Boat Brokers: How should we deal with them?

[Capn Jimbo]

A Discussion of Boat Brokers:

1. Brokers are not officially licensed or regulated.

2. Brokers are not escrow agents in the traditional sense. Most are not insured, and almost all will merge your substantial deposit (often 10%) with their own private accounts or funds. You are not protected from their misuse, misallocation or bankruptcy.

3. Brokers do not really know the boats they represent, thus tend to misrepresent the boat they are showing.

Let's now parse the YBBA's suggested listing agreement, often changed or modified.

The OWNER agrees:

The OWNER hereby grants the EXCLUSIVE RIGHT OF SALE to the BROKER referred to above, and agrees not to list the YACHT with any other party. The OWNER further agrees:

To notify all prospective purchasers or brokers who contact the OWNER directly that negotiations must be conducted through the BROKER. To supply the BROKER with the names of all prospective purchasers who contacted the OWNER directly.

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.

To pay the same commission specified above if within one year of this agreement’s termination the YACHT is sold, donated, traded, leased, or chartered (for more than one month) directly by the OWNER to any person or organization introduced to the YACHT by the BROKER during the term of this agreement.

First of all, please know that NONE of this is mandatory, yet we as buyers are led to believe this is the “standard agreement”. It is not, yet few buyers even try to negotiate the broker's “standard” agreement. The commission is one-sided, and based upon the original purchase offer. Ridiculous! Even though many surveys or inspections reveal defects that often lead to a lower price, the broker still receives a commission based on the earlier, original offer.

Further the buyer is forced to turn over all negotiations to the broker, whose primary interest was and remains his/her own, maximized commission. Want to cancel out a bad broker? There are all manner of added clauses requiring advance written notice that can be for months, while the bad broker continues to offend you.

How about this: the “standard” YBBA one year lockup. While it is appropriate that a broker should, of course, retain his clients for a time, a year is excessive. Even realtors – dealing with much bigger deals – usually go away after 6 months. And in even in this case, the broker demands to be paid based on the original offer.

Consider: you list a boat, and refuse an offer just slightly below your possibly high ask. One year later you realize your error, and a deal is struck for half the original ask. You'll still pay full commission on the original, year old offer. Ouch.

The BROKER agrees:
To seek prospective purchasers for the YACHT through direct promotion of the YACHT.

To prepare information describing the YACHT and to distribute this information through its multiple listing system to selected yacht brokerage companies, hereafter referred to as “corresponding brokers.”

To keep corresponding brokers informed as to the price, location and availability of the YACHT .

To pay any corresponding broker who sells the YACHT, a percentage of the commission received from the OWNER.

To promptly transmit all offers to the OWNER.

And here we go again.

The “direct promotion” of your boat is actually a pretty easy, single click event that “lists” your boat on multiple websites, some available only to brokers. That's often the extent of the “direct promotion”. You won't even get an “open house”, lol. As far as preparing information, often these listings are based solely or largely on information provided by the seller. Does the broker do a thorough inspection? Maybe. Will the brokerage send their own surveyor for a competent initial impression (to spot serious issues)?

Not likely.

My own pet peeve – and I know most will agree – are we all not tired of the cut 'n paste technique of simply repeating original marketing features, eg. “roomy U-shaped settee”. You know the drill. C'mon already. We either know the design and we can surely view pictures without assistance. What we really want to know are the specifics: components, model, age, condition. Maintenance log or receipts. Clear info regarding deck and hull, painting, etc.

And when you ask for this info? Good luck. The concept is to cause you to travel to see for yourself, or wait for your expensive surveyor to find what they already should know.

Now as far as “keeping corresponding brokers” (other brokers) informed, don't count on it. Your friendly broker will do almost anything to keep them away, as he/she seeks a full commission. Heck, I can't tell you how many times I responded to one of these “broker only” websites, only to wait weeks for them to get back to me.

