Shopping for Cat with buyers broker or without?

[psychfeld]

I'm shopping for a 40 something Cat to circumnavigate with. This has been a process that's rather encompassing on many levels.

The issue I'd like to hear other's opinions about is when and whether to contract with a buyer's broker to do my bidding. Specifically - under what conditions does it benefit me, the buyer, in securing a deal? I'm commonly skeptical of sales agents being capable of authentic truthfulness because they've got a big incentive motivating them and many are unaware or unwilling to account for inherent conflict of interest.

I spoke with Phillip Berman on the phone at some length and he was quite emphatic about the merits, ethics and propriety of using a buyer's broker. He indicated that I would have the benefits of his team of sales guys working together to find the best deal per my wish list.

With his expertise I don't hold a whisper regarding the design, issues and thoughtfulness regarding boat matters. However, I am still gathering information about various boats to consider.

Any experience, thoughts or suggestions, pro or con, regarding dealing with a boat broker is welcome.

Thanks kindly for your feedback.

[travellerw]

Whether you have a buyers broker or not, you are still paying for it. Just like a realtor, the commissions are split between the buying and selling broker. If you don't get a buying broker, then you are paying the selling broker that commission and getting ZERO from it. At least with a buying broker you have someone acting on your behalf.

On top of that, a buying broker takes care of many tedious details. Such as the offer contract, securing escrow, ect.. Frankly, unless you are doing a completely private transaction, then its a no brainer to have a buying broker!

[2Hulls]

A couple things:

What do you mean by a buyer's broker? I assume you mean a garden variety broker who also has his/her own listings, but helps you - a buyer - find and make an offer on a vessel. This broker gets paid by the seller as a split of the commission the seller pays the listing broker, so he/she really works for the seller - not on your behalf. Maybe there aren't many around any more, but there used to be such a thing as a "Buyer's Broker" who worked for a fee the buyer paid and got no part of the commission. This type was wholly independent from the sale and not beholden to the seller whatsoever.

Assuming you mean the former, and contrary to what my friend Phil advised, there is a huge reason to be YOUR OWN buyer's broker. Do your legwork and research and contact the listing agents of vessels you're interested in. When the time comes to make an offer, negotiate and make counter offers, you can assume you have 5% of the listing price as wiggle room on top of what overpricing there may be - since this is what the listing broker would have had to pay a broker representing you. So pay yourself. This method is harder to implement from long range in that it may not be easy to travel to visit every boat you may be interested in. An upstanding buyer broker may be useful with this. But you'll make your purchase contingent on a survey anyway. Bottom line - ask yourself what a buyer broker can do that you cannot do?

Dave

[psychfeld]

Yes, if I'm buying a boat I can and should get my side represented with an agent.

The issue I'm trying to resolve for myself is the contracting with a buyer's broker that obligates me to work through this and only this broker. I can see the advantage to the agent who is investing their time and wants to be sure I don't do a deal elsewhere.

I am concerned about the exclusive obligation I have to that agent and under what conditions other boat buyers have or haven't made the decision to sign on with a buyer's broker.

[travellerw]

Originally Posted by psychfeld

I am concerned about the exclusive obligation I have to that agent and under what conditions other boat buyers have or haven't made the decision to sign on with a buyer's broker.

There is absolutely no obligation. I never signed a contract and was free to drop my broker and move on at any time.

Its delusional to think that you are not paying that fee from your offered price. The commisssions are fixed, so if you "the buyer" offer %5 less (since you are acting as buying broker) it will come from the sellers pockets not the brokers.

Seems crazy to not have someone with indepth knowledge on boats, especially Cats.

[2Hulls]

Originally Posted by travellerw

Its delusional to think that you are not paying that fee from your offered price. The commisssions are fixed, so if you "the buyer" offer %5 less (since you are acting as buying broker) it will come from the sellers pockets not the brokers.

I'm not delusional and you're incorrect. The listing broker can accept less than 10% if he or she wants. This is exactly what took place in my case. The broker gave up a significant portion of the intended 10% commission in order for the seller's bottom price and my top price to meet. It would be idiotic, if not unethical, for a broker to torpedo a deal just because he/she got 5% instead of 10%. The next offer may come from a buyer with a broker and he/she'll be getting only 5% anyway.

What is delusional is thinking that with a buying broker you have someone acting on your behalf. Maybe. More like acting on their behalf.

Dave

[psychfeld]

Dave,

I'm with you regarding the possibility that a buyer's agent has the potential to distort their opinions because of the income opportunity for themselves.

I Gladwell's book Blink he cited a study in which a comparison was made between the price real estate agents sold their personal homes for, relative to the market average, and the price obtained for their listed clients.

The study was damning - agents waited for significantly higher prices when selling their own homes verses those of their listed clients.

Agents will generally deny their inclination to do that either because they or dishonest or unconsciously biased for their own rewards.

What I'm trying to discern is what value the , buyer brokers bring to me in exchange for my agreement only to buy through them. It's not looking good for the buyers brokers but I'm wanting to be as open minded as I can.

