conflict of interest?

[capt lar]

swami - You do raise an interesting issue. The guy selling had no broker. You did not tell us who would pay the commission if you bought the boat. Let's assume the price is 100K with standard 10% commission. If I am the seller, unless your broker had me agree to pay him a commission, I expect to get my 100K. Your broker is your problem and whatever agreement you made with him is yours to satisfy. If, however, I give your broker the listing, I am now the one to pay the commission if he sells it to you or anyone else.
Your broker may have saved you some money - 10K ! Best thing you can do is just ask the broker, but as I reread your original post, you had a strange situation because there was no listing broker.

[Pblais]

Best thing you can do is just ask the broker,

Imagine having a conversation to resolve a question. Might actually work but then again .... .

[capt lar]

Bitter, Paul, bitter

[capt lar]

On a different server tonight - screwed up smilie. Here you go....

[Boracay]

The old sales trick was to ask a closing question and then wait.

To me its the same if you are buying.

Swami, it sounds like you have asked the closing question (as a buyer) and now you need to wait for a correct respose.

Remember that some sellers are content to let their boats rot on a mooring for years. If your seller is like that them you must either pay the asking (and be nice about it) or wait.

In particular if you are planning on borrowing, or your cash is well invested, then waiting is the preferred option.

I have not seen any suggestion in this thread that the boat represents good buying.

[Sailormann]

I have not seen any suggestion in this thread that the boat represents good buying.

Indeed this is the truth. You must tell us all the particulars of the boat so that we can spend a week or two debating the relative merits of the craft, whether or not any shortcomings should be considered major, exactly how it would satisfy our personal boating needs and then a few more days after that for us to squabble amongst ourselves as to whether you should or should not buy the boat.

Do not be so inconsiderate as to deprive us of this small joy ...

[hellosailor]

It sure would be nice to hear the whole story.

If the broker was engaged as a "buyer's broker", how were they engaged? A contract, an oral or written agreement? What was the deal? If there was no deal, there was no engagement and there was nothing more than "If I see a boat I'll call you" and that's not a buyer's broker.

A buyer's broker has the obligation to get the most favorable terms for the buyer. A seller's broker has the opposite, an obligation to get the most for the seller--and that often means keeping his mouth shut about things that might reduce the price, often seen as "as best we know" disclaimers about conditions and such.

So yes, there is VERY MUCH a total conflict of interest for one broker to fill both roles.

Now, if I engaged a broker (which means consideration or contract binding us both) and that broker then went to "my" boat and said "Hey, can I represent you to sell your boat?" that would be a violation of ethics and a conflict of interest. UNLESS, perhaps, the broker said "My client wants to buy your boat...and by the way, if he doesn't, I'd like to sell your boat." But until and unless the first deal is completed or can't be made--there's no way the same broker can fill both roles without a conflict, that I can see.

What, he can try to get $90k for the existing client, while advertising the boat for $110k on the web? Ain't gonna work. Advertise the same price that his client is offering? Why, that's pointless if the deal is going to be made, Yachtworld ads aren't free.

And as to prices being "the same" with and without a broker? Come on, let's not kid ourselves. If I want $100k for my boat, I'm going to ask the broker to offer it at $110k* to cover his commission, so my cut is still the same in the end. That's just human nature, no one is going to say "Gee, I want less." If they were willing to pay someone else to sell the boat...they'd probably have brokered it in the first place.

[*Whatever the commission rate is these days. What is standard these days anyway?]

[TaoJones]

. . . a few minutes ago that read as follows:

Hello swami maximus,

The "conflict of interest" thread you started at Cruisers Forum has been the genesis of a number of entertaining posts, and it's a real contribution to the discussions on the Forum. I hope that the various posts have been helpful to you in your deliberations regarding the vessel your are considering.

That said, it might be informative to the Forum if you posted again, giving more detailed information on the potential transaction. For example, what was your agreement with the broker when you approached him/her to get involved in your pursuit of the right boat? Was it a written agreement, or verbal? Did you have an understanding about how the deal would be handled if you located a boat on your own? How has the fact that the broker approached the seller, got a listing contract on the vessel and posted it on YacthWorld.com affected your relationship with him/her? If this fact had an adverse effect on your potential purchase, have you abandoned this particular vessel and renewed your search for another boat?

