Deal before survey?

[djcoul]

I’m looking at a trawler in WA. The listing broker won’t let me get it surveyed until a price has been agreed on and a deposit made. This is new to me. Is it normal?

 

[Flatswing]

Pretty typical - in no small part because of the need to haul the boat, so it is usually combined with the sea trial once an agreement on paper is reached, and deposit posted. Of course, post survey, you will likely modify your offer. That's when the real negotiating begins.

 

[Delta Riverat]

Yup. You need an accepted offer before the "show" begins. First the sea trial and first chance to bug out.

Next the survey and second chance to bug out or bargain.

Once the bug out or bargain has been reached, only then are funds transferred.

 

[mvweebles]

Agreed with Delta and Flatswing. Typically the contract has liberal exit clauses if anything the buyer discovers is concerning (which means if they change their mind, they can come up with something to exit the agreement). Study the language and make sure you're comfortable. And make sure you're dealing with a reputable broker who will refund the deposit/escrow if you pull the plug on the deal.

Slightly against the crowd, but I'm not a fan of the ride to the yard being the sea-trial. There is a fair amount to check out on the sea trial and you need a few hour duration. Again, controversial, but I would want a 5-10 minute WOT run which is a frequent place where the boat will fail due to overheat or simply won't get on plane (if semi-displacement or planing hull). Why would you continue to a full survey if the boat fails the sea trial?

There are a ton of knowledgeable folks on TrawlerForum. Comodave has purchased something like 24 boats. You can take his input to the bank. And there are others.

Peter

 

[Blissboat]

What the preceding posts said. The Purchase & Sale agreement protects both parties by locking down at least a provisional deal while the buyer conducts due diligence. Properly written, the P&S contract includes an "off ramp," for at least X number of days, during which the deposit is refundable. I happen to agree with Peter about sea-trialing first (with your surveyor on board and on the clock). Then, if the sea trial didn't cure your case of boat fever, schedule the haul out. To be clear, all expenses will be on your dime, so even though your deposit isn't yet at risk, it's not a completely "free" look. Get your money's worth, and whether or not the boat turns out to be what you need, you will learn valuable things from the experience.

 

[Fleming]

I’m looking at a trawler in WA. The listing broker won’t let me get it surveyed until a price has been agreed on and a deposit made. This is new to me. Is it normal?

This is to protect YOU as well as the Seller from wasting each other's time. Survey and haul out cost can be $1500-$4000 depending on the boat. Imagine paying all that to survey the boat, taking the time out for the survey, and then find out that the Seller won't sell it for anything less than the asking price. Or, now that they know you are invested in it, the Seller can say he wants $5000 over the previous asking price.

Give it a close inspection, find the soldboats.com comps, find the BUC value of the boat, make a fair offer based on the condition and assuming everything works as it should. Then survey. Anything found on the survey that is not as it should be, or not as it was expected to be, can be renegotiated.

 

[Shrew]

As stated, here are the standard order of operations:

1) View the boat. Here you have a chance to observe the layout and general condition. Certainly inspect anything you want. Some folks feel they can perform a large portion of the survey themselves (I recommend hiring a NAMS/SAMS certified surveyor).

2) Buyer submits an offer in a signed Purchase and Sale (P&S) agreement with good faith deposit. P&S should include contingencies (e.g. subject to satisfactory inspection, survey, insurance, loan approval, sale of existing boat, etc....basically whatever you want.

3) Seller either accepts or rejects offer. If rejected, seller make submit counter-offer in a new Signed P&S.

NOTE: P&S is valid when when both parties sign agreeing on price.

4) Vessel is Surveyed. Surveyor is an agent of the buyer.

5) Vessel is sea trialed. (NOTE: Steps 4 & 5 can be reversed, but most survey first and sea trial second.

6) Sale is either completed, or rejected due to conditions reported in either the survey or sea trial.

7) If rejected, counter offers can be made and a new P&S is signed, or the buyer and seller can simply walk away.

