conflict of interest?

[TaoJones]

swami maximus, when you "introduced" your broker to the seller. If you did so in the hope that he would negotiate a lower price for you, that was your second mistake, because his commission is based on the selling price and he has no incentive to try to get it down.

All is not lost, however, because you found the boat in the first place. This gives you the option of dealing with the seller without having the broker involved. Will the broker be pissed if you consummate the sale and he's cut out? Sure! So what? It isn't worth his time to pursue it legally, and he won't prevail if he does (unless you foolishly signed an exclusive representation agreement with him).

If you really want THAT boat, and don't want to cause trouble, let him keep the listing, but get yourself another broker to represent your interests and present the offer. No broker can ethically represent both sides in any deal, even though they do it all the time.

And, as others have said, the commission comes out of the seller's proceeds anyway. Just don't think that the price is going to come down much at this point - your greatest negotiating power was sacrificed when you got a broker involved.

If it were me, I'd dump the broker posthaste, go back to the seller and see if you can work it out between the two of you, and if not, walk away. There will always be another boat, and it's always a buyer's market. Don't give up that position of power.

TaoJones

[AnchorageGuy]

I would be cautious about advising someone to coax a seller into violating a contract and putting them in a position where they could be sued by the broker. Hiring another broker at this point will only convince all parties that you, not they should be considered with suspect. There are no underlying issues with the original broker. If you want that boat use him. Don't get "dodgey" about the whole deal.

[TaoJones]

Because swami maximus found the seller and his boat, his prior knowledge supercedes the listing contract the seller subsequently signed with the broker.Thus, his option to deal directly with the seller is retained (unless swami signed an exclusive representation agreement with the broker).

I concur that the broker will try to convince the seller that the signed listing agreement obligates the seller to pay the broker a commission whether he is involved in the sale or not, but I maintain that that is an invalid claim, and the broker would not prevail. If the broker consults with an attorney to file such a claim, he would be so advised and would then drop it as a waste of his time.

Obviously, at this point it's a mess. Swami's "feeling" that he may be getting screwed is valid, and that is why I advised that he should be prepared to just walk away from the problem and start looking for another boat.

TaoJones

[AnchorageGuy]

I respectfully suggest that this forum is not the appropriate place to dispense legal advice without all of the facts. Or perhaps even with all of the facts.

[TaoJones]

. . . but to get back to swami's original question as to whether this is a conflict of interest, I would maintain that it is. Why? Because the broker is now sitting on both sides of the table, supposedly representing swami's best interests while also doing the same for the seller. That is not ethically possible, and only exposes the broker to be callously representing his best interest; i.e. to reap a double commission.

So, swami, given that you're already feeling that something isn't qute right, how do you think you will feel if you go through with the deal and are unhappy with the boat for some reason?

TaoJones

[tomdidit]

I agree with those that say "What is the big deal here?" If you want the boat the seller pays the commission. You are going to offer what you are going to offer...not what the broker wants to offer. Whatever you offer is based on a survey and a sea trial and then you may offer less. You are in control of the situation and the broker is still in the middle. He is just a little closer to the action now.

How were you planning on compensating the broker when you introduced him to the deal? If you had a prior written aggrement it still holds. In my opinion he did nothing wrong. If you were going to pay him X to do the deal for you, you just saved some money as the seller is now on the hook.

[Sailormann]

Want to make sure I understand this. You went to a broker, told him you wanted to buy a boat and asked him to help you.

You didn't pay him a retainer for his time/efforts/expenses.

You told him you had found a boat that you liked, and were proceeding with a deal that did not require his services. He then listed it and it is on Yachtworld.

You are wondering if this was an ethical thing to do.

In a word - yes, it was. Not honorable maybe, but not unethical.

The guy doesn't work for free. From his perspective, you are a really picky customer (most people don't spend years looking - months sometimes, weeks usually), who has finally identified the particular class of boat that you want, but you might not end up buying this particular specimen if the survey doesn't work out, or the tides change, or any of hundreds of other reasons.

If you put yourself in his shoes, and had worked with someone for a little while on faith, expecting that they would eventually purchase something through you, then found out that they were moving ahead without you, well from that side of the fence, you were the one who made the first less-than-above-board move...

Takes two to tango. If you go to someone and ask them to work for you (remember that buying and selling boats is the work he does to live) you should feel obligated to cut them in on the deal, regardless of who found the boat. Finding the boat is about half of the process, and the other half is the hard part where it is better to have a third party in the middle.

