Boat broker commissions in the US - are they next after real estate?

[shimari]

Boat broker commissions in the US are typically 10%. You can some times negotiate that down if you're giving the broker other business such as selling and buying a boat with them.

The National Association of Realtors in the US just settled such that their commissions will no longer be the 5%-6% as they have been. Sounds like there will be no set commission as in the past (although, you could negotiate a little here too).

https://www.npr.org/2024/03/15/12387...ler-settlement

I have to wonder if boat brokers will be the next targets.

[Indolent58]

Maybe.

https://www.reuters.com/legal/litiga...0yacht%20sale.

[Jimbo2010]

They should be lower

[Kettlewell]

I never understood why it isn't a set fee for their services, guaranteeing that you get the same treatment no matter the value of your boat (or house). What other services do you pay for based on the value of the product being sold? As it is there is a huge incentive for the brokers to work hard to sell the most expensive boats and properties. I have seen this when looking at boats--they start out showing me boats that cost more than I am willing to spend.

[rabbi]

Back in the days brokers where in a position to demand that percentage.
They were the ones that brought buyers & sellers together. If you wanted to buy / sell you basically had to use a broker.

The internet has changed that and more and more people will adopt the new way of buying / selling both boats and real estate.

When buying I scout websites with FSBO listings.
When selling I pay a broker a flat fee to upload a listing I prepared to yachtworld and forward any leads to me.

[shimari]

Originally Posted by rabbi

...

When buying I scout websites with FSBO listings.
When selling I pay a broker a flat fee to upload a listing I prepared to yachtworld and forward any leads to me.

What is the flat fee?

[rabbi]

Last time I paid 600€ for the Yachtworld listing and passing on email contacts. That was 2018 IIRC

You need to call many brokers to find one who is OK with that. Most refuse and want their percentage deal.

[MicHughV]

Let's face it...most boats sold these days are generally thru' a brokerage company.

Let's see, here, first off, consider this, unless the boat sells, the broker makes squat. In the meantime he has shown the boat dozens of times, and often has to travel some distance to do so. This is all on his dime.

Most all boat owners generally price their boats way higher than the market can bear, with the result these boats may often languish on the market for months or even years, but for the broker it matters little as he is still obligated to try and sell it.

Then too, the broker must contend with the tire kickers, that have no intent to purchase the boat, but are merely "looking around". Again, this matters little to the broker if he wants to show and sell the boat.

Finally, he gets to make a sale, but that 10% has to be split with the brokerage house, so he only makes 5%. If there is a buying and selling broker involved, that 5% gets cuts in two...now down to 2.5%.

So, lets assume a boat sells for $150,000, about average for the general 40' range.
!0% would be $15,000, but he sees only half this....$7,500 and if he splits with another broker, only $3,750, an event that happens more often than one thinks.

In the meantime, he or she may have shown the boat several times, often over a period of time, let's say 40 hours of his time, 3750/40 is $93/75/hr.
Then he still as to arrange a survey, sea trial, financing, insurance, etc, etc, let's assume another 8 hrs of his time...3750/48 = $78.13/hr
Now add in mileage, meals on the road, etc, and that $78 gets whittled down ever more.

Taken on a yearly basis, assuming he sells one boat per month, he is making about $45,000/year or less.

These are all just averages to show your typical boat broker is not exactly rolling around in the cash.

True, there are those brokers that deal in the mega million yachts, but these are far and few in between.

Like most anyone else, I hate to fork over a fee for "commissions" just as I hate to fork over the obligatory 6.5% sales tax, but there is little chance to avoid this.

Off course, one could go the "by owner" route, but this has a number of pitfalls to consider as well and at the end of the day little is gained here.

Like any business, there are good brokers and not so good brokers. Good brokers are worth their weight in gold, whereas lousy brokers can be a PITA.

Lots to consider here.

[Fore and Aft]

Shimari I get a front row seat in the brokers business and generally I would say they earn their money. I would say that the lower end of the market $100,000 and less just sucks and is hard work. The broker has to have a lot of turn over to make a living. The hours invested often don't want thinking about.
As for selling yourself, I can easily say a broker assisted sale usually goes ahead after a survey. But for private sales it can be hit or miss affair. Often a miss since the buyer hasn't made a full disclosure on the vessels condition and is praying the surveyor is blind. Which leads me to another issue. I have never been abused by a seller when a broker conducts a sale. But every year one or two private sellers try and hide their lies by getting aggressive.
I think a broker's commission is money well spent.
Cheers

[MicHughV]

True, my above example used $150,000 as a base price, but many time, boats are sold at half that price or less, so a broker might walk away with $1,200-1,500 per sale.
It's a tough gig for sure.

[shimari]

Originally Posted by MicHughV

True, my above example used $150,000 as a base price, but many time, boats are sold at half that price or less, so a broker might walk away with $1,200-1,500 per sale.
It's a tough gig for sure.

In your example, the sales person gets 50%, or 5% of the commission. Does this mean the brokerage(s) takes 5% and the listing and selling agent split 5%?

I totally agree commissions on boats under $150k are appropriate. Once you get into the bigger more expensive boats is where I question the 10%.

[MicHughV]

Typical broker commissions are 10% of the selling price.
So if a boat sells for $100,000, the commission is $10,000

Of that $10,000 the brokerage company takes 50% to cover advertising, etc, leaving the broker that sold the boat with $5000.

If there is a buying and selling broker involved , they split the $5000, regardless of effort provided by either broker, so the $5000 gets split 50%, meaning each broker gets $2,500.

That's pretty much the way it works, though sometimes a "deal" is made to cover unusual circumstances, but that is rare as brokers don't or won't deviate from the 10% rule.

[Montanan]

Originally Posted by shimari

In your example, the sales person gets 50%, or 5% of the commission. Does this mean the brokerage(s) takes 5% and the listing and selling agent split 5%?

I totally agree commissions on boats under $150k are appropriate. Once you get into the bigger more expensive boats is where I question the 10%.

A broker typically hires agents and the agents earn a portion of the commission. Half is a typical split between the brokerage and the agent. The broker pays for all the business expenses, such as listings, office, insurance, utilities, advertising, etc.

And yes if there is both a seller's and a buyer's broker involved then they split the commission between the two and then again with any agent that is involved, hence can be 2.5% to each involved party.

10% is a rather trivial amount when one is contemplating ownership of a depreciating asset that is nothing but a major expensive object and hobby. It is part of the purchase price, not an additive value to the buyer whereas the privilege-based taxations can be additive to the purchase price.

The contingent commission is dependent on a successful sale, and is marginally more than the Sales / Use taxation and considerably less than VAT.

[markxengineerin]

The business to be in seems to be owning YachtWorld. Talk about easy money and a near monopoly that can be run by a very small team.

As for the broker fees, the owners of the brokerages seem to be the ones making $$, not so much the average broker.

[shimari]

Originally Posted by markxengineerin

The business to be in seems to be owning YachtWorld. Talk about easy money and a near monopoly that can be run by a very small team.

As for the broker fees, the owners of the brokerages seem to be the ones making $$, not so much the average broker.

YachtWorld is roughly the same thing as the Multiple listing service for real estate in the US.