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Old 29-12-2012, 08:41   #1
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Ethics

Hi
I am looking for a boat to buy and found one on a web site for used sail boats . I did not contact the seller . I spotted another boat same make but contacted the broker It turned out to be the same exact boat .
Am I obligated to use the broker or just deal with the owner ?
I have contacted the owner but it was after the broker ?
Are their any legal obligations to the broker ?
I did mention to him [broker ] I had been looking at this boat and did not realise it was the same boat .
Any advice will be appriciated
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Old 29-12-2012, 08:44   #2
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Originally Posted by rancher44 View Post
Hi
I am looking for a boat to buy and found one on a web site for used sail boats . I did not contact the seller . I spotted another boat same make but contacted the broker It turned out to be the same exact boat .
Am I obligated to use the broker or just deal with the owner ?
I have contacted the owner but it was after the broker ?
Are their any legal obligations to the broker ?
I did mention to him [broker ] I had been looking at this boat and did not realise it was the same boat .
Any advice will be appriciated
The relationship is between the seller and the broker. Unless you sign something you hhave no obligation to the broker.
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Old 29-12-2012, 09:04   #3
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re: Ethics

You can do anything you want. Depending on what is going on it could be to your advantage either way.

The seller and broker's issues are theirs not yours.
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Old 29-12-2012, 09:07   #4
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re: Ethics

You nay not have a legal obligation to the broker, but you do have a moral obligation. In the overall scheme of things it really don't matter. If the boat sells, unless your name is on an exclusion list, the broker still gets his commission. Things like this happen all of the time.
My broker is listing my boat and I also put it on Craigslist. If I make a deal with a Creaigslist person, I will simply turn it over to my broker. I put it on Craigslist for little additional exposure. If you have ever put a boat on Craigslist, you can understand why a broker would not.
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Old 29-12-2012, 09:08   #5
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re: Ethics

It is frequently quite useful to contact the owner directly, even if a broker is the person that shows you the boat. A lot of owners enjoy talking about their boats, and are often more willing to deal than the broker whose commission is based on the final selling price.
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Old 29-12-2012, 09:16   #6
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re: Ethics

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Originally Posted by Tony B View Post
You nay not have a legal obligation to the broker, but you do have a moral obligation.
Generally I would agree completely (as a former yacht broker) but in this case I do feel that there is some grey area and the issue not so clear cut.


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In the overall scheme of things it really don't matter. If the boat sells, unless your name is on an exclusion list, the broker still gets his commission.
Not necessarily. Depends on the type of listing with the broker. It could be an exclusive listing where the listing broker will get a share of the commission no matter who sells the boat, or an open listing which could be done with many different brokers. In that case whoever sells the boat will get all the commission if they are one of the listing brokers. If the owner sells the boat privately then no commission is paid to anyone.
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Old 29-12-2012, 09:34   #7
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re: Ethics

As a buyer you have no idea what sort of arrangement the seller and broker have, so you are under no ethical obligation one way or another. Do what you prefer to do, and let the seller and broker work it out.
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Old 29-12-2012, 09:48   #8
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re: Ethics

Skipmac is partially correct IMO. Once a seller engages broker, there is a clause in nearly all agreements between the seller and the broker that if the vessel sells by whatever means, even if the broker does not lift a finger and the seller does all the marketing, showing and negotiation for the final price on his or her own, the broker will be standing there with their hand out looking for the commission. This can extend for months beyond the termination of the contract between seller and broker. It is the sellers responsibility to perform uder the contract, not the buyer but the price of the boat many times include sufficient to pay the brokerage fee of up to 10%.
Many sellers have been surprised to find that a broker is legally entitled to a commission even after the contract has expired. I have personally been called as a witness in a boat sale transaction where the seller did not read the fine print of the contract with a broker and ended up paying even though the broker had never shown the boat, advertised it or even visited the vessel. The owner had done all the leg work, advertising and showing of the boat and consumated the sale months after the listing agreement had expired yet the brokers' claim was still up held.
Be very careful to read what you sign!! Phil
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Old 29-12-2012, 10:36   #9
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re: Ethics

If the seller is offering his boat for sail outside of the brokerage, you have no obligation to the broker. He may have.... depending on if he has an open listing or otherwise. I have had a broker agree to take half the commission if I sell the boat (and he finalizes the paper). Why not?... he splits the commission with the selling broker anyway.... it might as well be you!
I guess it's all just conjecture if we dont know what the seller's deal is with the broker.......
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Old 29-12-2012, 10:40   #10
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re: Ethics

It's odd that the seller is potentially undercutting his broker. Ethically, you are free to go either way. Personally I would rather deal directly with an owner than indirectly with a broker.
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Old 29-12-2012, 11:00   #11
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re: Ethics

