Trying to be a Reasonable Buyer

[FlyingRock]

Placed offer and agreed to price terms with seller on a 10-year old boat for approximately $110K "pending survey and appraisal." Though not in written agreement, seller agreed to a credit of "up to $1,750" to address survey findings. Well, it turns out that the vessel has a completely non-operative MFD and radar array, though those were listed by broker as features of the boat. This was very likely something seller (and listing broker) knew beforehand, though they listed them as features. Correcting will cost much more than the credit offered. Other items found at survey will take up much of offered credit. What is a reasonable revised offer to reflect the need for a new MFD/radar? Cost of a new basic system (probably $3.5K, before labor)? Our thoughts are to have the seller fix the id'd "significant" survey issues prior to sale (probably about $1,500) and a $3.5K price reduction so we can add a basic MFD/radar. Seem fair? We're a little taken aback on the non-disclosure of known defect. This is our first used boat buying process. Thanks.

 

[NotHerDecision]

Hate to say it but that’s why you survey. As far as cost and what is reasonable we need more information. What equipment is on the boat. What boat specifically. Also you say the mfd and radar but if the mfd doesn’t work then it may just be that piece.


Remember a boat is only worth what a buyer is willing to pay so make your offer accordingly. Also remember this can be viewed as an opportunity to repair or replace with newer stuff you actually want.

 

[FlyingRock]

If it's OK, I'd rather not say too much on the specific boat during the negotiation process, but the MFD is a Raymarine C80, original to the boat. I agree this is why you do a survey, but I would think this would be disclosable prior to listing. Why list a boat as having a chartplotter if it is known to be non-functional? The sellers were recently using the boat, so I'm 99% sure they knew of this defect. Our original offer was based on the equipment list. I also recognize that any C80 is probably near the end of its life, so I'm trying to be reasonable on a revised offer. Thanks.

 

[FlyingRock]

If it's OK, I'd rather not say too much on the specific boat during the negotiation process, but the MFD is a Raymarine C80, original to the boat. I agree this is why you do a survey, but I would think this would be disclosable prior to listing. Why list a boat as having a chartplotter if it is known to be non-functional? The sellers were recently using the boat, so I'm 99% sure they knew of this defect. Our original offer was based on the equipment list. I also recognize that any C80 is probably near the end of its life, so I'm trying to be reasonable on a revised offer. Thanks.

And, this notice to the seller puts the ethical onus on them to disclose to any future buyer, should our sale fall through, correct?

 

[Craig]

Why agree to any credits before the survey findings? The offer I made on my boat reflected things seen pryor to survey that I thought needed addressed. Your surveyor
should give you a value range based on his findings. If its not worth what you offered plus repairs then its time to move on. If you feel there is integrity issues time to walk also. If the survey finds additional items then seller has to make a decision.

 

[fwebster]

As far as disclosable events, these are boats, not houses and I am not aware of any requirement to disclose known defects, other than personal ethics and honesty. I think a lot of brokers operate more by the principle of caveat emptor and just leave it up to the buyer for figure it out for himself.

If the broker listed the MFD and radar as equipment included with the sale, but did disclose that they were not functional then you are hooked and have no recourse. However, if they were DOA and the broker did not disclose that, then it doesn't matter if he knew it or not, you have every right to expect them to work.

It doesn't matter if they knew the electronics worked or not, unless they told you they did and you found that they did not.

With respect to any future sale or buyer, you are a party to this contract only and have no say in or influence over anything else. However, in the real world, if you eventually reject this boat because of a failed survey, that news travels from marina to marina, from boat yard to boat yard, on forums, etc. Brokers know that a failed survey can be the kiss of death unless his seller steps up and remedies the defects. And, this is one of the selling points the broker will use in convincing the seller to handle the repairs for you......."The boat is already sold; here is an interested buyer already under contract to buy the boat. You are going to have to spend this money sooner or later, so lets spend it now and sell the boat. "

If it were me, I would not try to negotiate this piece-meal. I would schedule the survey, the call the broker tell him: "I have the survey scheduled for Aug xx," then, on the same phone call, tell him that you discovered that the MFD and the radar did not work but were listed as equipment included with the sale. Then, ask him if he would like to refund your deposit and cancel the deal now because the money the seller reserved for repairs won't cover the cost to fix the electronics or try some other approach, because I'm ready to reject the boat now under these terms.