 

[Shrew]

BTW, This process is no different than buying real estate. Nobody is going to allow a home inspection on a property for sale without a signed P&S by both parties. I'm not clear why this is so foreign to people when it comes to a boat. Basically think of a boat more in terms of a real estate and less like buying a car.

 

[mvweebles]

.........

4) Vessel is Surveyed. Surveyor is an agent of the buyer.

5) Vessel is sea trialed. (NOTE: Steps 4 & 5 can be reversed, but most survey first and sea trial second.

Shrew - in my neck of the woods (California/Florida), sea trial always comes first. Might be a regional thing but doing the sea trial first makes sense as it's very low cost for the buyer.

Peter

 

[SteveK]

I am probably on my last boat. But if ever again after 1 or more looks by myself an offer made is accepted, then a mechanical survey before a regular survey including sea trial.
I was not surprised by either survey report, but doing both, doing the cosmetic survey first after already making an offer on appearance seems unnecessary expense if the mechanical survey with sea trial questions the purchase.

 

[Jeff F]

BTW, This process is no different than buying real estate. Nobody is going to allow a home inspection on a property for sale without a signed P&S by both parties. I'm not clear why this is so foreign to people when it comes to a boat. Basically think of a boat more in terms of a real estate and less like buying a car.

Good list.

As always I think to a certain extent it depends on the size of the boat and the deal. I've bought and sold lots of boats on the car model, but they've been broadly in the car price range.

I'd also point out that on a remote deal, it may be advantageous to engage a surveyor to do step 1 on your behalf. Maybe that's what the OP is thinking. Instead of getting on a plane before making an offer have a surveyor do a walk around and act as your agent before negotiations start. I know several surveyors who will act in this capacity, and the broker shouldn't object.

 

[Bacchus]

The agreement should protect your interests... imagine if you paid for a survey and seller announced boat.was sold to another buyer. Agreement.should include time for various steps before agreement "expires" and seller free to accept other offers.

 

[twistedtree]

Shrew - in my neck of the woods (California/Florida), sea trial always comes first. Might be a regional thing but doing the sea trial first makes sense as it's very low cost for the buyer.

Peter

I think you are balancing cost against where you most suspect there might be issues. If there is a particular aspect of the boat that you are concerned about, it might make sense to start there. Either way the goal is to find deal-killer issues early in the process when you have spent less money, vs later in the process when you have spent more.

 

[RickyD]

My first big boat survey happened first and my surveyor spent 7 minutes and said "you don't want this one". I loved the boat and made a low ball offer which was refused. My last two boats I did the mechanical and the engine survey sea trial virtually simultaneously. In the first case I knew there were cosmetic issues that had me lower the asking price substantially and it was accepted. It wasn't until after the sea trail was over that there was smoke coming from the engine room. I asked my engine surveyors what was going on, they said "excessive blow by". So the this boat had been under utilized for a few years and my broker said "hey, just use it and it will clean up." Well I had the PO run it and use some solutions and it cleaned up 50%, not enough for me so I bailed. The good news was that the next potential buyer bought my survey for a discount saving me some money. My current boat, everything went really well. Some issues found were corrected by the PO and some we shared. I love my boat even if she waves a red flag now and then. Knock on wood, right now I have her almost perfect. Oh, man, that is gonna cost me. What's next???

 

[Chuck34]

I’m looking at a trawler in WA. The listing broker won’t let me get it surveyed until a price has been agreed on and a deposit made. This is new to me. Is it normal?

As others have said, yes, this is typical. In fact, when dealing with a broker, most won’t even start the engine without a signed agreement.

 

[MYTraveler]

If I were the seller and a prospective buyer wanted to survey my boat before signing a PSA, I would regard that as strategically advantageous, since the buyer's several thousand dollar investment in a survey I will give more leverage when it comes time to negotiate price. It is important to recognize that a PSA is binding on the seller, but leaves the buyer with the option to back away. The seller really gain nothing by entering into a PSA (other than not wasting time with lookie loos, but anyone investing in a survey is making a serious commitment).