Let's not even discuss “borrowed” listings – a ploy to get you to contact them, so they can then contact the actual broker and get a split of the commission. As far as communicating your offer to the seller, or heaven forbid, allowing you to speak to the owner? Don't hold your breath.

It gets worse. Most will demand at least a 10% down payment with the offer. Is that “standard”? For them perhaps, but absolutely not a legal requirement. One legal dollar will do it, especially knowing that it is you – the purchaser – who will have to pay for a good – and expensive – survey.

And there's more. Next they expect you to use their “escrow” service. Most buyers think this is the same kind of protection and insurance as offered in real estate deals, wherein the escrow bank, service or agent is independent, does not merge your money with their own accounts, and who will offer title insurance. Good stuff – but – NOT in boat sales.

Your broker is NOT an escrow agent. They CANNOT do a real and complete title search, rarely find deficiencies and CAN'T and WON'T offer title insurance. They WILL merge your funds into their own or business accounts, and you'd better hope the deal closes before their brokerage does, and goes out of business.

Real estate is a cake walk compared to boat sales, and we all have had bad experiences with most weekend warrior agents. Boat brokers are much worse, less reliable, less competent and if you manage to find a good one, treasure him or her.

Good brokers do exist and they are worth their weight in platinum. But know this: you can and should develop your own purchase offer.

It's not that hard. At the least you can and should renegotiate the “standard” brokers' agreement. You can and should shorten the lock-up, and alter the commission terms to the actual sale price, not the original offer. You should buy Don Casey's “Inspecting the Aging Sailboat”, learn his “30 minute survey” (easy and VERY effective), and create your own little Doctor's bag with a nice tapping hammer, small mirror on a flexible shaft, pointy tool, inexpensive Ryobi wood meter (about $35), set on “hardwood”, small high intensity flashlight, etc.

I can't tell you how many boats you can quickly eliminate in 30 minutes or less, to find the few that are really worth a survey.

You won't believe the broker's reaction when after a brief introduction, you take your leave to examine the whole boat, stem to stern, and bring out your meter and plastic headed tapping hammer. One broker forbid me to even tap? “Fine” I said and pulled out the meter, and added “I'll just tap with a quarter”, lol.

When – inevitably – you find bad stuff (delam, rot, oil in the bilge, rusty fittings, evidence of leakage) and tell the broker, he/she will have newfound respect for you, and may then be more responsive in presenting boats in better condition.

My nickel. What's yours?

[skipmac]

My take. This is just another broker bashing thread. At least unlike most of the other broker bashing threads that claim all are evil, you do reluctantly admit that there are some good brokers.

Aside from this, you list a lot of incorrect information and generalizations. To clarify a few:

There are two ways to list a boat, one is exclusive the other is open. The open listing allows you to list the boat for sale with as many brokers as you like. However there are pluses and minuses. Almost no broker is going to spend money to advertise your boat which costs him/her money if you have it listed with every other broker in town. That's just common sense. Assuming a good broker, if you give them the exclusive listing that allow them to recover the costs of advertising when the boat sells.

Also, you need to be realistic about advertising. A full page ad in one of the boating magazines costs thousands. Unless you have a very salable, big dollar yacht the best you can expect is a small share of a page along with several other boats or maybe ads in smaller or local publications. If you're selling a $100,000 boat the total commission which is shared by the office and a broker or two will be $10,000. Out of that they have to pay all the costs of running a business. If they sold one a day it would be a different story but a broker can go weeks between sales and in a down economy it could be months.

And the contract you listed is a lot more restrictive and one sided than any I've ever seen. However like ANY contract or legal agreement a person signs, one should read, understood and any delete any objectionable bits or don't sign.

As for all the rest, spend a couple of minutes, use the forum search function and read one of the dozen or so other broker discussions on the forum to see other opinions.

I don't disagree that there are bad, lazy, dishonest and outright crooks that are brokers. Just like there are bad, lazy, dishonest and outright crooks working as boat captains. Doesn't make them all that way.