At this point, the broker is already spending the $10,000 commission, but you just snatched the check out of his hands and he will get serious about making the deal work. The best result here would be for the seller to remove the $1,750 limit on repairs. if he won't, walk away.

Good luck with it..........

 

[FlyingRock]

Thanks, all, for your input. This really helps us in preparing a response and revised offer - and hopefully reaching an agreement. I don't believe anyone was being dishonest here, just not sharing anything that they weren't directly asked about. I would still think that known non-working items should either not be listed as features in a sales brochure or be marked as being offered "as is." Perhaps I'm just a little naïve - live and learn. But, we'll see how this plays out. I greatly appreciate the input.

 

[Golfman25]

A couple of thoughts. First, if it's not written it didn't happen. So the offer of credit while nice is meaningless.

Second, you don't want to put a limit on the survey findings. At best, as a seller you want a min amount before you would fix or discount so you're not messing with minor stuff.

What did the surveyor find with respect to the value of the boat? Are you over or under, or right on target? The mfd and radar is effectively obsolete. Probably costs more to get rid of than it's worth. Any idea why it wasn't working? Did it even power up? Sure it would be nice to get a few more years out of it, but it's going to need replaced eventually.

So you need to decide how aggressive you want to get to have the buyer discount the price. Take all the fixable issues and them up. Then maybe add the current depreciated value of the mfd and radar. Come up with a number and tell them that's what you want discounted based on the survey. Be ready to negotiate from there. You're already in for the survey costs and the time you have spent to date. So decide how important the boat is to you. Good luck.

 

[bobeast]

Your initial inspection of the boat should have at least revealed to you the defective MFD and radar, before you made the offer. If not, I hate to say it, but you may need to up your inspection game. Surveys are intended to reveal issues that were not readily apparent when you looked at the boat.

All that said, its your money, so making the offer you mentioned seems reasonable to me, as long as you are willing to walk away if the seller won't budge. Personally, I'd have a bad taste in my mouth over such non-disclosed issues.

 

[northern]

Run Forest Run
There are lots of boat for sale. The items you talk about are small cost compared to an engine, generator or hull damage poorly repaired. If simple things do not work then I would be very concerned

 

[Boat Guy]

Placed offer ...... Our thoughts are to have the seller fix the id'd "significant" survey issues prior to sale (probably about $1,500) and a $3.5K price reduction so we can add a basic MFD/radar. Seem fair? We're a little taken aback on the non-disclosure of known defect. This is our first used boat buying process. Thanks.

Seem fair? No.... For a few reasons.

1. "seller agreed to a credit of "up to $1,750" to address survey findings" -- Meaning seems you had a verbal agreement that you now want to change.

2. The value of a used C80 and radar isn't close to what you want. Further, I don't think you know the reason it's INOP..Perhaps something simple as a switch...But, as a ref., I purchased a E120 with 4' array for around $800 a year ago simply to have an separate radar screen.

I'm not sure the broker knew or didn't what was working. I have no confidence or faith in brokers. Further, the market is so crazy now, I'm surprised you got one to return a call.

If you like the boat and you think it's a good deal, don't nickle and dime....Best of luck.

====Edit the post from C120 to E120...Forgot which one I bought. ====

 

[rondds]

When I bought this boat there was full disclosure that the generator was not operational. I had made a decision from the get-go that I wouldn't try to repair it, I would remove and replace it. I'm sure, in the owner's eyes, the boat was priced appropriately in light of the dead genset. In my eyes, it wasn't. And after examining the boat myself, I made an offer, of course, subject to survey and sea trial. It was rejected. There was no counter-offer so I made a second offer and it was accepted. Survey went off well, the boat required no repairs and I bought the boat.

