Buying from Boat Dealers Problems

[Seevee]

All,

I'm in the serious mode of buying a boat, and will probably purchase one in the next few months or so. I'll be in the bracket of 55 to 80K for a boat, in the 31 ft cruisers range.

I've been in contact with several dealers, and have a HUGE issue with some of their policies. Most want a contract with a 10% deposit prior to a sea trial, which I find ridiculous. A few of them will allow me to put the deposit into my attorney or trustees account.

However, I find this totally unacceptable, especially in this day and age. There is NO WAY I will put a deposit in there account, unsecured, for any boat, no matter how good the deal is. That's totally a stupid financial decision.

I "may" do it with my attorney or trustee, if there's a no condition clause that the money is returned to me for any reason the boat is not purchased.

My question is what the [heck] are these dealers thinking? Do they really want to sell boats or are they just being [jerks]. If I were selling, I'd give any one a ride if they paid for expenses no matter what, and I'd treat all like a potential buyer. If I gave 10 rides to flukes and the 11th bought the boat, the job would be done.

Why are the dealers being so hard to deal with, what are they thinking?

I recently looked at a local boat here in St Petersburg that was perfect, but Savage Yachts, the dealer wanted a 10% deposit in their account totally UNSECURED before a boat trial... absolutely NO WAY. I went elsewhere.

Thoughts?

 

[Frank Acampora]

Re: Buying from Boat Dealers Problems

Ever heard of "Earnest Money" in a house sale? It is done with just about every house sold. You put a couple of thousand in an escrow account when the contract is signed. If the deal falls through for cause--like failing inspection--you get your deposit back. If you just change your mind--sorry, seller keeps the money.

With a good lawyer you should be able to get the same terms on a boat. If not, a boat is a luxury item. Walk away and keep looking until you find acceptable terms. If enough people do this, then the deales would not have leverage to demand.

 

[Mason78]

Re: Buying from Boat Dealers Problems

I have felt the same frustration while shopping for a bowrider. My intention was to water test several manufacturers before narrowing my search down. I have had two dealers tell me that they do the water test "after" the purchase, and that they will spend an afternoon "showing" me the boat and its features. They act like they are doing me a favor.

I'm with you, I'm not dropping any money on a product that I have not tested.

 

[MarkSee]

Re: Buying from Boat Dealers Problems

Thoughts?

Here in SoCal, there is a difference between buying a boat through a "dealer" vs. a "brokerage" but some dealers also have an onsite "brokerage" division. Where a boat for sale goes usually is determined by the size of the boat but also how a sale is handled differs also.

What you describe with the 10% is how some brokerages do it here in SoCal and how I bought my 270 Sundancer.
The contract you get into should be worded such that it is contingent upon approval of mechanical and hull surveys which of course, is at your expense not the seller. The wording should also indicate the deposit is fully refundable. Usually the surveys you get done are paid through this account that you paid 10% of.

It is also a common practice to not get to do a Sea Trial (aka ride) until after you have paid for any surveys or declined to have them done in which case, you're buying the boat. If you're looking to just take a ride on a boat even if you offer to pay the expenses, well, some brokers may do that but many may not as the boat is owned by someone else. Some brokerages also have to pay for a licensed captain to do a Sea Trial if the current owner is not around to do it themselves. That licensed captain gets paid by the seller.

Note that I am only aware of how things are done here and even that can vary somewhat depending on the broker(s) involved, their standing with the brokerage management, your relationship with them (off the street vs. knowing them for many years), etc.

By a weird set of circumstances, I ended up with a broker that when we talked, found out we talked back in the 90's at boat shows with each other when she owned her own dealership. I lucked out so it was more relaxed than what you might be dealing with just walking in off the street.
Wish you lived out here.

Mark

 

[tpenfield]

Re: Buying from Boat Dealers Problems

All,

I'm in the serious mode of buying a boat, and will probably purchase one in the next few months or so. I'll be in the bracket of 55 to 80K for a boat, in the 31 ft cruisers range.

I've been in contact with several dealers, and have a HUGE issue with some of their policies. Most want a contract with a 10% deposit prior to a sea trial, which I find ridiculous. A few of them will allow me to put the deposit into my attorney or trustees account.

However, I find this totally unacceptable, especially in this day and age. There is NO WAY I will put a deposit in there account, unsecured, for any boat, not matter how good the deal is. That's totally a stupid financial decision.

I recently looked at a local boat here in St Petersburg that was perfect, but Savage Yachts, the dealer wanted a 10% deposit in their account totally UNSECURED before a boat trial... absolutely NO WAY. I went elsewhere.

Thoughts?

I am not sure from your post if you are talking new or used boat . . . but from your price range I'll assume it is used.