[chris mac]

Like any service provided, if you can do it yourself.... Then do it yourself.
I don't like going to restaurants. I can cook the same thing cheaper at home, and usually better.
That doesn't mean I will go on the Internet bashing all restaurants.
If you don't want to use a broker then it's simple, don't. But I don't see the point in trying to convince others that they shouldn't either.

[David M]

I think the original post is pretty fair. It is information a seller needs to consider that he or she might not be getting from any other source than here.

Yes there are good brokers and less than honest brokers. It's the buyers responsibility to filter out the bad ones and the original post helps. It does not unfairly label them all as bad.

I see no broker bashing.

[skipmac]

Originally Posted by David M

I think the original post is pretty fair. It is information a seller needs to consider that he or she might not be getting from any other source than here.

Yes there are good brokers and less than honest brokers. It's the buyers responsibility to filter out the bad ones and the original post helps. It does not unfairly label them all as bad.

I see no broker bashing.

Well here's a couple of quotes that I think are at best uncomplimentary, alarmist and unfair. Many of the statements are incorrect or misrepresent the reality.

Brokers do not really know the boats they represent, thus tend to misrepresent the boat they are showing.

If it is their own listing, most brokers I've known were very familiar with the boat, it's condition, history, etc. But there are hundreds of boats listed for sale in any large market. A good broker will not limit what he offers to the buyer to only his/her own listings but go to the multiple listings to find a selection of boats that might be of interest. No one can know the condition of every boat listed on the market and has to depend on what information if any, they can get from the owner (often not much) or listing broker.

Referring to the contract he quoted, which is far beyond the standard contracts I've seen he says.

First of all, please know that NONE of this is mandatory, yet we as buyers are led to believe this is the “standard agreement”.

This clearly accuses brokers of misrepresentation or worse.

Regarding deposits he says.

They WILL merge your funds into their own or business accounts, and you'd better hope the deal closes before their brokerage does, and goes out of business.

When I was a broker we absolutely had a separate escrow account where all deposits were held until the deal closed.

Real estate is a cake walk compared to boat sales, and we all have had bad experiences with most weekend warrior agents. Boat brokers are much worse, less reliable, less competent and if you manage to find a good one, treasure him or her.

In addition to all the above, the OP first complains about brokers trying to trick sellers into signing an exclusive listing agreement (no not his exact words but the meaning was clear) then complains that the broker won't pay for a survey out of their own pocket or do aggressive advertising, each of which can cost thousands of dollars. So why would anyone spend thousands of dollars to survey and advertise a boat with zero guarantee that the seller won't go to another broker or sell it independently?

I do agree there are many very good recommendations in the post and I agree there are bad brokers. I worked for one broker that was a blatant liar and threatened to fire me if I wouldn't misrepresent boats to get a sale. Yes the OP occasionally makes a slight nod to those very rare brokers that aren't bad but the overwhelming tone is condemnation of brokers as a class.

[Tetepare]

There are two topics OP brought up. The Brokerage agreement is like any other agreement, designed for the benefit of the party that presents it. Go read your insurance policy, particularly "exceptions" and the brokerage agreement looks down right friendly.

Then there is "Broker" vs "broker". The Broker is the firm with which you are entering into agreement. The small-b broker is the guy that is (or isn't) going to sell your boat. He/she may or may not be savvy about boats, or your model, and may or may not be very motivated. One of our local brokerages has a number of brokers (employees selling boats) and there is a wide disparity in knowledge and motivation amongst them.

If you know the Brokerage, do you know the employees? You don't want a racing guy selling your CT41. And you don't want the broker who's out cruising all of July either- how is he going to show the boat? Nor do you want a broker that's 100 miles from your boat.

[denverd0n]

Originally Posted by Capn Jimbo

1. Brokers are not officially licensed or regulated.

They are here in Florida. I'm surprised that you don't know that.

[Pelagic]

Originally Posted by David M

I think the original post is pretty fair. It is information a seller needs to consider that he or she might not be getting from any other source than here.