So not only did you cut him out, but you didn't have the decency slink away and do it quietly. You told him "Gee sorry, thanks for all the time and effort, but we found a boat we like on our own, so I guess we don't need you." If I was in his place I would have taken that as a bit of a shot...

Chances are that if you end up getting the boat, you're going to pay more for it than you would have had you called him up and said "We found something we like. How can we structure this so that we all end up happy ? " You never know, he might have told you not to worry about it and good luck. He could have asked what you we planning on paying, and then suggested thatif he could negotiate lower than that, he could take the difference.

Lots of options...

There are some really bad brokers out there, I have a pretty bad opinion of them overall. But I guess that there are some pretty irresponsible clients too huh ?

[CaptainK]

I say hang that dirty broker from the highest yardarm.

But that is just me!!

I say dump him while you got the chance.

[Paul Elliott]

I don't know if boat brokers work under different rules than real estate brokers, but this would be a questionable situation in a real estate deal. What I read here is that Swami Maximum (S.Max.) engaged the broker to represent them (the buyers). Now the broker is also representing the seller. If the broker's sole function is to take care pf the paperwork, then I suppose there's no conflict. If, on the other hand, the broker will be representing and advising both parties during the negotiations, there is a now a conflict of interest, and probably to the buyer's detriment.

Presumably S.Max and their broker had terms in their representation agreement covering the case where the boat to be purchased is not listed with a broker, so S.Max's broker would still get get paid a commission or fee.

I am not saying that having one broker representing both parties is always unethical, but both parties have to agree in advance to it. When you hire a buyer's broker, it is usually to avoid just this dual-representation situation. If the seller wants to have a broker represent them, the buyer's broker might better suggest an independent broker.

[Pura Vida]

Swami,
There is really nothing wrong here. In fact, this sounds like a first time buyer's learning experience, not any kind of suspect behavior on your part or the brokers part.

Think of it like this for a moment. The brokers job is not to "represent" anyone like an attorney would. He is not an advocate of anything but the sale. He traditionally works with both buyers and sellers and is simply contractually aligned with the seller. The seller only pays him a fee if the boat sells in a given period of time. Most of the time this fee is reasonable since it saves the seller the aggrivation of showing the boat, surveying the boat (the seller should not be at the survey!), and handling the paperwork.

My last boat was in the marina news letter for sale by owner for a couple of months. I was working with a broker and he negotiated with the owner to sell the boat for a commission. The then owner decided that it was worth the commission not to hassle with the sale since he lives 60 miles away. This sale would never have happened without a broker.

No harm, no foul. If you still like the boat, negotiate a price based on the survey, here is where you should do the real dilligence since the surveyor is important to a valuation that can be easily abused. The survey has been discussed at length in several threads. If you can come to a price you are willing to pay make the broker earn his commission by handling all of the details of the transactions. But remember in the end that he may be the guy you use to sell this boat and buy your next one.

Three possible 'suspect' broker actions:
He insists on a specific surveyor. This is always a red flag.

He asks for a copy of your survey. You pay for the survey and it should serve as your basis of the boats valuation.

He asks to or attempts to delay a deal in order to gain control of the contract from another broker. This may not be an issue for you as a buyer but it does give some insight into the way the guy thinks.

[tomdidit]

In Swamis defense here, I don't see anything in his posts that says he wanted something for free. My read of his posts was that he was using the broker to represent him and expected to pay for the services.

Still, the broker has done nothing wrong. This is what he does for a living. I have bought real estate from a listing broker because he happened to represent the house I wanted. I was still in control of the sale from a inspection and price stand point. The broker was just lucky enough, and happy enough, to double his commission. So what?

Swami, if you like and decide to buy the boat, so be it. If you let this kind of thing stand in your way you will probably continue to kick tires and maybe, someday, get around to buying a boat. There are X number of boats on the market, 1/3 X number of good boats on the market, and probably 1/200 X number of boats on the market you may be interested in. If you have been looking for a long time, and it sounds like you have, you may like the hunt better than the actual purchase. If so, the broker is just wasting his/her time with you unless he happens to find a good listing like this along the way.

[Pblais]

It's still in his best interests to sell it to you, and if you can get the right boat for the right price, even with a sleeze bag salesman, it's still worth doing.

Brokers make money closing deals. I bought my first and second boats without a broker working for me. In each case both brokers were honest hard working folks that helped make the deal work and help me with all details of the transaction even after the sale was closed! I'll use the first broker to help me sell the boat I now have for sale and if the other broker were near I would have a hard time deciding which to use.

