Can a broker rip you off when selling your boat?

[StuM]

Originally Posted by goboatingnow

You pay a broker to advertise through his extensive list of contacts. Before the internet this was much harder to do as it meant placing paid ads etc.

And to spend time talking to prospective buyers and to spend time showing the boat to them and keeping an eye on them while they are looking over the boat. And to spend time communicating with the seller. Time is money.


Plus, a broker like any business also has other overheads that have to be factored in to his revenue/expenditure. (And no one is going to be paying him holiday, sick pay etc)


It annoys me when an employee of a client who gets provided with paid leave, sick pay, superannuation contributions, possibly a company vehicle etc etc and gets paid for 8 hours every working day of his life complains that my hourly charge rate is much higher than his hourly wage.

[Simi 60]

Originally Posted by goboatingnow

Actually the buyer effectively pays.

BS

[Simi 60]

Originally Posted by StuM

And to spend time talking to prospective buyers and to spend time showing the boat to them and keeping an eye on them while they are looking over the boat. And to spend time communicating with the seller. Time is money.

Sometimes

I have bought several houses where I found them, I contacted the agent, I drove to the address and all the agent did was meet me there, open the door and stand there while I went through.
I put in a cheeky offer if I wanted it and they'd convince the buyer the market had changed and the house wasn't worth as much as the seller and agent originally thought.


I have sold several houses where the same happened in reverse.
2 of them I had friends go through who reported back on the lack of input from the agent.
No attempt at selling was made
Needless to say they were sacked and houses were taken off the market and re listed later with better results.

Boats have been similar.

One about 20 years ago had the prospective buyer who had contacted me first because I had a for sale sign on the boom cover.
I sent him to the broker who then had them contact me again because the broker was useless, knew nothing about catamarans and couldn't sell free money.
I asked what I had to do to sack them for lack of performance stating reasons why.
Got it in writing and did that
And several weeks later sold the boat myself.
Once sold the broker tried to take me to court - turns out the Muppet who owned the brokerage was a barrister, so that wasn't going to end well.
Paid the commission over several years at about $10/week, the barristers name was Richard, cheque was always made out to Dick.
I got a laugh from it every week.

Our current boat we went and spent a few hours on her several times
Never saw or spoke to the broker directly once, told us where the keys were, let yourself in.
When we decided to buy her we asked what absolute bottom dollar would be and he told us a number 35% less than ask.
No attempt at all to actually sell.
Feel sorry for the owner, but at least she has gone to a good home and is being used for her intended purpose.

So yes, while there are some good agents out there a lot of them aren't.

[valhalla360]

Originally Posted by goboatingnow

If you get your asking price why are you worried. Ultimately you sell the boat for whatever money you accept. WhAt happens after that is irelevant

If you (the owner) comes in with a pre-determined price and you get that price...sure.

What we are talking about here is a situation where the broker, who many will presume to have a much better feel for the market value gets you to list the boat for a lower price or by not providing higher offers gets you to eventually lower the price.

Yes, ultimately, if you accept the lower price, not much you can do about it but it is something to be worried about and you should try to find comparable priced boats on your own, so that you can back check the price the broker is pushing you to sell at.

Of course, that gets tricky for the OP as a sale from thousands of miles away on a small island can distort the market compared to someplace like the Med or Florida where there is a huge market with lots of comparables.

[valhalla360]

Originally Posted by goboatingnow

Actually the buyer effectively pays.

The buyer pays for the boat. Then the seller pays the broker. The fact that it's typically done by subtracting the commission off the proceeds of the sale doesn't change who is paying it.

The legal fiduciary duty of the broker is to the seller.

The only special case would be a "buyers broker" but that implies a written contract between a buyer and the broker. There is no indication that is present in the OPs situation.

[goboatingnow]

Originally Posted by Simi 60

BS

There only one source of money

[goboatingnow]

Originally Posted by valhalla360

If you (the owner) comes in with a pre-determined price and you get that price...sure.



