A Rant About Brokers

[YotMax]

In Sydney a broker will show you a boat all you like. You can poke around and look to your hearts content. If you're lucky, they may start the engine for you. But they won't let you do anything until you've put some money down. Once that's done, all things are possible - test sail, haulout, surveyor inspection, you name it. If you're not happy, the deposit is refundable minus expenses. It's always seemed fair to me - protects them financially and they can exclude the tyre kickers and joy riders to focus time on the genuine buyers.

Originally Posted by jbinbi

They can listen (the most important aspect of sales is actually listening, not talking. As a famous trainer once said, ' you have 2 ears and one mouth, use them in that proportion')

jbinbi, that's a great rule. I wish more salespeople knew that rule and used it. Not boat related (apologies in advance) but my wife and I were in the market for a house a while back. We spotted a potential property and lined up an inspection with the salesperson who offered to show us a couple more similar properties on her list. All good to that point.

When we met her for the inspections, she spent sooooo much time talking that we barely got in the entrance to most of the properties. I think I saw one bedroom in one place. Otherwise it was non-stop verbal assault, almost all of it completely unrelated to what we were doing. Nice lady but needless to say, we didn't buy a house that day.

[Hyprdrv]

I have an interesting question, what does the word "Broker" really mean? I always thought it was someone who had passed a test on ethics as well as general knowledge of what it took to sell something as expensive as a house or such. I know in the world of real estate you can't call yourself a Broker unless you have passed an exam showing competency in the area of sales of such, an understanding of legal contracts, and general knowledge of his product . I'm now under the impression that there are no rules and regulations (as far as the sale is concerned) for boat sales. Correct me if I'm wrong. Why would I give him a check for X% down payment when his main concern is his commission, not my best interest? Yes his company is a big one.
From what I've seen they wish to keep the seller and buyer as far apart as possible yet here is a guy (seller) I can gather the most info on a boat I'll own for many years longer than the salesman I dealt with for a few months and is gone.
Now my current problem is a little different but I've got some issues with the my "Broker" who I don't want to cut out of a commission who may want it all and end up with nothing if the seller or I get pushed to hard. He wants to talk to the seller to iron out his cut yet I'm afraid he may screw the pooch here. All in all I did 95% of the work to this point and other than I like the guy personally, $10,000 to $20,000 in commissions for 5% of the work sounds steep in my book.
This fixed rate for commission by a salesman, negotiate, whatever, is not fair to the seller or the buyer unless it's for services rendered, Heck that could buy a lot of spare parts.

Steve

[Pblais]

I have an interesting question, what does the word "Broker" really mean?

In most states in the US it means you have a license. The license is to make sure you don't run off with the sales / use tax collections that are owed to the state. It is no assurance they know anything more than where the tax money is supposed to go. I believe most can be audited to assure tax compliance. Brokerages are free to set up any standards they choose.

Ethical standards are not required. It's not something you could test for in any case. Most brokers use standard contracts. In the case of a contract the contract states all the rules. There are many things that you might assume are required but if it isn't in the contract then it's not. Most of the standard contracts are written fairly and the common practices of using escrow accounts for the money can protect buyer and seller both. With that as a level playing field it does work well so long as all parties are motivated to communicate with honesty.

[Hyprdrv]

So Paul the question is are boat brokers licensed? I don't believe they are. You are correct, ethics are subjective however there are standards for ethics in any business. Is it unethical to miss represent a product and is it unethical to present yourself as something your not?

[David_Old_Jersey]

Obvioulsy this is a heavily US oriented thread. Over here no need for a licence to be a broker. Plusses and minuses to that one

FWIW it seems to me that in the US a "Broker" does more (or is expected to by some?) than simply broker the deal. More of a Buyer for a purchasor?

[Pblais]

So Paul the question is are boat brokers licensed?

Where licenses are required it is done by the state. This is true for all licenses to practice anything. Many have national associations like barbers, medical doctors, and lawyers. They all get a state license. Realtors and teachers require continuing education and some require professional degrees and difficult examinations.