These are some of the thoughts that occur to me off the top of my head, but any other information you could provide the Forum would help to focus the discussion.

Thanks again for this interesting thread. Hope to read your "update" soon.

TaoJones

Hopefully, swami will respond and provide more detailed information to help us in this discussion.

TaoJones

[swami maximus]

Sailorman-i fear that you have a few misguided ideas about this. we did not tell him to bugger off because we found our ideal boat by ourselves. we told the seller that we are working through a broker, and to expect his phone call... the broker was to be compensated by the usual fee's associated with co-brokerage or whatever he worked out with the seller. at no point did we tell the broker that his services were not needed. i don't know where you got that idea, but have an inclination that you at some point were or are close to a broker that was screwed in said manner, and feel a need for some vindication. either way we are still on good terms with all parties. this was simply a question as to what the sagely thoughts of those much more salty than i might be about conflicts of interest- as this is our first boat, home, major purchase etc. we are a young couple and want to do things right the first time, knowing that very likely we will still make many mistakes, but still trying to minimize the damage of our ignorance. picky... your darn right i am. i have looked long and hard, studied the listings about many a boat, been aboard more than a fleet of 'em, traveled the west coast from seattle to mazatlan in search and found one i think fits us. patience is a virtue that we have been blessed with and have used it not to make costly mistakes. thank you for your thoughts though... all have been very helpful.

[swami maximus]

I had posted a response to taojones, but unfortunatly my computer conection in the marina froze up and lost it. it was profound no doubt... but i'll have to try again.
I unfortunatly did not get the email you sent as it was eaten by my spam blocker. i apologize for my late additions. in my first post i opted for expiedency in a short and sweet post rather than a lengthy story. however as you noted it has aroused some interesting responses (all of which I appreciate sincerly) and has helped me a great deal. and to point out that i am not a tire kicker infinite we placed our offer yesterday using the same broker. in the end the money is still in our hands and we can only offer what we have to offer. and that is the bottom line. i hope to answer your questions:
what was your agreement with the broker when you approached him/her to get involved in your pursuit of the right boat?
casual. he was the listing agent of a boat we looked at but were unimpressed by. he asked what we were looking for, and we told him. he said he'd keep his eye out and let us know if anything came by. we recieved a call by him later in the week and he has since been keeping up with us as we mostly find the boats we want and he makes the contacts while suggesting a few that he has found...
Was it a written agreement, or verbal?
verbal if anything. like i said casual.
Did you have an understanding about how the deal would be handled if you located a boat on your own?
not set in stone. he represented himself as our broker, and when we found boats he'd contact and set up a viewing. figured it would be however co-brokerages were handeled. some boats were unavailable for co-brokerage and we where "on our own" for those. when we contacted the seller we told him that we were working with a broker and that to expect a call from him. then set it up through him and let him work it out with the seller (which this appears to be the end result).
How has the fact that the broker approached the seller, got a listing contract on the vessel and posted it on YacthWorld.com affected your relationship with him/her?
we're fine. I asked him before i posted on this site if he thought it was a conflict of interest. and he said no, that he now has the responsibility of representing both parties to see that they get the fairest deal possible. i would not fault him for listing on yachtworld before us passing, as we have passed on many boats up to this point and this could very well have been another. the only allegance i would expect is that if someone askes him that he would say that we are looking at it, and give us first crack at it and not to pass it on till we are not interested in it. (its not a popular make so i don't foresee heaps of competition).
If this fact had an adverse effect on your potential purchase, have you abandoned this particular vessel and renewed your search for another boat?
like i said earlier, we are patient and if this ends up in the dumps we're ok. we're still i nterested in the boat... and will rely heavly on our OWN SURVEYOR WHO IS HIGHLY REGARDED IN THE AREA WHO WE WILLCALL OURSELVES.


my original post was better written and more involved but now i'm tierd of typing the same thing and fearful that this too will not go through, so i am going to send it in this rough version.
thank you to all who offered up their thoughts. i have read them all and considered them equally. even the hanging bit.
mahalo nui.
swami maximus

[hellosailor]

"and he [the broker] said no, that he now has the responsibility of representing both parties to see that they get the fairest deal possible."

That's the part I can't grasp. How can he get a "fair" deal for both sides, when in theory you want the lowest selling price and the seller is entitled to the highest selling price. A selling broker normally would talk you blue about how much higher other boats are selling for and why this one is worth every cent you can find to buy it.