Yes, a 10% deposit is common practice . . . that takes the boat off the market and allows you the time to do the sea trial and survey. If the seller (dealer/broker) were to offer sea trials without any deposit money, it would encourage joyriding among the buying population.

Usually, there is an offer/contract that accompanies the 10% deposit stipulating the time that you have to do all of your trials and inspections. It should also state that the 10% is fully refundable if you do not accept the boat after you have completed your assessment.

So, you will have to put up some money, if you are serious about buying a boat. You will want to make sure you are choosing wisely as you would not want to have to incur the expenses of inspection and in the end reject the boat.

A private party sale is more likely to give rides, if that is what you are looking for.

 

[JoLin]

Re: Buying from Boat Dealers Problems

Usually, there is an offer/contract that accompanies the 10% deposit stipulating the time that you have to do all of your trials and inspections. It should also state that the 10% is fully refundable if you do not accept the boat after you have completed your assessment.

That's precisely the way I bought my 24' Chris*Craft from a broker, and my Four Winns from a private seller. The final price was negotiated up front, 'contingent upon the results of a survey and sea trial.' I signed a contract and put down 10%. In the case of the brokered deal, it was fully refundable. In the case of the private sale, I allowed the seller the option of holding back $100. to pay for his time and fuel. As somebody else mentioned, that took the boats off the market until I could 'do my thing.' I had first right of refusal, even if a much better offer than mine came along before I was finished.

Those contracts left me with several options if the surevy or sea trial weren't what I expected. I could renegotiate the deal, negotiate for any needed repairs, or simply take back my deposit and go home. If you have specific concerns about a boat you want to pursue (you think it might be underpowered, for instance), have them written into the contract.

Buying and selling a boat, particularly in the size and price range you're suggesting, is an expensive and time-consuming process for everyone involved, not just you. That 10% 'earnest money' separates the buyers from the tire kickers. Do your homework, eyeball a bunch of boats and go forward with the one that speaks to you.

My .02

 

[tpenfield]

Re: Buying from Boat Dealers Problems

If the deal falls through for cause--like failing inspection--you get your deposit back. If you just change your mind--sorry, seller keeps the money.

I would add that you really do not need to have a 'reason' to reject the boat after you have done your diligence . . . you can simply reject (i.e. not accept) it, and get your deposit back. Not sure why someone would do that, but something to keep in mind.

 

[agallant80]

Re: Buying from Boat Dealers Problems

That sounds pretty standard. Way back in the day I found my self working in the IT department of a finance company that owned two Corvette dealers. The policy at the dealers was pull credit and qualify first. I ended up going in to the dealer on the weekends and sold a few cars. I have to agree with the policy. You would not believe the amount of people that want a nice toy and have bad credit and no money down. I remember once a guy came in and wanted to buy a 40K corvette (this was in the early 2000's). He argued with me about pulling his credit and qualifying him before the test drive. He gave in and I was able to qualify him only to find out that he had a credit score in the mid 400s and had a repo from Christler financial about 6 months prior. Sure if you are selling Hondas then go ahead and do the test drive but when it is a toy like a Corvette or a boat you tend to attract allot of dreamers. Not to mention that the financial requirements for a toy require higher down payments and better credit.

When I bought my stingray it was the same deal. The dealer did not want to sit around all day test driving boats with someone who they did not know would be able to buy the boat so it was pick a boat, get the financing in order then test drive. If I did not like the boat since I had been qualified then I was able to try other boats. Some times a dealer would make exceptions. I went and looked at a boat at Marine Max it was a searay that they needed to move, I told the sales guy that I was not going to buy until after the new year but he tried everything to get me to buy including "Why don't you and your girl come down this weekend and we will take the boat out for a cruse" I guess it depends on the dealer and how bad they need to move a boat but for the most part you will need to prove that you have the means to buy the boat before they invest any time in to sea trials.

Look on the bright side. My aunt and uncle are selling their yacht through a broker, the asking is $280,000. If you want to test drive that you have to be qualified and you have to pay $400 to have it put in and hauled back out. It could be worse...

 

[Slip Away]

Re: Buying from Boat Dealers Problems

Nothing wrong with the dealer's policy, unless any deposit is non-refundable. We are on our 4th boat. All of them were looked at in the winter, early spring when a sea trial was not possible. All were contingent upon approval after sea trial. We put money down on all of the boats, then waited until spring for everything to be done, and the sea trial completed. then bought the boats. You should be able to walk at any time during the process, and expect a full refund. If not, time to move on.

Oh, and by the way... that V318 "Jill's Thrill" in St. Pete would not be "perfect" in my book. That boat has been on the market for 5 years now. Been at 3 different dealers from Daytona to Tampa/St. Pete. Buyer beware on that one....