 

[Bacchus]

I MO the PSA is also (maybe more importantly to them) a way for brokers to protect their interests. In many / most cases the sellers identity and specific location of the boat is not included in any advertising. Brokers don't want buyers dealing directly with sellers so that info is rarely divulged early in any dealings. It is not coincidence that the "standard" PSA deposit is essentially the brokers commission. They get their $ upfront and yes, it is (should be) held in escrow but they control it.
I doubt that sellers demand many of the " std practices" imposed by brokers.

 

[TBill36]

This is where good brokers earn some of their commission. If you can't come to an agreeable price up front, then you don't want to go any further. Many long-distance transactions are negotiated without seeing the vessel first. Most brokers know the sellers bottom line and don't want funds unless the offer is accepted. A good broker will be up-front about boat condition and what to expect. The last thing they want to do is go through a lot of paperwork and coordinating surveys etc and then have the deal fall through. They'll present the offer and if accepted then a 10% deposit is put in the broker"s escrow. It is fully refundable pending inspection by the purchaser. Work with good, well-known broker houses.

 

[Shrew]

Shrew - in my neck of the woods (California/Florida), sea trial always comes first. Might be a regional thing but doing the sea trial first makes sense as it's very low cost for the buyer.

Peter

YMMV, that's why I put a caveat in there that the order isn't in stone in a attempt to avoid a pedantic response.

 

[drewread]

This is where good brokers earn some of their commission. If you can't come to an agreeable price up front, then you don't want to go any further. Many long-distance transactions are negotiated without seeing the vessel first. Most brokers know the sellers bottom line and don't want funds unless the offer is accepted. A good broker will be up-front about boat condition and what to expect. The last thing they want to do is go through a lot of paperwork and coordinating surveys etc and then have the deal fall through. They'll present the offer and if accepted then a 10% deposit is put in the broker"s escrow. It is fully refundable pending inspection by the purchaser. Work with good, well-known broker houses.

I'm still waiting to meet this good broker.. lol

The amount and level of misrepresentation of condition I'm seeing from brokers is astounding. Even down to using photos of other vessels, sometimes with weak watermarks to say they are of another vessel, sometimes not...

 

[jhall767]

This is where good brokers earn some of their commission. If you can't come to an agreeable price up front, then you don't want to go any further. Many long-distance transactions are negotiated without seeing the vessel first. Most brokers know the sellers bottom line and don't want funds unless the offer is accepted. A good broker will be up-front about boat condition and what to expect. The last thing they want to do is go through a lot of paperwork and coordinating surveys etc and then have the deal fall through. They'll present the offer and if accepted then a 10% deposit is put in the broker"s escrow. It is fully refundable pending inspection by the purchaser. Work with good, well-known broker houses.

We had a buyers broker who we know help us find a boat. He found one in Florida with great potential. His associate went to the boat and inspected it. We negotiated a price and had a contract contingent upon our viewing the boat, sea trial, mechanical survey and hull survey. Had the contract signed before we got on the plane. Deposit meant we were serious. Didn't start paid surveys until after we toured it and decided we wanted to pursue it. Final negotiated price was about $40k less than original due to issues found during survey.

 

[twistedtree]

If I were the seller and a prospective buyer wanted to survey my boat before signing a PSA, I would regard that as strategically advantageous, since the buyer's several thousand dollar investment in a survey I will give more leverage when it comes time to negotiate price. It is important to recognize that a PSA is binding on the seller, but leaves the buyer with the option to back away. The seller really gain nothing by entering into a PSA (other than not wasting time with lookie loos, but anyone investing in a survey is making a serious commitment).

Yes, I think you have a good point. The only down side is whatever time and cost you incur as the seller, which may be very little, or perhaps none.