Others just have to pay a fee and be "signed up". Boat brokers would usually be in that group.

[Robertcateran]

'quote
'So how can any of us, unless they have purchased 100 boats in their lifetimes, say the majority of the brokers are bad!? I can understand if you say, I have purchased 7 boats in my lifetime, and all 7 brokers were worthless, so I am extrapolating this, but maybe you just the 7 bad ones out there.'

If I got 7 bad brokers in a row, it would certainly colour my judgement.
If there were an even number of good and bad brokers, then the probability of getting such a run is one over 2 to the power of 7, ie less than one chance in a hundred. ie there is a strong probability that more than half of the brokers are bad.

I have had good experience with two brokers: straight forward, knowledgeable, pointed out important points without crapping on, and answered questions if they knew but didn't ******** if they didn't.

[Pblais]

'So how can any of us, unless they have purchased 100 boats in their lifetimes, say the majority of the brokers are bad!?

I really can't say that. I only say the most of the brokers don't sell many boats. It would be different if you had to take the broker home instead of the boat. It's possible to get a great boat in spite of the broker. Most of the boats actually sold are sold by accomplished brokers. There is a better than not chance the boat you buy will be from one of those. It's all the boats you didn't buy that have the problems with the brokers.

The customer bares some burden in the idea of what boat they choose. Brokers have customer horror stories too.

[Hyprdrv]

I think we can all agree that there's a high percentage of bad brokers to good brokers out there. There are also a high number of tire kickers out there as well. This contributes to hardening the broker to whether a person is a true buyer and not just waisting there time. Take any sale of services or product and see how much time is spent on a sale that never happens. The number of times I've spent on a contract that all of a sudden is "shelfed" can really tick me off. It's part of the business world.

I'm a real buyer. I'm new to boating and have decided I want one. I'm familiar with buying properties and dealing with Brokers there. From what I've seen to date there is little difference between them as far as there approach and business practice. Tom I couldn't agree with you more in probably 90% of the cases, I wouldn't buy a house or a boat until I talked to the owner. Do you know that if you asked an owner of a home a direct question "does the roof leak?" and he says "no" and it leaks after the sale he's liable for the repairs? Same way with a boat. A direct question must be answered truthfully or your liable. I like to feel a seller out, is he honest? Cares about his product? Willing to work things out to our mutual agreement? Help one another? What's his motivation?
On the other hand the "broker" is taught to keep the buyer and seller as far apart as possible. They don't want us to muck the deal or more importantly cut them out of it. In the real world I'm sure this happens but not in my case. I recognize the fact that I don't know everything there is to buying a boat out of state, I need someone to be sure all the paper work for proper transfer of the vessel is done and in a timely manner. (90 days to get out of Florida I learned here) He has offered to help bring the boat up home, something he's done a number of times which could be a huge savings plus I'll be getting some real world experience with an experienced blue water sailer.
I'll be sure to update this thread and let you know how it goes. At this point the seller and Broker don't seem to be able to contact one another and settle a commission issue. I'll continue to move forward with learning about issues with money, insurance, slip, and such then once this goes down I'll start another thread to update.
A question, If the boat is 1000 miles away and the buyer's Broker wants to go see it who pays for the trip? We would try and do the inspection and sea trial over a day or 2.

Thanks,
Steve

[Jim Cate]

An interesting thread. Most of us who read it have purchased one or more boats, and most of those sales have been executed through a broker, both good and bad.

Has anyone else considered that there is an inherent conflict of interest when the same person (the broker)represents both the buyer and the seller? The buyer wants to get the best (lowest) price for the boat, and the seller wants to get the highest, and the broker wants to get the boat moved and collect his comission, and the higher the sale price, the bigger his cut is. It stretches my faith to believe that this middleman can be acting in the buyers favor, yet that is what we customers need...