 

[airdvr1227]

Re: Buying from Boat Dealers Problems

All of our boats are sold "contingent upon successful sea trial" or some other wording that fits the situation. From a dealer's stand point; he wants to know he's dealing with someone who is serious about buying the boat. We aren't on the water. It's about a mile away so the sea trail involves having someone from service take charge of doing everything that has to happen in order for the boat to get in the water. Without doing things this way people would want to take boats out and we'd never get anything done in service.

 

[sktn77a]

Re: Buying from Boat Dealers Problems

Sounds like an archaic systems that needs a kick in the pants! Ever test driven a BMW 7 series or Mercedes S series? A dealer would get laughed out of business if they insisted on a 10% deposit before a test drive. And before people say "boats are different", they are not. Find yourself a dealer on a lake or ocean marina that doesn't play such stupid games. The economy is such that it's a buyers market and the buyer calls the shots.

 

[tpenfield]

Re: Buying from Boat Dealers Problems

Boat are not different, cars are.

You pose an interesting question by comparing the prevailing selling process of the 2 - boats versus cars.

The differences are in the areas of:

driver's license versus ??? for boating (so presumed knowledge of operating them)

Insurance, most people have insurance for their driving, as far as boating ???

Expense to test drive; relatively inexpensive for automobile versus launching a boat $$$.

Now I have known friends of mine to be handed the keys to a boat for a test drive, but those are few and far between, and solely for new boats. It would depend if a boat dealer has things set up in their operation to do test drives at will. As far as brokerage boats . . . it is not their boat, so 'nuff said in that case.

So, you are right, cars are different, not boats.

 

[Crusoe]

Re: Buying from Boat Dealers Problems

OP put the same post on THT (and who knows how many other sites). Looking for sympathy but not getting much here. If you prefer the car dealers way, drive all the cars they'll let you. If you're into boating it's a whole different culture where you hafta pay to play. Might as well get used to it.

Break
Out
Another
Thousand

 

[JoLin]

Re: Buying from Boat Dealers Problems

Sounds like an archaic systems that needs a kick in the pants! Ever test driven a BMW 7 series or Mercedes S series? A dealer would get laughed out of business if they insisted on a 10% deposit before a test drive. And before people say "boats are different", they are not. Find yourself a dealer on a lake or ocean marina that doesn't play such stupid games. The economy is such that it's a buyers market and the buyer calls the shots.

I assume you've never been a seller. My first and only experience was the 21' Pro-Line I sold privately 4 years ago...

The prospective buyer looked the boat over stem to stern. I answered all his questions and demonstrated everything I could on land. He asked for a sea trial. Next morning I towed the boat to a local ramp with him following, launched it and spent an hour riding around with him. At the end of it he said, "Thanks, I'll let you know" and drove off, leaving me to retrieve the boat, haul it back home and clean it up. Never heard from him again and he didn't return my phone call a couple days later.

I spent 2 hours of my time the first day and about 6 the second, an $8.00 launch fee and $50. worth of fuel in the boat and truck. I don't blame the shopper, I blame myself for not making him demonstrate an intent to actually buy a boat before I put that much effort into the sale. I wised up in a hurry. The next 2 so-called buyers weren't willing to deal before a sea trial. Fine by me- let me know if you change your mind. The last guy was serious. He had decided to buy a boat, knew what he wanted and thought mine was a likely candidate.
He didn't have any issue putting in some (refundable) cash up front.

As a seller I welcome the opportunity to spend an hour or two with you answering questions, letting you poke around, demonstrating systems on the boat, and even starting the motor. But, fair is fair. Don't ask me to jump through hoops for you while you're deciding whether to buy a 21' outboard walkaround or a 26' I/O express cruiser. That's what friends, family and window shopping are for. Spend some effort and shoe leather of your own deciding what size and type of boat you want to buy, and decide that you're actually willing to go through with the purchase if you find a good example of what you want.

My .02

 

[Tail_Gunner]

Re: Buying from Boat Dealers Problems

Well something like a 30' boat is going to take sometime to be preped and readied to go....Now that may have a cost of say 200 believe me here succesful big business look's at that cost factor with a keen eye. So a dealer makes a policy.. lets say a open demo policy and does 40 demo's a month at the end his or hers bottom line is analyzed. Someone notes that's 8000 now x that by 12 and the demo policy is canceled.

I dont mean to be sharp angled here but your not buying a car....demoing a car is free...nope that has a cost to but very small compared to dropping a boat gassing her up and out for a joy ride. Find a boat that you want to buy have it surveyed make the deal then have the sea trial...Your not going to be able to test drive large boat's like you would test drive a car's just not going to happen....In this economy.