There are good brokers out there and like Realtors there are too many good ones for you to put up with a poor one. If you don't like the broker you chose yourself then dump them. You don't need a reason. You should like your broker if you chose them.

The boat won't be any better or worse based on the broker. It's only a matter of services provided. Brokers don't have conflicts of interest they only close deals or fail to close deals. Conflict of interest is of no issue here. They can be dishonest and they can provide poor service. I think it's generally easy to tell the good ones from the bad. You can at least decide if you like or trust them for yourself.

You need to use caution with all brokers. All brokers get a lot of potential clients that like looking at boats and never make an offer. They will blow you off if they think you are one of those types if they are any good at the job. They do it because there really are a lot out there. Don't act like one of those clients or they will think you are one. Most brokers will size you up to see if you meet that criteria.

[TaoJones]

. . . and I think one particular paragraph is directly on point. In that paragraph, you state, "My last boat was in the marina news letter for sale by owner for a couple of months. I was working with a broker and he negotiated with the owner to sell the boat for a commission. The then owner decided that it was worth the commission not to hassle with the sale since he lives 60 miles away. This sale would never have happened without a broker."

Imagine, though, that after the above, your broker had put the listing on YachtWorld.com. In effect, rather than working for you to consummate the sale of the vessel you found and brought to him, he is now offering it to any and all comers. Where would that leave you? Would you not have thought that the broker's actions created a conflict of interest, just as swami maximus did?

If, after all good faith efforts by the interested parties, no agreement could be reached and the sale was aborted, only then would the broker be justified in posting the listing on YachtWorld.

In my view, it is the creation of the conflict of interest that poisons the well for swami maximus. It could still work out to everyone's satisfaction, of course, but the odds are against it.

TaoJones

[Pura Vida]

Tao, Fair enough. I agree that the listing on Yachtworld could be a conflict, but to pursure it farther would cause me to make a few assumptions.

Bottom line is that I would have preferred my broker to complete my deal before pushing the listing to the public.

pv

[Benny]

Unfortunately we must make some assumptions as to the brokers motives or reasoning BUT as the story is related by Swami, we must assume that the broker wanted to ensure he was paid on some purchase that Swami was going to make. Afterall, he had spent time and some advice on the service but had not yet been remunerated for it. So he saw his chance to solidify his commisiion by getting the listing of the boat that Swami was fairly certain was THE ONE. The legal problem which I could see is that he was under a contractural arrangement - maybe only verbal - but still a contract to advise and represent Swami in a boat purchase. This can be very important if there are any reasons to want an alteration of price or conditions if either there are survey deficiencies or other problem comes to light. There is also the matter of disclosure of known problems that may be detrimental to the buyers position that a listing broker would be privy to but unless bound by a contractural clause, may not need disclose. Therefor, he would not be able to act for both parties should a legal conflict arise and his listing contract will most probably contain the clause that he is legally bound to represent the seller first. Due to the initial contract though with Swami, it would be a very interesting court challenge.

Swami, your expectation of this broker acting for you and not being paid until finding the right boat may have been a bit naive but if he agreed to do this, then he is bound and if you found the boat, he is only entitled to a commission that both parties had already agreed to and also bound to represent you only. If he had asked your permission to secure the listing agreement as a way of binding the seller to your offer, then all parties would have had to agree to this arrangemnt and the sales agreement and conditions drawn up accordingly. By persuing the boat seller that you found without your knowledge and dismissing his legal obligation to represent you solely in that purchase, and then listing the boat on Yachtworld in order to offer it to the highest bidder, he has breached his contract and you have every right to supercede his listing contract with the seller and make your own deal. The unfortunate thing is that now you would have the difficult task of convincing the seller that it is OK to make the deal without the broker which he probably wouldn't do for fear of legal reprisals.

The best thing you can do is get another broker to represent you and ensure there is a good survey with YOUR surveyor and full disclosure by the seller and broker of any known deficiencies as surveyors miss some important problems sometimes. If this original broker tries to advise you that you must use him and not another broker, I am sure as a sailor you know some choice words that you can say to him to emphasize your disagreement and displeasure of his actions with the seller. Speaking of whom, he was more interested in listing with the broker than persuing a deal with you so you don't owe him anything either.

The forgoing is based upon the conditions as you have related them. If you did not really have an agreement with the broker and were just kicking tires, then there is no onus on his part to adhere to a casual or unstructured discussion that he would help you find the right boat and he was legally free to persue your referral however, the seller, if having discussed the possibility of selling the boat to you first can legally make a private deal with you without the broker.

Hope this helps.