Yes there are good brokers and less than honest brokers. It's the buyers responsibility to filter out the bad ones and the original post helps. It does not unfairly label them all as bad.

I see no broker bashing.

I agree David, especially as the OP is in Florida, where the large boat brokers firms have their own special form of Mafia, that is well known and despised in other regions of the industry.

Bottom line, is to do your own due diligence and polish your BS meter.

[Capn Jimbo]

To address our resident and apparently offended broker...

"If it is their own listing, most brokers I've known were very familiar with the boat... No one can know the condition of every boat listed on the market and has to depend on what information if any, they can get from the owner (often not much) or listing broker".

Since the poster contradicts him/herself, no further response - other than to note that after viewing about 50 boats in the last year in Florida (despite one of the minority of states that license), my experience was, with a handful of exceptions, completely unsatisfactory. The great majority did not know their boats, nor seemed able to get accurate information.

"Referring to the contract he quoted, which is far beyond the standard contracts I've seen he says "...please know that NONE of this is mandatory, yet we as buyers are led to believe this is the “standard agreement”."

Sorry Charlie, but contract quoted is directly from the YBAA (Yacht Broker Association of America) document entitled "STANDARD FORM OF THE YACHT BROKERS ASSOCIATION OF AMERICAN; YACHT BROKERS CENTRAL LISTING AGREEMENT". Allow me to cite also Boat U.S. who referring to brokers, states "the contract will usually be standardized."

"When I was a broker we absolutely had a separate escrow account where all deposits were held until the deal closed".

Well good for you, but surveys of one are less than convincing. Not to quote Boat U.S. again, but "..Demand to use a specific business (escrow or shipper) and don't accept an alternate. If you chose to use an escrow service to settle the transaction, suggest your own aftervisiting the BBB site and verifying it’s a legitimate one". The poster's claim that his/her broker had a "separate escrow account" is entirely misleading.

Read my lips. A broker is NOT an independent escrow agent - no matter what they may call their account, which is entirely in their hands, and in their trust. They CANNOT and DO NOT offer title insurance based on a truly thorough title search. The trail of ownership, damages, liens and the like are extremely hard to trace and verify; ergo no title insurance is offered. You're on your own.

"In addition to all the above, the OP first complains about brokers trying to trick sellers into signing an exclusive listing agreement (no not his exact words but the meaning was clear) then complains that the broker won't pay for a survey out of their own pocket or do aggressive advertising, each of which can cost thousands of dollars".

The poster is exactly right, these are not my words - at all. Any complaint or issue with trickery is that conceived by the poster alone.. Shame. Further I did not "complain that the broker won't pay for a survey", a complete misrepresentation of my position that the buyer - who is the one who pays for an expensive survey - need not succumb to the broker's usual demand for a 10% down payment.

What did I say? Read it again: "One legal dollar will do it, especially knowing that it is you – the purchaser – who will have to pay for a good – and expensive – survey." Read the posting.

Where this knee jerk poster went awry was the notion that - if you are lucky - there are a few good brokers who either have the expertise on staff and have the time to reach a "competent initial impression" (my words, and posed as a question, not a conclusion). That dear jerker, is not a paid survey, and was not intended to imply that.

I had the wonderful experience of a great Tampa brokerage who does take that time, as they do not wish to falsely promote an offering. Their descriptions are reliable and trustworthy, although that never, ever obviates the need for we the buyers to pay for a complete, thorough, competent and professional survey - from a competent and independent surveyor.

It has been well said elsewhere to "...ask your broker for their top 3 recommendations for surveyors - then - pick someone else", lol. I concur. And this forum is an excellent place to get such independent recommendations.

In closing, I can't stress enough how much I tire of those posters who deliberately twist and misrepresent the words of others. I'm really not interested in these yellow snow jobs. Have a differing opinion? Have at it. But personal attacks and characterizations are unwelcome, and serve no one.

Carry on.

[skipmac]

Originally Posted by Capn Jimbo

In closing, I can't stress enough how much I tire of those posters who deliberately twist and misrepresent the words of others. I'm really not interested in these yellow snow jobs. Have a differing opinion? Have at it. But personal attacks and characterizations are unwelcome, and serve no one.

