BUYER UNDER CONTRACT: NEXT STEPS

NOW THAT YOU’RE UNDER CONTRACT TO BUY YOUR BOAT…

First off, Congratulations on getting your offer accepted. Now it’s time to take a few proactive measures to ensure your transaction moves forward without any deterrents. 

We’ve put together a brief 7 item checklist and recommended actions you can take to move forward strategically in your transaction.

1. Ensure You Have Submitted The Deposit - The 10% deposit must be submitted into the buying broker’s escrow account within 72 hours or 3 business days of offer acceptance. Failure to do so will void the contract, open you to risk of losing the deal plus it can reduce negotiating leverage into a transaction.

2. Ensure Insurance Quotes Submitted  - Insurance quotes take time so if there’s going to be challenges such as surprisingly steep rates, unrealistic captain supervision requirements or denial, it’s better to find out sooner in the transaction than later.

3. Ensure Loan Documents Submitted - Loan approval can take time, so get started sooner. In the event you’re not approved, we want to limit your time and money put into inspection costs.

4. Schedule Your Survey - Your survey is critical to determine the vessel you’re buying is in fact in the condition as it’s advertised. Be prepared for many findings to be revealed, with the seller to resolve them, credit them or for you to fix them upon purchase.

5. Ensure Your Material Damage Disclosure Statement Is Signed Off On - Ensure that any known damage is disclosed up front before spending time and money inspecting a vessel that may drastically change price or buying probability. 

6. Ensure Your Exclusion List Is Signed Off On - If something isn’t being sold with the boat, make sure it’s known now so it doesn’t create friction or result in out of pocket costs for parties at the time of closing. 

7. Ensure The Boat Is Test & Prepped - A light sea trial and pre-purchase inspection can help set expectations for potential issues before they come up or can be resolved. It’s highly encouraged to take oil samples immediately upon acceptance to avoid worst case resolution quotes.

Step 1: Submit Your Deposit. Ensure you submit the 10% deposit required by the contract into the buying broker’s escrow account within 3 business days to ensure your contract remains valid. If there’s a delay in depositing these funds, this can unnecessarily signal instability to cooperating brokers and the seller so we advise moving money quickly and verifying wire instructions with your team .

Step 2: Submit Insurance Quotes - Insurance quotes can take some time to get back so it’s advisable to start now to determine what your rate will be, coverage requirements, hurricane plan requirements and captain supervision requirements. In the event that the cost is especially high or requirements are prohibitive, we want to know this now before you and the cooperating parties invest time and money into the transaction. We’ve attached an insurance intake form here or your yacht broker can connect you to their preferred marine insurance brokers.

Step 3: Ensure Loan Documents And Applications are Submitted - However you plan to pay for the yacht, we advise moving money and organizing paperworks up front. Loans can take some time based on the cruising region, if you plan to charter, and if you don’t show certain debts or income through your various businesses, it might require some reallocations. It’s best to find this out up front. If you’re paying cash or funding another way, the same rule applies in the sense that we encourage you to be proactive before investing time and money and finding out later that loan terms will be different then envisioned. It’s important to note as well that if you plan to finance the boat, it’s typically a 20 year term with 20% down and the boat can’t be older than 20 years old to qualify for financing. If you need a loan application, be sure to fill out the application linked with this video or reach out to your yacht broker for a connection to their preferred lender, who specifically deals with yacht loans. 

Step 4: Planning Your Survey. Your survey, much like a home inspection, is going to turn over a ton of findings or minor issues with the boat. In reality, even brand new boats have the same issues since it’s a calibration of so many systems, exposed to salt water, sun and not such standardized maintenance. A survey is critically important to determine the true condition of a vessel and is almost 100% required to get proper insurance and financing. Not all surveyors are equal in how thorough or experienced they are so selecting the right surveyors is a unique process that is determined by availability, geography, price and experience. Your broker can help you to do so but they cannot tell you exactly which broker to hire or pay them as there’s been evidence of collusion and it’s important to maintain ethics. We have a number of resources to help you but in reality, the type of vessel you’re buying, will dictate which surveyors you hire.  

During a survey, the seller is responsible for covering the costs of the crew and the fuel but the buyer must pay for the inspection costs. The time surveyors must arrive, the time to sail to the open water and time to sail to the shipyard requires adequate planning that should typically be coordinated by your broker representative. 

A hull surveyor, with a NAMS or SAMS accreditation will check structural integrity and systems. An engine surveyor will perform engine, generator and transmission checks and it’s paramount they have the appropriate computer to plug into the engines, for if they don’t you will have tremendous blind spots on true health. For foreign built boats, you may mobilize an electrical surveyor and for sailing yachts, you will mobilize a rigging inspector. These surveyors will all need to be present during the haul out from the water and on sea trial to determine vessel health. Since there’s so many moving pieces to this, ask your broker on how you can be extra thorough, efficient and check out our guide after the guide that we’ve attached to this video. 

Step 5: Ask To Have The Seller Sign A Material Damage Disclosure Statement - This is a common form in our industry that transfers selling risk from a buyer to a seller that says they’re unaware of any critical damage events that would impact the performance or future resale of the vessel. This is for major items like fires, lightning strikes, hurricane damage and sinking, which should be disclosed up front to save you an unpleasant surprise after you invest time and money into your acquisition. 

Step 6: Ask To Have The Seller Sign An Exclusion List - This document details anything the seller won’t be selling with the vessel that wouldn’t be considered a personal item. This can include artwork, dinghies, coolers or anything that a buyer would expect to be conveyed. The rule of thumb is that if it’s onboard during a survey and not on an exclusion list, it must go with the purchase. 

Step 7: Ask To Have The Seller Pre-Test the boat ahead of your survey and sea trial. You want the survey inspection to go well so you can have a high degree of certainty that this is the vessel for you. Following our short checklist will allow surveyors to inspect systems without issue and in the event that anything undesired can be detected ahead of the sea trial survey, will allow for smoother operation, slight delay before you invest time and money or an immediate credit in your favor. 

If you have any questions about these actions to be taken, please contact your yacht broker or reach out to our team in the contact information here.