Southwest Florida Yachts
 
 

 

Boat Buying/Selling Tips: Part 3
By Barb Hansen
March 2013

You might find this hard to believe, but our experience over the years has shown that yacht buyers sometimes think vessels are also available for “free boat rides!” If you have your boat listed with a broker who is offering an hour or an afternoon on the water on your boat without a signed contract and a 10% deposit in escrow, it’s time for you to find a new Yacht Broker—pronto.

If you’re a buyer, work with your Yacht Broker to come up with a sincere offer and make it contingent upon at least: a Sea Trial, including all systems operational; a Marine Survey, with an independent surveyor’s (you have chosen) opinion that the vessel is seaworthy and/or the seller’s commitment that any deficiencies will be corrected. You may also want an “engine survey” and/or “oil analysis” if the engine (s) have higher hours or appear to have been ill-maintained.

While a Sea Trial is a must in any boat sales transaction, it does not take place without having a legitimate offer, a signed purchase agreement and a deposit of 10% of the offered price in the bank. Note that is IN THE BANK. “No. Mr. Buyer, we can’t just hold your check and see if you like the boat before cashing it.”

The Sea Trial is usually done at the same time as the Survey. What surprises some sellers is that while the buyer pays for the Surveyor, the boat yard charges to haul the boat out of the water and any mechanic’s fee for an engine survey, the cost for someone to operate the boat during the Sea Trial is borne by the seller. That operator should NOT be the seller. Frankly, I recommend that the seller NOT attend the survey or the Sea Trial. Let the Surveyor do his or her job!

Once the survey results come back, it may be necessary to re-negotiate the selling price. Forget about nit-picky things like rusty hose clamps, you are looking for major potential repair or replacement items such as a non-functioning refrigerator, air conditioner or generator. A simple vibration underway could result in thousands of dollars in repairs to props or shafts. Over the years, we have found that the cost of the Survey has typically more than paid for itself by finding deficiencies whose repairs—made at the seller’s expense—were always more than the cost of the survey.

If the price changes, the contract must be adjusted accordingly and initialed by all parties. Once the price is set, the buyer signs an “Acceptance” of the boat. This is an important piece of paper as it is like the point of no return for the transaction. Prior to that document being signed, the buyer can back out of the deal and still get his or her deposit money back. Once the buyer has “accepted” the yacht, they are locked in. If the deal falls through, they lose their deposit money. For example, if the bank doing the financing has a change of heart and decides not to loan the money, the buyer does not get the escrow deposit back.

Finally, a Closing Date is set for the transaction. If there is financing involved, that date may be determined by when the bank will have the loan completed and the funds available. Meanwhile, the selling broker should be gathering all of the paperwork needed for a smooth sale. Most likely the yacht will either have a State title or a Documentation number. If the boat is a US Coast Guard Documented vessel, then the Documentation paper needs to be surrendered. You may want to consider using one of the vessel Documentation services available to the boat-buying public. That agent will handle the important paperwork, including the change of Documentation and Bill of Sale. They can also handle the Title work, if the boat is not documented.

Additionally, if there is a dinghy included in the sale, be sure to get the signed title for it, as well.

Once everything is complete, the “closing” can occur. No money should change hands until all of the paperwork has been signed by both parties. The actual closing is often just the final step of transferring funds from the buyer to the seller. Your broker will be certain that any “pay off” on the boat is satisfied prior to distributing any funds to the seller. The buyer will want to be sure to have insurance coverage in place on the day of closing. Likewise, the seller can generally cancel their coverage at midnight on that day – rumored to be the “happiest” in the life of both the buyer and seller.
 

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Southwest Florida Yachts
3444 Marinatown Lane N.W. • North Fort Myers • Florida 33903
(239) 656-1339 (800) 262-7939 Fax (239) 656-2628

Marinatown Marina 26° 38.5'N 81° 53.0'W
Burnt Store Marina 26° 45.71' N 82° 04.20'W


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