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Old 24-05-2016, 09:13   #16
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Re: Question on Boat Brokers

When I've sold boats through a broker, the commission has been based on the actual selling price and they've had a minimum as well. I've never heard of a broker basing their commission on the asking price.
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Old 24-05-2016, 09:22   #17
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Re: Question on Boat Brokers

That's not the asking price, it is the agreed contracted selling price.


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Old 24-05-2016, 09:35   #18
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Re: Question on Boat Brokers

I just completed a sale and buy transaction this past February in the Pacific Northwest. In both cases the final price was adjusted from the initial offered price due to survey items. In both cases the brokers involved only received, and only expected, their commission on the final sales price.
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Old 24-05-2016, 09:46   #19
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Re: Question on Boat Brokers

It pretty much is shady in the spirit of the transaction.

There is no selling price until after the survey and sea trial. Either party can walk away from the deal or continue to negotiate for any reason. The buyer can make an offer, go home and research and find it was too much, then at the time of the sea trial change his offer for any reason and still have the final contingent upon the survey. Seller has the right to tell the buyer to pound salt at any point as well if the buyer changes his offer, or counter it.

After the survey, the buyer will either sign the acceptance, which validates his offer, or make another offer. It does not have to have anything to do with repairs, but the buyer can justify his offer due to repairs needed to help the seller accept the new offer. Buyer does not even have to justify the new offer at all. We are still negotiating the SALES PRICE until the acceptance is signed by both parties and it becomes a contract.

Contact a good maritime attorney before you go any further for a phone consult before going further to see what your options are. It could be a simple $250 consult and letter from an attorney to the broker that will get him flying straight if he is in the wrong. That would net you $500 and a lot of satisfaction. If he is truly violating the contract, maybe possible it could be nullified and you can sell direct to the buyer using the attorney and/or good documentation service that acts as a pseudo escrow by making sure the abstracts are done, and money goes to the proper places (loan payoff, taxes, etc.). They create the closing documents.

Speaking of used cars, this used to be a trick of used car salesmen to get a higher commission on the sale of a car. they would work the numbers to show the original sell price of the car, but increase the trade-in to the customer, so they net the same negotiated price, but the salesmen gets more commission and/or bonus. It was also a trick in the old days for buyers to get a better deal. Stings when it gets close to home with the seller paying the commission instead of the dealership.

Seems your broker is going through a lot of trouble for an extra grand in commission. Is the broker representing both the buyer and the seller in your case?
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Old 24-05-2016, 09:53   #20
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Re: Question on Boat Brokers

The devil is always in the details and many times it depends on what side you are coming from. To claim the broker is shady or dishonest with such limited information could be jumping the gun a bit. I assure you as there are many less than ethical brokers there as many less than angelic sellers as well. Side deals between buyers and sellers, with a boat in brokerage, without the brokers knowledge are done a lot more often than you might expect and brokers are well aware of this practice so they do try to protect themselves and rightfully so in the contract. So before all brokers are "Whores", Shady, or out to artificially create a market, remember there are always two sides to every story. Standard contractual agreements are usually based in lessons learned from both sides because both sides have had a history of being less than ethical. I have several business acquaintances that are brokers and we share a beer or two every now and then. One of these guys related a story once that basically went like this. The boat was listed at $230K, brokerage fee was based on 8% of the selling price agreed upon at closing. The buyer on his own contacted the seller directly. The seller contacted the broker and stated that he would sell the boat at the reduced price of $160,500 to the buyer. Now the broker knows that 10-15% reduction in price is not all that unusual but that this was a fairly significant discount. But the seller said he was in a hurry to just get rid of the boat and move on and did not care. The broker walks the buyer out the front door after closing and sees the seller driving off. The broker says to the buyer, "Hey, isn't that your BMW he's driving?" The buyer says "Yeah it was, and he's got my Harley too" So after the third beer my broker friend says, "So I have this 8% interest in a BMW and Harley I can't even use" I laugh, he kinda sarcastically laughs.
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Old 24-05-2016, 09:56   #21
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Re: Question on Boat Brokers

Quote:
Originally Posted by boatymcboatface View Post
I am in the process of selling a boat through a US broker. The buyer and I signed a contract, but then later we agreed to a reduced price due to some findings on the survey. The broker expected his commission to be based on the original seller offer price and not the final selling price. He claims this is the industry standard. This seems shady to me. Can anyone clarify as to whether this is industry standard?

Thanks.
either you agreed to a commission in actual dollars or a percentage of the final selling price. quite simple really. hold him to what he agreed to and live up to your end of the bargain. for older/cheaper boats most brokers do have a minimum commission regardless of the selling price but it's all in the contract.
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Old 24-05-2016, 10:04   #22
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Re: Question on Boat Brokers

It used to be written in most boat contracts that commission was based on % of agreed price prior to survey.