The sale of this boat is going to depend on how anxious the owner is to move the boat and how much you are willing to spend. If you are his first customer, maybe he waits. If he's underwater on the boat, maybe he doesn't wait?

During the closing on my boat there was a sheet of paper from the bank that held the note which showed his "payoff amount" and it was about $12K more than my accepted offer. Then, of course, he had to pay the broker. To this day I don't know why he accepted my offer but he did and that's all that matters.

Offer what you think the boat is worth and negotiate from there. Best of luck to you and I hope it works out well for both parties!

 

[FlyingRock]

Thanks again for all of your input. I agree that we should have checked during our initial inspection, but I was more concerned with seaworthiness and the general state of the boat. I accept responsibility for not checking that on our initial inspection. Since the chart plotter and radar were listed as features, I just assumed they were in proper working order for a 10-year old boat. I also agree that their value is diminished. However, my initial offer was for a 10-year old boat with an assumption of no major structural or engine issues and working (though aged) electronics, subject to the survey results.

The survey revealed mostly minor issues and the non-working MFD (which actually somewhat worked in the slip - the chart plotter, anyway) and immediately went blank on the sea trial. I will certainly give the seller the opportunity to either fix the display or provide a reasonable credit toward a new one. Thus, the title of the post, "Trying to be a Reasonable Buyer." But, again, I (perhaps naïvely) expect some honesty in a listing. If I were selling, I'd state "MFD and Radar offered 'as is'." If they knew. Maybe it worked perfectly right up to that minute we took it out for the trial. Bad timing for the seller, if that's the case, because it then became a survey item. In retrospect, I can't be pointing any fingers. But the surveyor believed it to "very likely have been known by the seller."

We'll make a reasonably revised offer and see what they do. It's a great boat, but there are plenty of others out there. We're prepared to go forward either way. I cannot express my thanks enough for all your responses, input and guidance. Thank you.

 

[yobub]

Although it seems counter intuitive, the negotiation doesn't end when the offer price is accepted. It ends when you accept the survey and the contract. What the folks on this board believe is fair is somewhat irrelevant to your boat purchase. You are still in negotiations, and now you know that the boat will cost you more than you offered. Guess what - once you own the boat you will find things that the surveyor didn't find and the broker didn't know about or disclose, and you should take that into account with your price. Hopefully your contract was written so that you can walk away from the deal if you aren't satisfied with the survey results (which you aren't).

Keep negotiating until you get to a price that you can accept and that the seller can accept. Don't let yourself get emotional about it. It's just money, and there are lots of other boats in the world. You are buying a used boat and all that comes with it.

That being said, the group here can be a great resource for how to replace things yourself and what various repairs cost.

Finally, regarding your radar, if you are trying to understand an apples to apples replacement cost, Max Marine https://maxmarineelectronics.com/ sells used marine electronics, and may have a direct replacement for your gear. You might decide you want new electronics, but if you want to have a sense for the cost to replace what you have, they are a good resource. @Boat Guy gave you one idea for replacement cost. I bought a used E120 with 18" array and cable, 300DSM, Sirius weather, GPS antenna, and some other parts for $800 on craigslist, all working. I wanted the E120, but all of the rest of the parts made the deal worth it for me.

Good luck with your purchase, and we'll look forward to pictures of whatever you buy.

 

[Golfman25]

With regard to "honesty" I think your putting a lot of faith in the listing process. I have seen broker listings so far off it's ridiculous -- an inboard boat with bravo 3s, etc. Most likely the seller dropped the keys with the broker and he went through a checklist to list the boat. He probably didn't check functionality of anything.

 

[FlyingRock]

Agree. Not getting emotional about it and just trying to reach a fair deal for everyone, including the seller. Just made a revised offer based upon the cost of purchase and installation of a certified used C80 along with one other significant, though easily and affordably fixable, survey item that I cannot do myself. All of you were phenomenal. Thanks!

