kind of shape or condition at all (pro or con).
So if you want to know about any or all of the systems, soft goods, structure, history, machinery etc you will need to ask in writing in order to get an answer.
If not then your surveyor will be asking similar questions upon his arrival at the boat if you assign him that task.
The answer(s) to any of the questions may or may not be what you had in mind there is no way to tell.

 

[syjos]

This is where a boat buyers consultant would separate fact from BS, what's customary vs unusual in the transaction. Since he is not working on commission, the consultant will negotiate the best price for you.

Boat brokers are negotiating deals every day. A boat buyer, a few in a lifetime.

Who has the advantage?

 

[syjos]

If the seller or his broker are in denial or unwilling to address the issues and the issues are more than a couple thousand dollars, walk. If after you walk and you still like the boat, come back and make a new offer. You are at a better negotiating position by getting your deposit back and starting over. Be prepared to lose the boat. If you gotta' have it then you are at their mercy. It's a buyers market for older trawlers and there should be no reason to not to gain an advantage with sellers.

If it less than a couple thousand, have them fix it before closing. If they reduce the price for that repair and additional issues with that repair surfaces, you are out of luck after closing.

When we bought Sandpiper, the surveyor found a lot of soft spots around windows, rot in the portugese bridge and soft spots on the roofs. Way more than anticipated.

The owner was the original owner and had owned the boat for 24 years and in denial of the boats current condition. He was selling his boat because he had dementia, had not used the boat for 18 months and his family wanted the boat gone. He was 86.

He told the surveyor, Matt Harris that there was nothing wrong with the boat and obviously was an incompetent surveyor. Matt Harris is a renowned surveyor of Chinese boats in the PNW and has been featured in a Passagemaker article back in the 90's. We decided to walk because of the number of issues and figured the owner would be difficult and not budge. We got our deposit back.

The owners attorney contacted us and said the owners family wanted the boat sold. He asked us to get three estimates for repair. The boat was in Port Townsend and 3 estimates came in at $56K, $62K and 65K. We were still on the fence leaning towards walking since the owner was being difficult and the number of issues were daunting.

The family left it up to the attorney to work things out. Without any negotiating on my part, the attorney offered to drop the sale price by $65, the highest bid to cover repair. He offered us another $10K reduction in price to compensate us for the time we spent on the deal - 4 months, and for any hidden issues that I might run into later.

We bought Sandpiper for $65K. We fixed the mechanical must do's from the survey in 6 months and went cruising for the summer. We cruised Sandpiper for 8 years before tackling the rot repair.

Since purchase, the portugese bridge, boat deck roof and pilothouse roof have been replaced. I do my own work so the cost of materials totaled less than $10,000. But the portugese bridge took 2 years to complete, the boat deck 1 year and the pilothouse roof 1.5 years. And a bunch of small areas that needed rotten wood repaired was ongoing for a few years.

I work on the boat October to May every year and cruise every summer. We spent many summers in the Broughtons with epoxy coated unfinished projects visible on the boat. We looked like the Clampetts.

Sellers and their broker will be firm if they know you are a new boater, want the boat and have invested in a survey, haul out etc. They will dismiss the issues or make them less to try to get top dollar.

 

[Airstream345]

Great advice from Syjos above. I’ve been on Sandpiper and he’s given me lots of advice when we owned the same model boat.

At the end of the day you need to determine your threshold for the risk vs reward inherent in boat ownership.

Easier when you’re a DIYer, less so at $120/hr. Let the survey do it’s job and be prepared to walk. If all goes well you can reset the price and get things resolved. Personally I’d rather take the discount based on estimates and hire out the repairs ensuring it’s done properly.

Finally, windows that won’t open speaks to structural concerns or possibly just gunked up window slides. Surveyors will determine the cause.

 

[Ducatihottie]

Syjos it would be fun to meet some time after purchase, My boats in Fisherman's Terminal.

I wished I got Matt Harris for his specialty in CHBs. But I went with a friend and RN that used cale Mathers twice. It also happened to be the person the broker picked.

Is it ok to have a surveyor picked by the broker?

It sounds like you spent a lot after purchasing the boat. Were you able to include repairs in your financing? Is that possible?

 

[BruceK]

In broad terms it`s better not to have the surveyor the broker wants, unless he`s your broker. But often the pool of surveyors is small, everyone knows everyone,options are limited. I accidentally used the principal of a mechanical business whose employed staff were doing work on the boat, he`d never been on it, and I`m sure it was a good survey job, though I rejected the boat on non mechanical issues.
I believe you are overthinking the survey/what if/ etc issue. Get the survey done, take it from there in conjunction with your broker advisor. Be aware if his fee is coming from the seller via the sellers broker.
Subject to contract you can always walk if the survey or the sellers response to "adjusting" price doesn`t meet expectations. Take it step by step, it`s only as one step is taken the next one can be considered.
Try to keep emotion out of it. I rejected one boat, and pre survey was 50/50 on the next whether I would proceed. I had to see and survey the hull to know whether it was worth buying, because of specific hull concerns. It depends on you and how you approach things, if you are a worrier it will be more difficult but step by step is better than lots of "what ifs". Wait until "if" becomes reality, or dissipates as a non issue.

 

[Ducatihottie]

As you can tell, the excitement has gotten the best of me.

 

[Comodave]

I would prefer not to use the selling brokers surveyor. Not saying the surveyor isn’t honest but you never know. He/she may be a great surveyor but the selling broker may recommend him because he doesn’t kill deals, in other words the surveyor doesn’t write up much of anything. Now the recommended surveyor might be the best one there is, you just don’t know. Ask around the marinas about who is recommended. The Matt Harris referred to above does have a great reputation, I also read the PMM article about him.

 

[Ducatihottie]

Thanks. There you go again. Till you explained, I thought "PM" meant "Puppy Meat". Now I'm clueless what "PMM" means?