I'm not sure what the answer is. We spent three years actively looking for a new boat in Australia. Dealt with around thirty different brokers, some really bad (gave us blatantly false information), some truthful but not very interested in working with us, and one who was very good indeed. Unfortunately he couldn't come up with the right boat,but we would go back to him in a flash. We finally found Insatiable II through word of mouth and bought her directly from her owner/builder, and it all worked out for the best. We had the advantage of being pretty experienced yotties, and not being in a hurry, but I really feel for the many newbies who are in the market.

Perhaps there is a place for a "buyers consultant" person, someone with the skills of a surveyor and experienced sailor, who would represent the buyer. This person would have no fiscal interest in the transaction, and could offer unbiased advice and skilled negotiation on the buyers behalf. Or am I dreaming?

For most of us, a cruising yacht is one of the biggest investments we will ever make, and maybe the only one where a bad choice could kill us. Not a place for beginners, I reckon!

Jim and Ann Cate s/v Insatiable II lyingGladstone Qld oz

[Pblais]

Has anyone else considered that there is an inherent conflict of interest when the same person (the broker)represents both the buyer and the seller?

I don't think most brokers see it that way. Brokers that sell boats want a sale to be completed without extra difficulties. That happens when both parties are satisfied.

The idea that the broker can inflate the price is mostly myth. The broker does not tell you what price to offer nor do they force the seller to accept a price. There is no magic way to negotiate a deal. The best way is to have educated buyers and sellers.

No agent you use has xray vision to see otherwise unknown defects even if they claim to know more than you do. You still will get a survey that includes condition and value. You don't have money at risk until you have reviewed all of that. You have access to a lot of the tools even a broker has except the final sales price histories.

You do have to determine what the boat is worth to you. That is not the same as what it might be worth theoretically or it might be. It may not be the price the seller will agree to either.

Perhaps there is a place for a "buyers consultant" person, someone with the skills of a surveyor and experienced sailor, who would represent the buyer. This person would have no fiscal interest in the transaction, and could offer unbiased advice and skilled negotiation on the buyers behalf. Or am I dreaming?

I suppose it is possible but how? If someone else is negotiating the deal for you what is in it for them? Were I a broker that desired to be successful I'm going to try and move both you and the seller into a position where you will both agree. I make no commission if you both don't agree. That is the difference between brokers that sell a lot and those that don't eat regularly.

I think it unreasonable to think someone else will "represent" you and actually do it.

Not every deal can be closed. You can't make a seller lower a price unless they see clearly why they should. Who should they trust? The buyers broker clearly is not working for him and the listing broker only wants a commission. Since everyone has a perception of a conflict of interest who do you trust?

So now we have three brokers. They all go into a room and walk out with a deal. Do you really expect the seller and buyer to be happy? Your broker whines about how they did the best they could and the sellers broker whines how he fought so hard to hold the price. Did they both lie? How would you know what really happened? How hard would they work if they get only half the commission. Adding layers of obscurity is not the same as transparency.

Without some level of mutual trust there is no deal to be made. One broker can be a middleman if they can show the two parties that they don't have a bias. Should they fail that mission then one or both parties will bail. A failed deal is no deal. The concept that you can stack the deck and make more money has never proved correct. You say yes today and just before the deal is to closed you bolt.

You as a buyer need to know something and understand the transaction to be a happy and the same is true for the seller. During the process you have ample opportunities to research and seek out advice as you choose. You are under no obligation until you decide you are ready to agree to the deal. If the only reason you are agreeing to purchase a boat is because your consultant says you should then you have a serious problem. To be happy a month after the sale means you knew and understood why you signed the papers.

It's being on boats and looking at boats and reading a lot and asking questions and paying for good surveys. You are required to have a fundamental ability to learn.

The preconception that there is an inherent conflict of interest is to assume they are devoted to cheating you personally. They can't cheat everybody and close any deals.

[xxuxx]

DO NOT USE A BROKER! Why do you need one? The marine surveyer will take care of the boat condition and you, as the buyer should take care of the financial negotiation and its inherent value, real or implied.
I would like to here from a broker as to why you guys are necessary? The same goes for real estate brokers.