Carry on.

Well Capn. I quoted your words directly from your post with one exception which I noted but in my reading was an accurate interpretation. I made no personal attack but offered a rebuttal based on my personal experience as a broker and as a former broker I find your characterizations unwelcome.

As I said in my first reply, yes there are brokers that are scoundrels and liars but most brokers are just sailors like you or me.

Please note that I did not contradict myself in the statement I copy below. You clearly do not know the difference between a listing made by a broker and a multiple listing made by another broker but available for any broker to sell.

"If it is their own listing, most brokers I've known were very familiar with the boat... No one can know the condition of every boat listed on the market and has to depend on what information if any, they can get from the owner (often not much) or listing broker".

Since the poster contradicts him/herself, no further response - other than to note that after viewing about 50 boats in the last year in Florida (despite one of the minority of states that license), my experience was, with a handful of exceptions, completely unsatisfactory. The great majority did not know their boats, nor seemed able to get accurate information.

By the way, there is a very good reason for requiring a 10% deposit to confirm a valid offer on a boat. That insures that the buyer is serious which is very important to the seller as once an offer is accepted the seller will incur costs and some risks in the survey and seatrial. If there is no deposit required then anyone off the street can come in, make an offer with a $1 deposit and demand a sea trial.

And yes I will carry on to something more productive elsewhere.

[denverd0n]

Originally Posted by Capn Jimbo

That dear jerker, is not a paid survey...

Saying that his reaction is "knee jerk" is not name-calling. Calling him "jerker," on the other hand, quite clearly is. So first the ad hominem above, and then...

Originally Posted by Capn Jimbo

...personal attacks and characterizations are unwelcome, and serve no one.

Oh, the irony.

[BandB]

Well, that wasn't an OP wishing to generate a useful discussion, but just a one sided and ill informed rant. Destroyed your credibility by saying brokers aren't licensed when you're in one of two states in the country in which they are.

As to the rest, all are issues that can arise. However, I know many great and professional brokers. Now, you call every possible broker on every listed boat and you're going to have some problems. However, get a good buyer's broker, check them out, interview them, establish good communication and they will serve you well.

As to all terms of the agreement and placement of escrows and everything else, it's all negotiable. If you don't find the broker's escrow arrangement satisfactory then insist on using a title/documentation service as the escrow agent.

And to all in the other 48 states, I encourage you to push for licensing. For those even in Florida and California, we can use stronger regulations. In my opinion, boat sales below a certain price point should be treated much like cars including lemon laws on new boats. Boats above that price range and the industry and brokers should be treated the same as real estate with similar laws and protections.

None of that is cause to blast an entire industry. And now to those of you who continue to have broker issues, perhaps time to look in the mirror and see the one constant is you. Maybe there's a way you could handle things better, protect yourself and build relationships. It is a business of relationships. And if you're not comfortable signing a document, then don't do so, or at the very least get it reviewed by your lawyer.

There are good and bad in every industry including whatever profession the OP is in or has been in.

[sailpower]

It appears that the OP owns two boats the value of which added together don't equal a decent commission.

Has he even had any significant personal interaction with brokers when buying his "yachts" at these price points?

So, Captain, why not tell all about YOUR personal experiences with brokers?

[akprb]

“Looked at 50 boats in the last year”

Says it all.....

[YachtBroker]

As a professional yacht broker for the past 34 years and over 24 years of being a Florida Licensed Broker (even though I am in Texas), there are so many wrong assumptions expelled here, I won't even begin to counter them.

So don't use a broker, sell your boat yourself! Sure anyone can try it, but few are successful at it. The boat owners that think brokers don't provide a valuable service, most brokers don't want to deal with them anyway.

In this internet age, if you can't find a reputable broker, you're not searching very hard. Referalls and testamonials from fellow buyers, sellers, and service providers are everywhere if you ask.