I meant to say that in your mind you were making an offer. To the broker, you were not making an offer, but having a discussion about one. Different perspectives on the same actions and words. That's the real problem with verbal is we hear it differently, what one of us is saying is interpreted by the other and heard differently. Not like when it's in black and white.
Boat offers and the negotiation process
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I meant to say that in your mind you were making an offer. To the broker, you were not making an offer, but having a discussion about one. Different perspectives on the same actions and words. That's the real problem with verbal is we hear it differently, what one of us is saying is interpreted by the other and heard differently. Not like when it's in black and white.
BruceK
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Unless US law differs from elsewhere, an offer need not be in writing. As your second paragraph implicitly confirms.It may better from an evidentiary perspective that many things be in writing, but that does not mean communications in negotiations must be in writing.
Nor does an offer require consideration, consideration passes as an agreement is being made.
It seems the broker was the sellers appointed agent to conduct the sale. That being so,his receiving the offer as agent was the seller receiving it, because he was acting as the agent of the seller, with actual and ostensible authority.
Unless you can produce US law to other effect,you need to be more careful advising on matters of law. People read these threads and may act on information contained in them.
You could be more courteous ,and less patronizing, towards the OP, who at all times acted on the basis the broker was representing his interests. The OP`s error, if any, was one of trust. He had an unpleasant experience, let`s not compound it.
I understand what you're saying but it was a clear offer, he just rejected it.
The conversation started:
"Hey it's mod45, thanks for showing us again tonight. I did some research and I know you have another offer pending so let's get right to it. My offer is $X. I know that's probably lower than you hoped for but here are my reasons..." which dovetailed into a 20 min discussion. He asked if I could get higher which I did by presenting the deal another way, but not high enough and he flat out said it's not good enough to submit. He told me he'd call me if anything fell through and I hung up thinking the sellers were getting top dollar, good for them.
It's possible he didn't fully grasp the net numbers being thrown around on the phone and the buyer's broker, who I know to be very knowledgeable, beat them up at survey as expected. It happens, put it in writing, life goes on. I was doubly frustrated with this situation when it came to light because another broker's mistake cost us a deal last summer.
Rereading this thread, I think the more interesting discussion stems from the nuances of pre/post survey negotiations. Has this been discussed in other threads? Is it better to submit a strong offer knowing you have a list of costly items which will be presented after survey for repair or is it better to bring those up before hand and agree to a price that excludes those items from repair? Can you overcome the sunk cost fallacy if the seller doesn't play ball? Does this change if there are multiple offers out? All questions I think can help people with both sides of their next transaction.
FL Yacht and Ship Brokers' Act clearly gives the broker authority to act as agent. Broker has no statutory legal obligation to forward verbal or written offer to seller.
Verbal contracts might be difficult to enforce so any contract should be in writing.
BruceK
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Now that is interesting, it raises issues of integrity,and complexity.
Your offer may be seen as overly complex if it says, "for the purpose of any post survey price discussion, I`ve taken a b c d e and f into account and won`t seek to renegotiate based on those". What if it`s worse/ more costly to fix than you thought?
An offer of $X is much easier to understand, even if the offerer plans to later seek deductions already identified.
Some sellers advertise as "immaculate" "turn key" "no money to be spent" "perfectly maintained"etc, leaving themselves open to "Well, you said.....but,these things need fixing, and they will cost $X.
If your offer took into account identified defects, is it fair to claim them as a deduction a second time? Is it "double dipping".
Do you make an offer close to the asking price, knowing there will be deductions you will raise. Is that fairer?
These are philosophical or moral issues, everyone will have their own ideas. I`ve thought about it recently as I got close to making offers.People will follow their own standards. In a way it`s a commercial negotiation and ideas are going to range widely.
The more complex form of offer vs a simple $ offer comes under real scrutiny when there are competing offers,of both kinds.
I think it`s best to make a simple $ offer and do what you think is right as the issues if any, are exposed. You may have raised issues with the broker when placing your offer.
There are sellers who will not renegotiate post survey. The offer they accepted may be the least they will take,even if unknown defects are exposed. Equally,the seller may know the defects and accepted the offer on that basis. A seller may or may not tell you in advance that he will not renegotiate. Personally, I`m not into burning bridges.
An interesting area indeed.
BruceK
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Certainly the contract should be in writing. There are practical reasons for documented offers, but I don`t see that they don`t have to be in writing. If they are, I would make mine "subject to contract", for when the agreement is reduced to writing.