Right or wrong that was the verbiage.

Today commission is mostly based on final selling price.

BUT, always read what you are signing before you sign it. What YOU sign is what you pay.

The time to iron this out is best done before signing.
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Old 24-05-2016, 10:07   #23
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Re: Question on Boat Brokers

Not a chance!
When I purchased my Morgan, the price dropped significantly due to undisclosed deficiencies. The broker was paid on the net price without hesitation or question.
The boat he represented was not as represented therefore he should have zero expectation of being paid for the boat he advertised.
Check with the Brokers association, is he a member and find out what their standard practices are.
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Old 24-05-2016, 10:56   #24
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Re: Question on Boat Brokers

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Originally Posted by Tellie View Post
The devil is always in the details and many times it depends on what side you are coming from. To claim the broker is shady or dishonest with such limited information could be jumping the gun a bit. I assure you as there are many less than ethical brokers there as many less than angelic sellers as well. Side deals between buyers and sellers, with a boat in brokerage, without the brokers knowledge are done a lot more often than you might expect and brokers are well aware of this practice so they do try to protect themselves and rightfully so in the contract. So before all brokers are "Whores", Shady, or out to artificially create a market, remember there are always two sides to every story. Standard contractual agreements are usually based in lessons learned from both sides because both sides have had a history of being less than ethical. I have several business acquaintances that are brokers and we share a beer or two every now and then. One of these guys related a story once that basically went like this. The boat was listed at $230K, brokerage fee was based on 8% of the selling price agreed upon at closing. The buyer on his own contacted the seller directly. The seller contacted the broker and stated that he would sell the boat at the reduced price of $160,500 to the buyer. Now the broker knows that 10-15% reduction in price is not all that unusual but that this was a fairly significant discount. But the seller said he was in a hurry to just get rid of the boat and move on and did not care. The broker walks the buyer out the front door after closing and sees the seller driving off. The broker says to the buyer, "Hey, isn't that your BMW he's driving?" The buyer says "Yeah it was, and he's got my Harley too" So after the third beer my broker friend says, "So I have this 8% interest in a BMW and Harley I can't even use" I laugh, he kinda sarcastically laughs.
There are bad apples in every industry and they tend to set the bar for everyone else. IMHO, In that case, the broker could have easily gone back and sued the seller for commission on the higher of the two amounts of appraisal or the original agreed upon price of the boat once he found out the items were negotiated as consideration of value in the transaction under the contract to sell the boat. The broker is entitled under contract for a commission on the boat regardless of whether trades or a trade-in is used as part of the consideration.

But for the sake of fairness. If the same scenario played out and the buyer happened to find out the seller was willing to accept a much smaller amount than he originally offered and changed his offer to what he knew the sellers bottom line was. Yes, the broker would be out some commission, but his contract is either a percentage of the final sale price or a minimum agreed amount regardless of how the either party came to the "accepted" and contracted agreed sale price. The consideration is a separate line, just as it is when you trade-in one car to purchase another. The value of the consideration is subjective.

If the seller and buyer worked an outside deal for consideration of trading items, then the seller had violated his contract and very shady, especially how the buyer and seller probably reported the transaction for tax purposes. And clearly a violation of the contract in the brokers favor. I don't think proving it would be too difficult as both the seller and buyer would have to prove up consideration for the transfer of the two vehicles.

End goal is to keep everyone honest.
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Old 24-05-2016, 11:27   #25
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Re: Question on Boat Brokers

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Originally Posted by sailpower View Post
It used to be written in most boat contracts that commission was based on % of agreed price prior to survey.

Right or wrong that was the verbiage.

Today commission is mostly based on final selling price.

BUT, always read what you are signing before you sign it. What YOU sign is what you pay.

The time to iron this out is best done before signing.
It still is in many contracts today. Legal, yes. Shady, It sure leaves the door wide open, but probably not in the OP's case. I just spoke with an attorney friend and he said my earlier post is wrong. It is still common language that a seller should read before signing. Better yet, contact a maritime attorney before signing and save yourself a lot of money later on, but he is biased.

IF the broker is honest, they will help guide the seller to price the boat to market and condition up front, so not shady there. If the broker lists it close value, then the initial offer is pretty much going to be close to final. The seller original acceptance becomes a contract as soon as he accepts the first offer. The buyer has all the outs and changes.

