Once you’ve inspected and chosen a boat, decide on what you’re willing to offer based on what you have seen, and whatever adjustments are justified based on condition, equipment, etc. This may be a decision based on several factors including current market value, suggestions from your broker, the length of time the boat has been on the market, etc. Most importantly, what you are willing to pay or more important, what can you afford to pay?
When you make an offer you must be prepared to lay down a deposit – usually 10% of the purchase price to alert the seller that you are a serious potential buyer. After the offer has been tendered through your broker you’ll probably get a counter offer. Some people think of this as a game, but be reasonable. Being cut-throat at this point will just cause a seller to drop-out of the game. Once you get an agreement, you need to firm it up in writing. Your broker will generate a purchase agreement.
In the agreement, you must make the sale “subject to survey”. That means you have the option of accepting or rejecting the boat based upon adequate performance and condition. Obviously if a survey turns up hidden damage or problems or if the boat does not perform well in normal operations, you don’t want to be trapped into purchasing it. It’s best to get it in writing that any faults discovered are subject to adjustment or rejection of the original offer.
Subject to Survey
During the course of the survey you will discover whether the vessel is adequate for your needs and comparable to other boats of that type. Use a good surveyor, if you try to skimp on the survey fee, you’ll probably get what you pay for. The surveyor works for you and in your best interest. Don’t be alarmed when he turns up a list of faults. If he found nothing at all, he’s probably not a very good surveyor – who ever saw a boat that didn’t have faults?
Be reasonable on a closing date. You should give yourself time to recieve the surveyor’s written report and review it carefully. Discuss the results with someone proficient in boat repairs. On the other hand, setting a date too far in the future will cause the seller to doubt your sincerity. Sellers do not want to sit in limbo waiting to see if the deal is going to go through. Another buyer could come along in the meantime.
Your survey report is the basis for adjusting the offer. Major faults mean anything that affects the safety and operation ability of the vessel. From bent propellers to bad exhaust risers, anything that generally affects the performance and normal operation of the vessel is considered grounds for adjustment. So is anything that is about to fail, but hasn’t yet. Cosmetics and maintenance issues are generally not basis for adjustments but rather have already been taken into consideration for setting the selling price.
Your broker may be of assistance in helping you estimate repair costs. Even better would be estimates from a service yard to make the necessary repairs. After compiling a list with estimated pricing you are ready to approach the seller with negotiations.
In some cases, the seller will offer to make repairs. This may not be the best solution as he will not be willing to spend the money to repair the defects to your satisfaction. Since the seller is motivated to cut corners, to make repairs as cheaply as possible, it is best that you work from the standpoint of a price reduction only, and that you have the repairs done by a yard you trust.
Federal Documentation rules require that all liens against the vessel be recorded. If you are purchasing a documented vessel, I highly recommend that you engage a professional documentation service to hand the closing. Most of them are actively involved in the closing process and can provide a great deal of help. You should get a document extract, which is essentially a history of the vessel, along with any liens and existing mortgages. This is similar to a title search for real estate. If the vessel has a mortgage on it, you will almost have no choice but to use a documentation service, as these procedures are difficult, and the fee you pay is well worth avoiding the hassle.икони