What is the Standard Brokerage Commission

[Doodles]

Originally Posted by Zonker

Let say if boat is advertised for 500K and I'd be willing to pay 400K - is the broker still interested to sell the boat to me ? I guess I would be put in a waiting queue unless he really doesn't find other potential buyers. Also I would guess the owner wouldn't be notified of a potential buyer ?!

If its a legitimate written offer with a deposit I think they are required to present it to the seller. They may discourage you from doing it if they think it will be rejected out of hand but they still have to present it. That's always been my understanding anyway.

[Vasco]

Originally Posted by Zonker

Let say if boat is advertised for 500K and I'd be willing to pay 400K - is the broker still interested to sell the boat to me ? I guess I would be put in a waiting queue unless he really doesn't find other potential buyers. Also I would guess the owner wouldn't be notified of me as a potential buyer ?!

I would think that the broker has an obligation to present the offer to the seller. If it's a documented vessel you can easily find the owner and relate to them your experience if the broker refuses to present an offer.

Also I would think that 10 percent of 400K is better than zero percent of 500K.

[Doodles]

Originally Posted by simonmd

He should be yes as 8% of 400k is still not a bad days work! However, remember, it's still down to the owner being willing to let the boat go for 20% off the asking price.

Why? The broker is already taking his share of the hit, he's getting only $40K instead of $50K in commission. To take an additional rate reduction to 8% gives him only $32K or 6.4% on the original listing price of $500,000. The broker rate should be negotiated at the beginning of the contract with the seller not when an offer comes in. Same with houses. You sign a contract, you should live by it. You know you are not likely to get the listed price but will be settling for something less.

[simonmd]

Er, I wasn't suggesting that they should be reduced further, just that 8% is the average around these parts.

Originally Posted by Doodles

gives him only $32K or 6.4% on the original listing price of $500,000.

Are you listening to yourself? ONLY $32k for selling SOMEONE ELSES PROPERTY??? Give me strength. $32k is a YEARS WAGES for most decent working people, what on earth has a broker done to deserve this????

It's about time that they woke up to the fact that the days of being able to leach money off those that have the good fortune to have more than them are over. Personaly, I think that any broker charging over 5% is robbing you, sorry but from my experience, WHAT do these people do exactly to earn this kind of money?

In Europe, the average Estate Agent (real estate agent) gets about 4% on a property (which is alot more complicated than a boat sale) so what on earth does a boat broker do that's SOOOOOO valuable?

In the 21st century internet age, I honestly think that most brokers days are numbered.

[Doodles]

Originally Posted by simonmd

Er, I wasn't suggesting that they should be reduced further, just that 8% is the average around these parts.

Are you listening to yourself? ONLY $32k for selling SOMEONE ELSES PROPERTY??? Give me strength. $32k is a YEARS WAGES for most decent working people, what on earth has a broker done to deserve this????

It's about time that they woke up to the fact that the days of being able to leach money off those that have the good fortune to have more than them are over. Personaly, I think that any broker charging over 5% is robbing you, sorry but from my experience, WHAT do these people do exactly to earn this kind of money?

In Europe, the average Estate Agent (real estate agent) gets about 4% on a property (which is alot more complicated than a boat sale) so what on earth does a boat broker do that's SOOOOOO valuable?

In the 21st century internet age, I honestly think that most brokers days are numbered.

Easy solution .... sell it yourself. No commission at all.

Why gripe and whine after you've signed the contract? You know what you agreed to. If you don't like it, don't do it. But a lot of people think the advantages of using a broker are worth it. It's your decision, no one is forcing you.

[simonmd]

Indeed, I listed my flybridge with a few brokers as well as advertising it myself. Who sold it? I DID!

Sure, there is the aspect that when dealing with large sums of money, you're better protected with a broker but come on, anyone who lets them get away with the full comission really has more money than sence.

[Doodles]

Originally Posted by simonmd

Indeed, I listed my flybridge with a few brokers as well as advertising it myself. Who sold it? I DID!

Sure, there is the aspect that when dealing with large sums of money, you're better protected with a broker but come on, anyone who lets them get away with the full comission really has more money than sence.

That's great you sold it yourself and anybody else can do the same. It's called the free market system. The same system that allows you to negotiate the rate if you decide to use a broker. The 10% rate is not cast in stone. I sold a house a few years ago and the broker offered a lower rate because she knew the house would sell quickly and she could live with the reduced rate.

And don't think the selling agent gets the full $32,000 in the example above, which is a common misconception. That's what the brokerage house gets and out of that the agent gets a share but the rest has to go to cover the office rent, utilities, staff payroll, taxes, advertising ... everything else it takes to run a yacht brokerage business.