Cheechako is correct... the buyer is not party to the brokerage agreement therefore wouldn't be obligated under its terms. However, the seller may have a residual responsiblity to pay the broker depending on the terms of the listing agreement. I've seen cases where the broker suggests a selling price a little on the high side to give himself room to bargain, the listing languishes with no interest so the seller drops the price and gets a buyer himself, does the deal and the broker is left out in the cold but usually comes after the seller for his commission even though he had nothing to do with the sale. Such are the 'ethics' of the boat brokerage business.
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Old 29-12-2012, 11:27   #12
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re: Ethics

By the way, if you find a good broker, they will certainly earn their commission by finding you lots of boats to look at, doing the paperwork, possibly handling a deposit in escrow, etc. Even if you begin by contacting the seller first, he may very well want to turn the actual negotiations/paperwork, etc. back over to the broker. I have no problem dealing with both the broker and the seller in a case like you describe. Just be open about what is happening and don't try to cheat anybody out of anything. You have to assume they have an agreement that they will honor, but that is not your problem.
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Old 29-12-2012, 21:13   #13
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re: Ethics

Maybe a little clarification on how yacht brokerage and listings work is in order.

First, when a boat is sold by a broker there are two separate commissions involved in the sale. One for the broker that listed the boat for sale and another for the broker that sells the boat. Of course if a broker lists the boat and also sells it then that broker will collect both commissions.

Second, boats listed for sale with any broker are generally available for any other broker to sell.

Third, there are two ways to list your boat for sale with a broker, an exclusive or a non-exclusive listing. If you give a broker an exclusive listing you cannot list the boat with another broker and no matter who sells the boat or how the boat is sold, the listing broker will receive at least the listing commission.

With a non-exclusive listing you can list the boat with several brokers if you like and you can also sell the boat on your own. If you sell the boat on your own then you would not have to pay either the listing or selling commission.

Relating this to the OP's question, no matter which type of listing you use, exclusive or non-exclusive, if a broker brings a buyer to the table the owner is ethically and legally obligated to pay commission to that broker if that buyer purchases the boat. Since the OP had found the boat on his own before speaking with a broker, but had not gone to see the boat nor contacted the owner then in my opinion there is some question as to whether or not there is an obligation to the broker.

Their are advantages and disadvantages to both types of listings. If you sign an exclusive listing with a single broker that broker is much more motivated to advertise and aggressively market your boat because s/he is guaranteed to get a share of the commission when the boat sells. A non-exclusive listing allows you to offer the boat through several channels and still try to sell it on your own, plus you don't run the risk of being stuck with a bad broker if you happen to pick a dud.
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Old 29-12-2012, 21:36   #14
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re: Ethics

Great info, Skipmac... the point I was trying to make, however imperfectly, is that the contract, whether exclusive or not, is the determining agreement between the seller and the broker. A buyer is not party to the agreement and therefore I don't believe is bound by the terms. Trying to circumvent the agreement to save the seller a commission due a broker is dishonest IMO and a buyer could have some liability if a broker could prove colusion between the buyer and the seller.
I'm with David M on this issue... I would far rather deal directly with the seller and would wait until all obligations the seller might have with a broker have expired than have a broker get in the middle of negotiations on price, condition, survey interpretations and the like. To each his own, I guess. Phil
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Old 29-12-2012, 21:56   #15
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re: Ethics

Quote:
Originally Posted by Capt Phil View Post
Great info, Skipmac... the point I was trying to make, however imperfectly, is that the contract, whether exclusive or not, is the determining agreement between the seller and the broker. A buyer is not party to the agreement and therefore I don't believe is bound by the terms. Trying to circumvent the agreement to save the seller a commission due a broker is dishonest IMO and a buyer could have some liability if a broker could prove colusion between the buyer and the seller. l
Correct. The contract is between the seller and the broker, however the contract does specify that the seller must pay the broker a commission if he or she sells the boat to a buyer brought by the broker. I have not heard of brokers asking a buyer to sign a similar agreement but I agree that at the very least it is dishonest for the buyer to cut the broker out of a deal.


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I'm with David M on this issue... I would far rather deal directly with the seller and would wait until all obligations the seller might have with a broker have expired than have a broker get in the middle of negotiations on price, condition, survey interpretations and the like. To each his own, I guess. Phil
Well I used to be a broker but bought my last two boats directly from the owners, but I would not hesitate to buy a boat from a (good) broker. Sometimes the owner is too emotionally involved with the boat and can make negotiations a bit difficult.

Also when I was a broker I many of the sellers that wanted to sell direct were asking too much for their boat and often found buyers better deals and better boats than they found buying direct.
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