One thing people sometimes overlook is that a counter offer also rejects the offer to which it responds. Absent revival, it is no longer there to accept. Theory, yes, but it can have practical effects.
w8n4sun
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Having just gone through the buying process, and spending the most money we've spent on a boat (scary!), our broker guided us to just that. Presented an offer knowing there will be post survey negotiation. It helped that the seller and us got to meet during the process and built a relationship - it worked out for the both of us.
bridaus
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Most ethical: Lay out all your cards, all your thinking, offer based on knowing abc therefore value = $x.
Less ethical: Offer max you are willing to pay, no details, no matter what you know, don't say a thing. Let the experts tell you what it will take to fix it, and then adjust the offer.
Note that I didn't say the second option was not ethical, just less. You are making your offer easy to understand and accept, but you are also not communicating information you know or your position. This is what a "good" buyer's broker would understand and do on your behalf.
What's most interesting here, is when does holding back information become unethical? This question is almost too big for a post or thread, deserves a book.
PS: A couple of people remarked about getting to know the seller. This is really good advice if you and the seller are both reasonable people. If either have problems/are unreasonable, it's a bad idea. Again, this is why brokers make livings, they can buffer problematic interactions (and sometimes cause them too, but then they don't last long do they...? Capitalism.)
Less ethical: Offer max you are willing to pay, no details, no matter what you know, don't say a thing. Let the experts tell you what it will take to fix it, and then adjust the offer.
Note that I didn't say the second option was not ethical, just less. You are making your offer easy to understand and accept, but you are also not communicating information you know or your position. This is what a "good" buyer's broker would understand and do on your behalf.
What's most interesting here, is when does holding back information become unethical? This question is almost too big for a post or thread, deserves a book.
PS: A couple of people remarked about getting to know the seller. This is really good advice if you and the seller are both reasonable people. If either have problems/are unreasonable, it's a bad idea. Again, this is why brokers make livings, they can buffer problematic interactions (and sometimes cause them too, but then they don't last long do they...? Capitalism.)
My approach on initial offers has been contrasting 2 numbers. First number is discounting asking price by about 10-15% and imagining what the survey shows. Second number is full price minus critical repairs, minus my primary subjective issue (eg electronics or new upholstery). I then consider how each would look presented to a buyer. The last 3 boats I've looked at all had big repair costs associated with them, so I went with the second number and it hasn't worked out. So I should change it up, however most of the time these numbers aren't that far apart.
Random thoughts:
- If there are multiple interested buyers or on a newly listed boat, I'm starting to think it's best to get an accepted contract and negotiate on the survey. However this could backfire, I've had multiple brokers reveal prior survey issues after a deal fell through in an attempt to drum up another offer.
- If I say X is an issue and costs Y to repair, no matter how it obvious it might be, it carries less weight than a surveyor saying the same thing in a report.
- I hate the idea of paying for a survey, engine survey and haul out in addition to wasting multiple days only to find out a seller won't budge on the issues. Not sure how to get around this other than being really confident a boat is in good shape.
- I'm selling a boat. I've told interested parties I won't give much on survey. But I share a list of items that need to be fixed at haulout, I'll fix those and any engine/generator issues. This has been well received.
- Most of this logic applies to larger, older cruising boats. We're also looking at center consoles to tow/fish and it's less stressful. I'm just trying to get the boat we want at a decent price.
Random thoughts:
- If there are multiple interested buyers or on a newly listed boat, I'm starting to think it's best to get an accepted contract and negotiate on the survey. However this could backfire, I've had multiple brokers reveal prior survey issues after a deal fell through in an attempt to drum up another offer.
- If I say X is an issue and costs Y to repair, no matter how it obvious it might be, it carries less weight than a surveyor saying the same thing in a report.
- I hate the idea of paying for a survey, engine survey and haul out in addition to wasting multiple days only to find out a seller won't budge on the issues. Not sure how to get around this other than being really confident a boat is in good shape.
- I'm selling a boat. I've told interested parties I won't give much on survey. But I share a list of items that need to be fixed at haulout, I'll fix those and any engine/generator issues. This has been well received.
- Most of this logic applies to larger, older cruising boats. We're also looking at center consoles to tow/fish and it's less stressful. I'm just trying to get the boat we want at a decent price.