 

[JVM225]

Sounds like you should probably walk away from this boat because it’s not likely that you and the seller will be able to strike a deal you’re both going to be happy with.
Maybe chalk it up to experience, learn from it, and continue looking.
For the next prospect.
1. Insect the boat thoroughly yourself trying every switch, button, and piece of equipment you can try at the dock before making an offer. That should reveal non working electronics, stereos, lights, features, etc..
2. Make an offer contingent on Survey and sea trial with no pre-determined monetary allowances. If a seller tells you they will only fix X amount revealed on Survey and sea trial move on and don’t waste the time and money on the Survey and sea trial.
3. If minor things are revealed at the Survey and sea trial, offer to pay the seller the previously agreed on price for the boat if they make the necessary repairs or replacement. If they do it, pay them the full price you agreed to pay. They will be delivering the boat you agreed to pay for in the condition you expected it to be in and they should be paid the expected price.
Asking a seller to take care of deficiencies and then discount the agreed upon price in addition to that is unreasonable.
If they refuse to correct deficiencies, or offer to take money off so you can have the things done, then consider walking away because almost everything on a boat costs more to repair or replace then you think it will.

 

[FlyingRock]

JVM225: I'm actually optimistic we will reach an agreement. We essentially went with your option 3: "offer to pay the seller the previously agreed on price for the boat if they make the necessary repairs or replacement. If they do it, pay them the full price you agreed to pay." We, however also gave them the option to provide a credit to us to complete one survey item if they preferred not to go through the hassle of the repair/replacement prior to closing the sale. It's a very fair offer - in my opinion, and I'll be addressing a lot of the survey items myself in the off-season. Thanks.

 

[JVM225]

During the closing on my boat there was a sheet of paper from the bank that held the note which showed his "payoff amount" and it was about $12K more than my accepted offer. Then, of course, he had to pay the broker. To this day I don't know why he accepted my offer but he did and that's all that matters.

When I was shopping for my current boat I was absolutely shocked at the number of boats I looked at that the owners were underwater on and how far in the hole they were.

 

[fwebster]

Although it seems counter intuitive, the negotiation doesn't end when the offer price is accepted. It ends when you accept the survey and the contract. What the folks on this board believe is fair is somewhat irrelevant to your boat purchase. You are still in negotiations, and now you know that the boat will cost you more than you offered. Guess what - once you own the boat you will find things that the surveyor didn't find and the broker didn't know about or disclose, and you should take that into account with your price. Hopefully your contract was written so that you can walk away from the deal if you aren't satisfied with the survey results (which you aren't).

Keep negotiating until you get to a price that you can accept and that the seller can accept. Don't let yourself get emotional about it. It's just money, and there are lots of other boats in the world. You are buying a used boat and all that comes with it.

I don't agree with your negotiation doesn't end strategy.

I think it is unethical to enter into a contract to buy a boat with the intent of re-negotiating the deal later. The initial contract is to purchase a particular boat at an agreed upon price suject to any contingencies you place on the deal for surveys, sea trial, insurability, etc. After the survey you can do one of 2 things: a.)Accept the boat under the original contract terms or b.)Reject it and get your deposit money back.

In actual practice, no broker or seller is willing to lose a sale to you over the survey findings. The boat has now failed a survey which will make selling it to another buyer difficult and means the broker has to find another interested buyer. You and the seller can then negotiate an ammendment to the original contract, but this is a separate negotiation that deals only with the defects the surveyor discovered.

It is important to recognize the difference between the 2 negotiations: the first is to buy the boat when you are on equal footing with the seller...i.e swapping your $100,000 in cash for his $100,000 boat. In the second one, you are negotiating how to handle the defects, but the leverage is substantially weighted in your favor: his boat had failed a survey, his broker has to find another buyer if you reject the boat, the sales process must begin again from square one, and the sellers overhead (slip rent, insurance, interest/payments if he has debt) continues.

One final point worth mentioning: your ability to negotiate the repairs can be seriously hampered if the seller is upside down with any debt he may have on the boat, so be reasonable.