Because the buyer accepted final offer and original offer are within 10% as it is, then the broker is probably not shady, just started with a good contract that protects him IF the language is similar to the following:

To pay the BROKER a commission equal to _____________ percent (________%) of the selling price if the YACHT is in any manner sold, donated, traded, leased or chartered (for more than one month) during the term of this agreement, including any such transfer by OWNER. The commission shall be based upon the contract price accepted by the OWNER prior to any adjustments made to compensate a buyer for defects or discrepancies revealed subsequent to the OWNER’S acceptance of an offer.
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Old 24-05-2016, 12:00   #26
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Re: Question on Boat Brokers

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Originally Posted by tdoster View Post

IF the broker is honest, they will help guide the seller to price the boat to market and condition up front, so not shady there. If the broker lists it close value, then the initial offer is pretty much going to be close to final. The seller original acceptance becomes a contract as soon as he accepts the first offer. The buyer has all the outs and changes.

Because the buyer accepted final offer and original offer are within 10% as it is, then the broker is probably not shady, just started with a good contract that protects him IF the language is similar to the following:

To pay the BROKER a commission equal to _____________ percent (________%) of the selling price if the YACHT is in any manner sold, donated, traded, leased or chartered (for more than one month) during the term of this agreement, including any such transfer by OWNER. The commission shall be based upon the contract price accepted by the OWNER prior to any adjustments made to compensate a buyer for defects or discrepancies revealed subsequent to the OWNER’S acceptance of an offer.
Yes, the listing broker's job is to guide the seller as to how to price his boat but has no control over the final asking price. Sellers often disregard that advice. A broker who then lists the boat above what he/she considers market value is not "shady" or dishonest to use your terms.

Actually that is kind of common. Owners often think the broker is undervaluing the boat in order to do a quick flip and want to start higher. In that case the boat gets listed and at some point when the boat has sat long enough the boat sells. Or, it doesn't sell and the seller blames the broker. Maybe he even gets another broker and starts over.

Boats are not like houses or even cars. There are far fewer of them sold and equipment and condition vary widely. Boat comps are just not as precise as the other markets.

Anyway, always read before signing.
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Old 24-05-2016, 12:37   #27
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Re: Question on Boat Brokers

I am a licensed yacht broker in Florida. Commissions are paid on the final selling price in your example, not on original contract price. It is very common for adjustments to be made after survey. Your broker is full of it in my humble opinion.
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Old 24-05-2016, 12:52   #28
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Re: Question on Boat Brokers

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I am a licensed yacht broker in Florida. Commissions are paid on the final selling price in your example, not on original contract price. It is very common for adjustments to be made after survey. Your broker is full of it in my humble opinion.
Florida licensing has nothing to do with purchase agreements, listing agreements, what forms are used in a transaction, etc.

FL does not legislate what the commission should be or how it is calculated.

Many FL brokers belong to the Florida Yacht Brokers Association and do use their standard forms but these aren't definitive.

For example, the FYBA central listing agreement states that the commission will be _ % of the "Gross Selling Price" but they do not define what that actually is.
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Old 24-05-2016, 12:58   #29
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Re: Question on Boat Brokers

A little off topic but note that some yacht purchase agreements discuss seller's commission.

Why would a buyer sign any document that discusses commission? There is no upside and potential liability to be dragged into any future lawsuits between the seller and the listing broker.

For buyers and sellers:
The terms of sale are agreed to in the purchase agreement signed by the buyer and seller. Sometimes there is also a place for the selling broker to sign acknowledging receipt of deposit.

For sellers:
Among other terms the commission is agreed to in the listing agreement signed by the seller and the listing broker when the boat is listed. This can be amended by the seller and listing broker during negotiations.

For the brokers:
The commission split is agreed to in a co-brokerage agreement signed by the listing and selling brokers at the time of the offer.

Keep it all separate and specific.

BTW, this is where it can be advantageous for a buyer to work with a reputable broker who is not the sellers listing broker. This way the buyer can examine all of the paperwork in an initial meeting and be satisfied with what he/she will later be signing.

Also future deposit will be kept in his/her escrow account and not the escrow account of the seller’s listing broker.
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Old 24-05-2016, 13:02   #30
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Re: Question on Boat Brokers

Several years ago I sold our fab little Ericson 34 on my own. We just needed to make ourselves available when someone wanted to see it (or coerce someone nearby with knowledge to represent us.). A little more of a hassle but never felt like we were getting 'scammed' by a broker. That being said, I have met a broker (maybe two??) that I do like and, for the most part, trust.

I guess it also depends on the boat and your personal knowledge of the market to take on the task of FSBO. YachtWorld is a good site to look up comps. Then, there are plenty of FSBO sites where you can list your boat for free (meaning you can list it for free... your boat's not free... ).

Good luck... hopefully you're buying a bigger boat??
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