There is no perfect way as every seller and every buyer reacts differently and the brokers are different. I hate purchasing autos, but I'm good at it. However, there are huge advantages in buying autos over boats. First, all the available information. Second, for every available boat that fits your needs there are dozens of autos. We bought three primary personal vehicles in 2012. Three because his and her sports cars and an SUV since the sports cars are lousy for hauling anything. We walked off two different lots. Just refused to deal further with them. However, we knew there were identical vehicles available at other dealers. We live in Fort Lauderdale, but bought our sports cars in Tampa. Easy, straight forward and direct. However, on most boats, you're stuck. While I strongly recommend a buyer's broker, you and they are still stuck with the selling broker the owner chose. Then you're also stuck with one owner. You can't walk across the street to the same boat.
Even purchasing a house or real estate just seems to go much smoother. You submit and offer and get a near immediate answer. Last house we bought we got the answer within 5 minutes. That's not normal but 24 hours is. Also, real estate is heavily regulated in all states. There are standard forms. There are more consistent rules and practices.
I wish the real estate laws were applied to all boats above a certain size. You have a home inspection which is the equivalent of a survey. One thing you have in many states I've thought would be wonderful on boats is that the seller must complete a list of all issues known to them. It's a check list basically. Deposits on boats are scary because you don't know if the broker really has an escrow account or puts the money in it. Real Estate, you're more confident.
Buying boats is just stressful in many cases and especially when you've fallen in love with a specific boat. It's a largely unregulated business. Even the two states that license brokers are very limited in the control they exercise.
All I can suggest is be as honest and straightforward as possible, I would put it in writing so I'd know what I was intending to offer and mentioning was fully conveyed. Then with it all, there are no guarantees. You mention going through all the steps and paying for surveys and haul outs, only to find the seller is unreasonable. Same on the other side. Sellers spend the time and energy and buyer pays for the survey and then they find out they buyer hasn't been forthright and now is trying to get an unreasonable price reduction.
On both sides, as frustrating as it is, some of your best deals are the ones you don't make. You must be willing to walk away as frustrating as it is.
wkearney99
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Our current boat was an adventure. We wanted to look at a boat last Summer, but the selling broker at the time didn't get back to us. We persisted and were told the sellers had since decided to take a trip to Nova Scotia for a month. Um, ok, you didn't tell them of our interest, or us of their schedule. Ah well, sale missed.
Fast forward eight months to the following January. New buyer broker (for our old boat) tells us of a boat that fits out interests. Seems right, wife notices a few similarities... it was the boat from the Summer before. Now reflecting new work done and a lower price. SAME BOAT, but with a new selling broker. We had it surveyed and noted the major service items still in need of attention. Negotiated the cost of those to bring the price down further. My impression was the boat had entered the "cut our losses and get rid of it stage" so they accepted the offer.
I'm grateful to have had less work to do on my dime, and that the previous selling broker didn't do a very effective job. I don't know all the details, of course, so I'm just speculating.
That's hilarious. They got in their one final trip. In terms of selling, turned out to be an expensive trip but maybe it was very special for them. Whatever happened, then they got serious about selling.
That does bring us to a lot of people who list boats for sale but are not at all serious. They're simply listing in case they get the offer they can't refuse. These are similar to those who get in early on new models they think will be in high demand. They buy the second boat and by the time their's is delivered the waiting time is two years so they put theirs for sale at a profit.
In your case a classic, "Good things come to those who wait." The counter theory to "He who snoozes, loses."
wkearney99
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The second broker mentioned something about having a "come to Jesus meeting" with the sellers regarding the things that were done. A list of items I'd have had to spend. Items that might not have been great negotiating factors. We'd have probably only been able to haggle down on the major items and would have had to do those interim items on our dime. But we still likely would have bought the boat. So, yay for delays.
Meanwhile a friend just sold his EB49 for what they paid for it 6 years ago. Now, he got a bargain on it back then, and had spent plenty of money maintaining it... but still!
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Sounds like you are/were aware of specific larger value items which you thought would need attention....
"- I hate the idea of paying for a survey, engine survey and haul out in addition to wasting multiple days only to find out a seller won't budge on the issues. Not sure how to get around this other than being really confident a boat is in good shape."
Prior to an offer I would ask specific questions regarding performance, services and functionality that would tend to bring these (few?) items out in the open and establish a base case for proceeding or not.
wkearney99
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I agree that shelling out for a survey is a gamble... but so is buying the boat without one.
I flew up with my boat management guy to take a look at the boat while it was on the hard. This without letting the seller have a lot of advance notice, to avoid any last minute cleanups and such. That gave me confidence to spend for the first part of the survey while it was on land.
I found it incredibly useful to be present at the survey. Both to witness the degree of thoroughness, but also to get a few minutes afterward to ask "what kind of concerns do you see beyond what's surveyed"?
