-My definition of a survey allowance is an amount of money or negotiated work that a buyer asks the seller to have done AFTER a survey and sea trial on a boat are completed and the surveyor report notes deficiencies that must (or should) be corrected. These corrections could be done by the seller, a business hired by the seller or a “survey allowance” taken off the sale price.
Survey allowances can be a great negotiating tool for a prospective boat buyer and a nightmare a seller, but it doesn’t have to be that way…..read on.
A survey allowance is used after the buyer has made an offer and the seller has accepted the offer and a survey and sea trial have been scheduled and completed successfully. If during survey or sea trial the surveyor has found either known or hidden issues they are noted on the report and shared with the buyer and the buyer’s broker. They decide as a team whether to share the report with the seller and whether the issues are large or important enough to bring to the seller. Generally there are issues that should (or can) be found coming out of a survey that can be addressed by the seller, either getting those issues fixed by a marine professional quickly or deciding to ask for a “survey allowance”. Be careful here, because a survey allowance may not get a greedy buyer what they want and could cause the seller to dig in the heels if this isn’t handled correctly. I think the survey allowance should be used sparingly if possible and not used to hold the seller over a barrel. This tool should be a dance between buyer and seller, not shoved in their face to tell them how much the boat sucks, but definitely used to get a fair deal for the seller without nitpicking.
My advice to both seller and buyer is don’t get greedy….it’s a negotiation and both parties probably want to close the deal. Some vision is needed here, to see the future and decide how pricey the repairs really will be and if you want to tackle them. BUT….if the survey notes major problems with the boat then it’s time for the buyer to think hard about whether they really want the boat or to use the survey to pull out of the deal. For the seller, every survey should be a chance to improve the boat even if the sale doesn’t happen, but there’s a way to avoid this whole scenario all together. The best way I’ve found to negate niggling survey issues and make sure the buyer is really aware of the condition of the boat beforehand is the pre-sale survey, which I wrote about last week and I highly recommend.
The author and his family (and Great Dane) live on their Aleutian-51 Ketch in the Sea of Cortez right now during hurricane season actively cruising, watching the weather and avoiding Covid. This blog post is his opinion and information only….the author is not a professional boat broker or surveyor. However, the family has bought two sailboats, sold one of those sailboats, and their current sailboat (Aleutian-51) is for sale.
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