 

[Seevee]

Re: Buying from Boat Dealers Problems

All of our boats are sold "contingent upon successful sea trial" or some other wording that fits the situation. From a dealer's stand point; he wants to know he's dealing with someone who is serious about buying the boat. We aren't on the water. It's about a mile away so the sea trail involves having someone from service take charge of doing everything that has to happen in order for the boat to get in the water. Without doing things this way people would want to take boats out and we'd never get anything done in service.

Wouldn't you be happy showing a boat if the buyer paid the expenses to do a test run? Wouldn't you think if he spend $200 to $400 to do that, he was serious? I've done just that, and no problem with it. However, I also want a serious seller. I've looked at a few boats, that after the test run, there were some major issues that the seller refuse to address. Perhaps they didn't want to sell.

 

[Seevee]

Re: Buying from Boat Dealers Problems

Well something like a 30' boat is going to take sometime to be preped and readied to go....Now that may have a cost of say 200 believe me here succesful big business look's at that cost factor with a keen eye. So a dealer makes a policy.. lets say a open demo policy and does 40 demo's a month at the end his or hers bottom line is analyzed. Someone notes that's 8000 now x that by 12 and the demo policy is canceled.

I dont mean to be sharp angled here but your not buying a car....demoing a car is free...nope that has a cost to but very small compared to dropping a boat gassing her up and out for a joy ride. Find a boat that you want to buy have it surveyed make the deal then have the sea trial...Your not going to be able to test drive large boat's like you would test drive a car's just not going to happen....In this economy.

Tail Gunner,

I'd have to disagree with your last statement. I can't imagine nailing down a boat and making a serious offer AFTER a sea trail. You don't need a survey, yet, but need at least time to check out performance, handling, what works and what doesn't, etc. And that can really be done in less than 30 minutes. Then, and only then one is in a position to make an offer subject to the survey, which would be the final step.

I am finding mixed feelings on the deposits, however, it's more common than I thought.

Still, I could argue strongly to not put down large amounts that could be unsecured.

 

[Tail_Gunner]

Re: Buying from Boat Dealers Problems

It is your adventure Seeve and money and you have earned the right to spend the money as you see fit. I call what some do is brain damage while they call call it due dillegence so be it..In the end i hope you acheive your goal's..in a sense it's debasing to besmirch how someone decides what is best for them and there ability to analize the information and make a good decision.

There are so many variable's to making a large boat purchase i tend to keep it simple...That's the look..that's the brand..yep i like the twin screw's and my wife likes the color....Now for myself anything over 5000 i get a second opinion just to reflect on my decision try to keep all involved on a freindly baisis....As to the survey.... well that is priceless i would be the very first to admit that oversight's happen and in big boat's well...my ego take's a distant third to my wallet and my wife's potential wrath....

Ohh as to ride...well little secret there all the same on a good brand its just a hair splitting experience..

 

[MarkSee]

Re: Buying from Boat Dealers Problems

but need at least time to check out performance, handling, what works and what doesn't, etc.

These places you're contacting, are you asking them only about buying a specific boat from them that you saw an ad for or are they in a position to find you a similar boat somewhere else also and being a broker for you? In which case they may be more open knowing they'll get a commission from any boat sale that they are part of even if that means splitting the commission with a selling dealer.

The way it was with my broker/dealer, and apparently the way most places seem to work out here in SoCal is that the 'performance, handling' piece you are mostly expected to already know what you want and when you go "look" at a boat, that's really all you're doing is "looking" to see the layout, color scheme, cleanliness, engine room space, etc. That they say is called "showing the boat".
If mentioned and approved by the dealer/broker ahead of time, it may be possible they will start the boat in the slip and run/test many of the systems for validation of what works and what doesn't.

If you like what you see on that initial visit, then you make an offer contingent upon approval of the surveys which can include a sea trial by the surveyor with you aboard. Anything found not to be acceptable you ask the seller pay all or part of. If they refuse, then no deal.

Yes, it is your cost for the surveys, haul-out, etc. so usually you hope to come upon the "right" one early in the process.

We first looked at a 260 'Dancer and made an offer based upon the surveys which we had the mechanical done first. There were several items that the mechanic separated into 'normal maintenance'-my cost and 'upkeep'-current owner to pay. I was fine with my part but the current owner did not want to pay for the items on his list so the deal was off. So it cost me $300 but saved me a few thousand had the mechanic not listed this the right way. Ended up finding the nicer 270 'Dancer for same cost, fewer issues but the 1 major issue of a compromised exhaust valve that meant a $1500 valve job that the mechanic found ahead of time, we asked the seller to pay for which he agreed.

Mark

 

[sktn77a]

Re: Buying from Boat Dealers Problems

I assume you've never been a seller. My first and only experience was the 21' Pro-Line I sold privately 4 years ago...

We're talking dealers here, not private sales. Dealer profit includes the cost of doing business. Like I said - find a dealer with a marina on a lake or sea inlet. And one that doesn't play these games!