That gave us confidence to go the next step and ask for a sea trial. They'd pay to put it in the water, and if we didn't buy we'd pay to put it back on the hard.
During the sea trial we had the engines surveyed and that included asking the engine survey guy (they're separate surveys) what he thought of the overall condition of the engine room. He was right to comment the charging electrics seemed odd. Which is fodder for a whole other thread, but that added some dimension to the negotiating process. As in, "we notice something puzzling about the charging setup but we're not bringing that into the discussion". Which basically says, "go along with what we ARE bringing into the negotiations, else we'll open that OTHER can of worms too".
Best money we spent. Gave us a clear laundry list of things needing attention.
Nothing takes the place of getting eyes-on the boat. Spend the money to fly and see it in person. Go over it with an extremely critical eye. Which might mean not bringing the wife along, as you want a dispassionate view of the boat's condition. You're there to talk yourself OUT of the sale. If you can't find enough things to nix the sale then take it to the next step for a survey.
Agree on the written offers, they hold a LOT more weight than verbal.
But part of the negotiation process is verbal... most of it. And we do discuss price. I could argue to start out on a pretty even keel, agreeing with the sellers representation, collecting info, maint logs, numbers, items that need attention, equipment numbers and age... etc., etc.
Then comes the time you put in the sellers mind that there are some issues, whatever they are and see how they react. Like, it really will need a new XXX that could cost up to $xxx, or the YYY is really old and will need replacement shortly.
After a bit of talk, make the offer and tell him why you're offering this price.
There's nothing unethical about holding back information. However, if the seller is asked what's wrong, it would be unethical if they lied about it.
But, would it be unethical if the seller withheld the REAL reason he wants to sell? Perhaps he needs a bunch of cash to keep his business going, or he has a choice to make his boat payment or feed his kids.
Now, the broker is held to a higher standard, and there's some laws and standards that govern his behavior. Would be interesting to hear from a broker exactly what some of these are, and the required (by law) parts of the process.
I was told by a broker if they represent the boat they MUST, by law, do the closing. True? Does a boat broker really not have to present all offers? Was posted earlier that they don't.... seems strange. I've been told by brokers that they MUST have a deposit to make an offer, yet I've made many without through other brokers and some accepted.
Boat buying and brokerage seems like it should be similar to real estate, which a lot of us know, but it's not. Nice to know the real differences without the BS.
But part of the negotiation process is verbal... most of it. And we do discuss price. I could argue to start out on a pretty even keel, agreeing with the sellers representation, collecting info, maint logs, numbers, items that need attention, equipment numbers and age... etc., etc.
Then comes the time you put in the sellers mind that there are some issues, whatever they are and see how they react. Like, it really will need a new XXX that could cost up to $xxx, or the YYY is really old and will need replacement shortly.
After a bit of talk, make the offer and tell him why you're offering this price.
There's nothing unethical about holding back information. However, if the seller is asked what's wrong, it would be unethical if they lied about it.
But, would it be unethical if the seller withheld the REAL reason he wants to sell? Perhaps he needs a bunch of cash to keep his business going, or he has a choice to make his boat payment or feed his kids.
Now, the broker is held to a higher standard, and there's some laws and standards that govern his behavior. Would be interesting to hear from a broker exactly what some of these are, and the required (by law) parts of the process.
I was told by a broker if they represent the boat they MUST, by law, do the closing. True? Does a boat broker really not have to present all offers? Was posted earlier that they don't.... seems strange. I've been told by brokers that they MUST have a deposit to make an offer, yet I've made many without through other brokers and some accepted.
Boat buying and brokerage seems like it should be similar to real estate, which a lot of us know, but it's not. Nice to know the real differences without the BS.
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wkearney99
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The similarity of folks generally unable to be employed in any other field definitely seems comparable to real estate. It's sometimes hard to tell who's incompetent or criminal.
More often than not they're just criminally incompetent.
All to true. There are good ones and bad ones, and sometimes you don't know whose bad until it's too late.
For me, I could argue to do all your own paperwork, due diligence, and look out for yourself.
When you look at an ad from a broker, they all have the disclaimer:
"The Company offers the details of this vessel in good faith but cannot guarantee or warrant the accuracy of this information nor warrant the condition of the vessel. The buyer should ......"
Essentially, this should tell one to look out for themselves as the broker did not verify anything. What good is it, if you can't depend on it? So, they are TELLING us not to rely on them, so why would you trust them without verification?