[simonmd]

Originally Posted by Doodles

And don't think the selling agent gets the full $32,000 in the example above, which is a common misconception. That's what the brokerage house gets and out of that the agent gets a share but the rest has to go to cover the office rent, utilities, staff payroll, taxes, advertising ... everything else it takes to run a yacht brokerage business.

Of course, i'm not blind to how a business works, having owned and run several myself. However,

Office rent- What office? These days, people look at the broker's website and then decide to visit the marina if they have stock that interests them. The days of someone doing the reverse, going to a shop window to look for a vessel they might like are gone. Sure i'll grant you that it's a nice professional touch to have a premissis to sit down and chat, do paperwork, etc. but as the stock is in the marina and the listings online, its a luxury they dont need. I had my negotiations and then bought my last boat in a couple of bars and coffee shops, didn't have a problem with it at all, in fact more relaxed and felt less pressure to be honest.

Utilities- Apart from a decent mobile phone and internet contract, see above.

Staff payrol- LOL. 2 or 3 sales a year would cover the salesperson and his PA / accountant.

Taxes- No sales, no tax. Sales, then you can afford to pay it.

Advertising- Can be expensive but only if you're silly. Sites like Yachtworld, etc. can be surprisingly expensive but have a good IT guy get your website to appear on page 1 of Google and explore other avenues and you're laughing. Personaly, thanks to the brokers I was with, my boat was on Yachtword, TheYachtMarket.com, Boats 24, Apolloduck and a couple of others i've forgotton. However, my buyer (and two other very interested parties) did not come from these, I used Ebay and YouTube together.

Sum total to advertise and sell my boat?

About £80 all in for six months advertising with an Ebay classified ad'.

Probably 5 hours total in preparing the advert, taking pics, making video, etc.

3 or 4 hours in total with various viewings.

3 or 4 hours in total answering emails, phone calls, etc.

If i'd been the broker selling it I would have made about £6000 (8%),
take off the ad costs, £80 = £5920,
take off other costs (phone, fuel, etc) £100 = £5820,
take tax off at an average of 25% = £4365 Gross Profit,
devide by my time (13 hrs) = £336 PER HOUR!!!

So, selling four averagely priced boats per year could give any reasonable sales person a living, all for working a total of about 60 hours! I know this is a bit simplistic but the basics are sound.

[Doodles]

Originally Posted by simonmd

I know this is a bit simplistic but the basics are sound.

Yes, it is simplistic. And if it was that simple we'd all be fools not to be making a living as yacht broker now wouldn't we?

I have (had, retired now) a CPA firm and you could make the same arguments about it, i.e. all you need to do a tax return is a laptop and a cell phone. I use to charge several hundred dollars an hour and believe me I didn't get the majority of that. It went to pay the staff and overhead. Now if you are comfortable having your legal or accounting work done by someone operating out of his house, car or what have you, then fine but most people want to see a respectable business operation.

I don't know what kind of businesses you ran/owned but I'd be interested in hearing how you set your charges or rates?

[simonmd]

Originally Posted by Doodles

I don't know what kind of businesses you ran/owned but I'd be interested in hearing how you set your charges or rates?

Simple, market forces dictated the price and then you can work out how many you need to sell, etc. to make it profitable.

Like I said, my view is simplistic and i'm under no illusions about that. The point i'm making as that the golden years are over. Western ecconomics have suffered greatly in the past few years and I just dont think it's reasonable for brokers to carry on as if everything is normal.

Also, the last 10 years has seen the whole world be completly opened up by the Net, making marketing much easier for all concerned.

Over 10 years ago, a broker HAD to have a shop/office (usually in a marina so the rent, etc was very high), constantly pay for magazine advertising, post mailshots with latest stock and prices, ring round clients with updates etc. They had to physicaly go looking for buyers and this took alot of money and man hours. Also, the ecconomies were better so a seller was much more comfortable taking an 8, 10 even more % hit on their sale price as they apreciated the work involved and they could even compensate by topping up the sale price anyway.

These days, they have to lower their price drasticaly to get any interest and yet the broker has less 'leg work' and expensis due to the Net but they still expect to get roughly the same as before for less work.

[Jort]

Originally Posted by simonmd

Indeed, I listed my flybridge with a few brokers as well as advertising it myself. Who sold it? I DID!

Sure, there is the aspect that when dealing with large sums of money, you're better protected with a broker but come on, anyone who lets them get away with the full comission really has more money than sence.

You are so incredibly right. I have had a research agency look into what private boat owners thought about yacht brokers and how they feel about selling themselves. 83% of them thinks the average brokerage commission of 7% is too high. You are even talking about 10%! They also asked what they think they can do themselves. See the fact sheet in the pdf below to see some of the results. Because of the internet people expect transparency and they want to see a clear added value that is in balance with what they are paying. The added value of a yacht broker is definitely there, but they need to reconsider how they deliver this to their clients and especially how much they can honestly charge for it.