[xxuxx]

Originally Posted by Pblais

I don't think most brokers see it that way. Brokers that sell boats want a sale to be completed without extra difficulties. That happens when both parties are satisfied.

The idea that the broker can inflate the price is mostly myth. The broker does not tell you what price to offer nor do they force the seller to accept a price. There is no magic way to negotiate a deal. The best way is to have educated buyers and sellers.

No agent you use has xray vision to see otherwise unknown defects even if they claim to know more than you do. You still will get a survey that includes condition and value. You don't have money at risk until you have reviewed all of that. You have access to a lot of the tools even a broker has except the final sales price histories.

You do have to determine what the boat is worth to you. That is not the same as what it might be worth theoretically or it might be. It may not be the price the seller will agree to either.



I suppose it is possible but how? If someone else is negotiating the deal for you what is in it for them? Were I a broker that desired to be successful I'm going to try and move both you and the seller into a position where you will both agree. I make no commission if you both don't agree. That is the difference between brokers that sell a lot and those that don't eat regularly.

I think it unreasonable to think someone else will "represent" you and actually do it.

Not every deal can be closed. You can't make a seller lower a price unless they see clearly why they should. Who should they trust? The buyers broker clearly is not working for him and the listing broker only wants a commission. Since everyone has a perception of a conflict of interest who do you trust? So now we have three brokers. They all go into a room and walk out with a deal. Do you really expect the seller and buyer to be happy? Your broker whines about how they did the best they could and the sellers broker whines how he fought so hard to hold the price. Did they both lie? How would you know what really happened? How hard would they work if they get only half the commission. Adding layers of obscurity is not the same as transparency.

Without some level of mutual trust there is no deal to be made. One broker can be a middleman if they can show the two parties that they don't have a bias. Should they fail that mission then one or both parties will bail. A failed deal is no deal. The concept that you can stack the deck and make more money has never proved correct. You say yes today and just before the deal is to closed you bolt.

You as a buyer need to know something and understand the transaction to be a happy and the same is true for the seller. During the process you have ample opportunities to research and seek out advice as you choose. You are under no obligation until you decide you are ready to agree to the deal. If the only reason you are agreeing to purchase a boat is because your consultant says you should then you have a serious problem. To be happy a month after the sale means you knew and understood why you signed the papers.

It's being on boats and looking at boats and reading a lot and asking questions and paying for good surveys. You are required to have a fundamental ability to learn.

The preconception that there is an inherent conflict of interest is to assume they are devoted to cheating you personally. They can't cheat everybody and close any deals.

My point exactly. Trust no one and do it yourself.

[Microship]

Originally Posted by Jim Cate

Perhaps there is a place for a "buyers consultant" person, someone with the skills of a surveyor and experienced sailor, who would represent the buyer. This person would have no fiscal interest in the transaction, and could offer unbiased advice and skilled negotiation on the buyers behalf. Or am I dreaming?

Exactly. I've been trying to get a friend of mine to hang out a shingle to do this, as he was very helpful with mine, but he has other things on his plate. I believe there is a real market for this service.

The worst mistake a buyer can make, I believe, is to innocently click on the link at the bottom of a listing. The moment you make contact with the sellers broker, you are "owned" by them, and bringing in a buyer's broker later for a co-bro deal is difficult. I've been through this thrice, and have never felt that the broker had my interests uppermost in mind.

Steve

[Traveller]

Originally Posted by shawnkillam

I don't know exactly what brokers are making these days.

I don't either, but if it is anything like real estate brokers, far more that they deserve.

As a buyer of a boat or a house, what is the broker doing for me? Not a heck of a lot!

Do they guarantee the condition of the boat? I think not or I wouldn't need to get it surveyed.

Do they guarantee a clear title/liens against the boat? I think not.

And yes, it IS a buyers market and will be for a while. And the fact that these things are toys and luxuries, its even more of a buyers market.