He's now stuck playing "arbitrator" mediating a fair deal--but that's not the way brokers work in sales. If you can be satisfied knowing you paid more than you might have, and the seller can be satisfied knowing he got less than he could have, OK, you've got a marriage. Ergh, boat.

It's still probably in formal violation of an ethics code versus his broker's license.

[Benny]

So all you wanted to know originally is if the broker was in a conflict of interest to represent both parties? Unfortunately, we mostly understood or had to assume what seemed like a conflict between you and your broker and we were trying to help a fellow sailor with his predicament by offering advice as best we could given that it seemed you were being treated unfairly in your boat purchase transactions. Since you seem to have worked out your 'deal' with the broker all along, this thread is a case of many people trying to offer good advice and help to someone who didn't clarify the question and who had already acted as he wanted to with the broker. Well all of us certainly like to help others on this forum but I feel like you are a tire kicker as you have done so with us on this question - nothing definite - just fishing for responses that turn out to be moot.

I wish you well and hope that you do not encounter any problems with the deal by having the broker act for both parties.

[TaoJones]

. . . it's good to see you're still with us.

To quote from your post, above, ". . .this was simply a question as to what the sagely thoughts of those much more salty than i might be about conflicts of interest- as this is our first boat, home, major purchase etc. we are a young couple and want to do things right the first time, knowing that very likely we will still make many mistakes, but still trying to minimize the damage of our ignorance."

Your wish to gain the benefit of others' wisdom and insight, or even their delusions and misconceptions, indicates you are indeed a careful consumer. That's a good thing, and puts you miles ahead of the typical American.

Any thoughts I offered to the discussion were probably not sage, nor am I all that "salty." Rather, my thinking was, and is, based on having written, read and/or signed more contracts than I care to remember. Some were to my decided advantage, others were less so, and the majority were equally fair to all parties.

Having said that, I am still of the opinion that no broker can ethically serve two masters, and that the parties to every agreement are best served when each is represented by his/her own agent/broker. This is hardly a novel concept, and there are volumes of case law addressing this very point.

I hope the vessel you finally purchase is everything you want it to be, at least as a first step, and that you enjoy many years at the helm.

TaoJones

[capt lar]

Well, for my 2 cents, I think the broker has created a conflict. As I now understand it, the seller would have paid the broker, so that's all good. I also believe a "fair" price is not the highest or lowest but simply fair value and, just as an arbitrator can resolve an issue, a broker can be "fair". The problem is the broker represented you. Putting the listing on YachtWorld to attract additional buyers works directly against your interest. By doing so, he created a conflict. I agree with those that suggest he should have waited until you made your move or, at an absolute minimum, asked your permission. You would have said no.

[swami maximus]

Benny:
So all you wanted to know originally is if the broker was in a conflict of interest to represent both parties?
More or less. It just seemd a bit fishy to me... to put it lightly. My understanding was that we would approach this as a co-brokerage, and as there was not another broker for the seller, that he would remain "our broker" and do our negotiating and balance out his comission with the price with the seller. Not to go and represent us both now, and list it behind our backs.
Unfortunately, we mostly understood or had to assume what seemed like a conflict between you and your broker and we were trying to help a fellow sailor with his predicament by offering advice as best we could given that it seemed you were being treated unfairly in your boat purchase transactions.
Yes, and I appreciate the help sincerly. Though said conflict was not ugly nor did it result in any animosity, it did seem to me that our interests were compromised or undermined at very least.
Since you seem to have worked out your 'deal' with the broker all along,
There you are putting words into my mouth. I made my decision to place an offer after reading all these posts, and weighing out the intricacies. this thread is a case of many people trying to offer good advice and help to someone who didn't clarify the question and who had already acted as he wanted to with the broker.
apparently i have not been able to accomodate the world in a few typed words on a screen. but i can't take all the responsibility for those who would read between the lines. sorry if my terse verse has left you wanting. Well all of us certainly like to help others on this forum but I feel like you are a tire kicker as you have done so with us on this question - nothing definite - just fishing for responses that turn out to be moot.
this seems a bit passive/agressive but fair. i prefere "cautious buyer" to "tire kicker," but its still the same ball spun a different way.
I wish you well and hope that you do not encounter any problems with the deal by having the broker act for both parties.
thank you benny...
SM...