I'm intrigued about this discussion because I started a DIY website because of the exact same frustration about yacht brokers. I really don’t think the traditional business model of brokers has a future and I’m convinced people can sell their own boats better than any broker can. They know every detail of the boat and know exactly why they bought the boat in the first place and talk about it with passion. On top of that supply and demand find each other online these days. The only thing that remains is negotiating the price and taking care of the legal and financial aspects. When you have the boat surveyed and get a valuation by an independent surveyor you have a perfect document to base your negotiations on as long as both parties are reasonable. If they are not reasonable than there wouldn’t be a transaction anyway. Safe payment can be done through an escrow account of a lawyer or trust. The other alternative is a bank guarantee. Both safer than the most trustworthy yacht broker and not overly expensive. The legal part can be arranged by the buyer and seller themselves or they can use my free DIY sales module, but I know this is a forum and I don’t wish to be inappropriate by plugging my site here. I’m just another (ex) boat owner who was done paying excessive fees for something I can easily do myself.

[skipmac]

Originally Posted by Jort

You are so incredibly right. I have had a research agency look into what private boat owners thought about yacht brokers and how they feel about selling themselves. 83% of them thinks the average brokerage commission of 7% is too high. You are even talking about 10%! They also asked what they think they can do themselves. See the fact sheet in the pdf below to see some of the results. Because of the internet people expect transparency and they want to see a clear added value that is in balance with what they are paying. The added value of a yacht broker is definitely there, but they need to reconsider how they deliver this to their clients and especially how much they can honestly charge for it.

I'm intrigued about this discussion because I started a DIY website because of the exact same frustration about yacht brokers. I really don’t think the traditional business model of brokers has a future and I’m convinced people can sell their own boats better than any broker can. They know every detail of the boat and know exactly why they bought the boat in the first place and talk about it with passion. On top of that supply and demand find each other online these days. The only thing that remains is negotiating the price and taking care of the legal and financial aspects. When you have the boat surveyed and get a valuation by an independent surveyor you have a perfect document to base your negotiations on as long as both parties are reasonable. If they are not reasonable than there wouldn’t be a transaction anyway. Safe payment can be done through an escrow account of a lawyer or trust. The other alternative is a bank guarantee. Both safer than the most trustworthy yacht broker and not overly expensive. The legal part can be arranged by the buyer and seller themselves or they can use my free DIY sales module, but I know this is a forum and I don’t wish to be inappropriate by plugging my site here. I’m just another (ex) boat owner who was done paying excessive fees for something I can easily do myself.

All quite correct and you may offer a nice option for an owner that wants to sell a boat without a broker. However, there are plenty of boat owners that do not want to sell their own boat and yacht brokers can provide a service for that segment of the market.

I could pretty much build a house from the ground up: pour concrete foundation, frame the walls, install the plumbing and wiring, put in the sheet rock, etc. But I choose to hire a professional to do many of these jobs because I make more effective use of my time in other areas. Same applies for many boat sellers.

[boatsail]

Originally Posted by simonmd

He should be yes as 8% of 400k is still not a bad days work! However, remember, it's still down to the owner being willing to let the boat go for 20% off the asking price.

What if his asking price is 20% higher than market value? Did he sell for 100k less or did he get the top dollar the market would provide? If your priced right, you'll get your price or have buyers bidding against one another. If you sit on the market forever you must ask....is my price right???

[simonmd]

It's interesting that this old thread has been resurected as I've just put my present vessel on the market, of course, with my own advertising efforts!

Just to clarify, I'm not saying don't use brokers, I'm saying only use them in addition to private ads if you want to sell quickly. After all, say it costs and extra 5k to sell through the broker but he gets you a quick sale, that's potentially 5k in marina fees you've saved instead of keeping it there longer, so it's not all bad. The way I see it, the money saved by not paying their comission can pay the vessels berth and upkeep for another year, so unless you need to sell quick, just advertising it yourself is a very cost effective option. Just set the price a few grand over your private price to cover most of their charges and if they find a buyer before you do, happy days!

Personally, i've put mine on the market because I'll be spending most of this year working on a friends vessel but if she doesn't sell by the start of the summer, i'll simply get her taken out and put on the hard so she stays clean and keep the ad's running.

[simonmd]

Originally Posted by boatsail

What if his asking price is 20% higher than market value? Did he sell for 100k less or did he get the top dollar the market would provide? If your priced right, you'll get your price or have buyers bidding against one another. If you sit on the market forever you must ask....is my price right???

As with anything, a boat is only worth what someone is willing to pay for it. If it's not selling, it's the wrong price.

A very simplistic view granted.