[travellerw]

Originally Posted by 2Hulls

I'm not delusional and you're incorrect. The listing broker can accept less than 10% if he or she wants. This is exactly what took place in my case. The broker gave up a significant portion of the intended 10% commission in order for the seller's bottom price and my top price to meet. It would be idiotic, if not unethical, for a broker to torpedo a deal just because he/she got 5% instead of 10%. The next offer may come from a buyer with a broker and he/she'll be getting only 5% anyway.

What is delusional is thinking that with a buying broker you have someone acting on your behalf. Maybe. More like acting on their behalf.

Dave

And you confirmed that fact by actually talking to the Seller? or is that what the broker said he did? Unless the commission was listed on the contract that BOTH you and the seller signed, I wouldn't believe it.

In any case, all my dealings with selling brokers were very professional. My choosen broker did indeed act on my behalf and steered me away from many mistakes I would have made being green. In the end I got a good boat at a phenominal price because I took calculated risks based on his boat knowledge. He presented the offers I put forth and talked me into reducing my offers as more information came to light.

IMHO - A buying broker you trust is essential to the process. Especially if you are buying a boat far away.

[travellerw]

Originally Posted by psychfeld

What I'm trying to discern is what value the , buyer brokers bring to me in exchange for my agreement only to buy through them. It's not looking good for the buyers brokers but I'm wanting to be as open minded as I can.

First off.. If you have a broker that is trying to get you to sign an agreement that you will only buy through them, RUN. No broker ever asked me to sign anything except when I presented an offer. Then I was tied to that broker for that particular boat.

Thats the whole point. The broker knows you could call another broker in the next hour and he would loose you potential commission. They want your commission so the good ones will work thier butt off trying to find boats that would interest you. They also have a network of other brokers they can tap to get more information on a particular boat you may be interested in. In fact, I got back a couple of "don't bother looking at that one" through such a network. Had I called the selling broker, pretty sure he would have said "Ya come on down, bring money".

Anyway.. I have stated my opinion and will step out. Hopefully others will chime in so you can get more than 2 opinions!

[2Hulls]

Originally Posted by travellerw

And you confirmed that fact by actually talking to the Seller? or is that what the broker said he did? Unless the commission was listed on the contract that BOTH you and the seller signed, I wouldn't believe it.

I confirmed that fact when signing the final sales document that listed all the figures in the transaction, including the broker's commission. I didn't talk to the seller at all about this aspect of the sale.

IMHO - A buying broker you trust is essential to the process. Especially if you are buying a boat far away.

A buying broker you trust can be helpful. But not essential. It wasn't needed at all in my case, much less essential, and not having one saved both me and the seller some money and the selling broker was still well paid.

Dave

[2Hulls]

Originally Posted by travellerw

First off.. If you have a broker that is trying to get you to sign an agreement that you will only buy through them, RUN.

traveller is spot on here. Do not sign such an agreement.

Dave

[FSMike]

I tend to take anything a broker says with a grain of salt.
If there were two brokers involved I would have to have two grains of salt.

I've never used a buyers broker to buy a house, or a car, rv,etc. The only reason I can see to use one is extra help in locating what I am looking for, but in this internet age I don't think that is of much value.

To each their own.

[Sail IC]

I sold/bought three boats with brokers involved. First I don't know what commission the broker got. Second I sold a boat, and the broker reduced his commission to around 5 % to make the deal happen. Last boat I bought, the broker ended up with around 5% too. I know this with 100% confidence as I did all transactions, paid the seller directly the agreed price minus 5% commission which I paid the broker directly.


If you using a buyer broker you do end up paying 0-5% higher price. It could still be worth it, but it depends what kind of boat your buying and the geographical location of you and the prospect.

[out42]

I can't see the point in a buyer's broker and have never used one. In my experience the seller's broker deals happily with all the contractual work and the cost comes out of the seller's pocket. That broker has every incentive to make sure the paperwork is correct so you won't lose out there.

When you can use yachtworld, you can find everything you want, so your problem is really one of defining for yourself what it is you are after. If you don't know that, then don't bother with a broker, go and look at some cats and find out about them. Spending 10 minutes on two supposedly similar cats near to each other does wonders for clearing your head about what you want, then look up yachtworld, then talk to a surveyor, then make an offer.

And remember, it's a buyer's market out there....

[TJ D]

Hello,

I actually think that using your own broker is an excellent idea. Here's why:

1. It costs you nothing, as you know. I'm not sure how folks here think that there is some additional fee involved to be borne by the buyer. The seller pays commission, and it doesn't matter if 1 of 5 brokers are involved.

2. The selling broker is likely to be more forthcoming with info about a boat's flaws to another broker than he will be to a buyer directly. Call it a professional courtesy, but this seems to be the case in general. Not always of course.

3. Your broker will present the offer on his letterhead, and you will be able to hammer out the terms ahead of time if needed.

4. You will have somebody 'in your camp' at the sea trial and survey.

Obviously, you need somebody who you trust, which I assume is the case here. A broker who has been around boats for years should be more of a help than a hindrance here. And, if he knows you're a serious buyer, he shouldn't pressure you to purchase the boat that's wrong for you. He'll do the work to find the right one if he's worth his salt.

All at no charge to you... What's not to like?

Good luck, TJ