What we are talking about here is a situation where the broker, who many will presume to have a much better feel for the market value gets you to list the boat for a lower price or by not providing higher offers gets you to eventually lower the price.



Yes, ultimately, if you accept the lower price, not much you can do about it but it is something to be worried about and you should try to find comparable priced boats on your own, so that you can back check the price the broker is pushing you to sell at.



Of course, that gets tricky for the OP as a sale from thousands of miles away on a small island can distort the market compared to someplace like the Med or Florida where there is a huge market with lots of comparables.

Again lots of boats are sold at a different price to the asking. Nothing unusual in that

[NPCampbell]

Originally Posted by goboatingnow

No a broker is paid to sell the boat he’s in effect an agent of both the buyer and seller. The broker isn’t actually your agent , as he’s paid by the buyer . That’s why he’s called “ a broker “

You use a broker cause he advertises widely ,takes care of showing the boat ( you’d end up flying to the boat to show it ) and helping the paperwork processes. His job is not to get you top dollar per se.

I know many brokers that have said to the sellers. Your asking is too high here’s a reasonable offer. Etc

Ultimately you can’t have your cake and eat it. If you want top dollar be prepared to wait ,be prescient as to boatpricing trends , be prepared to wrack up yard and storage costs. Etc etc . It’s even worse of your boat is remote from main markets as the punters are limited.


Ultimately you decide, take the money and run or wait.

What you are describing is called "dual agency" in real estate. In my state, Texas, but not all states, this type of dual agency is forbidden. Being a "broker" doesn't alleviate you from this restriction.

In Texas, by default, the broker always represent the seller unless the broker has entered into a buyers agreement with a client. If there is no buyers agent the selling agent does not have to split the commission.

Obviously, this rule doesn't apply worldwide or even across the US. My point is you need to be familiar with the local rules so that you are fully aware of who your broker is legally representing: the buyer, the seller, both, or just the broker himself.

[valhalla360]

Originally Posted by goboatingnow

Again lots of boats are sold at a different price to the asking. Nothing unusual in that

Ummm...no one is questioning that. If the broker it honest and recommends a reasonable selling price and brings all offers to the seller, that's fine...but it has nothing to do with the thread.

The issue is if the Broker is purposely manipulating the seller to a lower price either to sell quickly (ie: drastic reduction in work & cost for a small reduction in commission) or more nefariously, to have a straw buyer get it cheap and then resell it to a buyer that wasn't brought to the original owner while pocketing the difference...that's at least immoral if not illegal.

The problem as with many legal questions is proving it.

[valhalla360]

Originally Posted by goboatingnow

There only one source of money

Nope, you are presuming that since it's typical for the seller to pay the broker out of the proceeds of the sale it's the buyer paying. It's really just a convenience. There is nothing that says the seller can't cut a separate check for the commission paid from fund outside the sale (so there could be multiple sources of money).

If you read the brokerage contract, the buyer is not party to the contract and has no obligation to ensure that the broker receives a commission.

[S/V Illusion]

Originally Posted by Simi 60

I pay brokers/agents to get me top dollar not bottom dollar.

You can set the top dollar amount you won’t go below but we all know that. Thanks for stating the obvious.

[Cwens]

Originally Posted by goboatingnow

No a broker is paid to sell the boat he’s in effect an agent of both the buyer and seller. The broker isn’t actually your agent , as he’s paid by the buyer . That’s why he’s called “ a broker “

Read the actual contract. In the vast majority of cases, the broker is retained by the seller and has a contractual relationship with and a fiduciary obligation to the seller, and has no contractual relationship with nor fiduciary duty to the buyer.



Discussion of whether the broker is "paid by" the buyer or the seller kind of misses the abstract, fungible nature of money. Consider these scenarios, in all of which the seller listed with a broker:

1. Buyer writes a check for $90,000 to the seller and another check for $9,000 to the broker.
2. Buyer writes a check for $99,000 to the seller. Seller deposits the check, and writes a check for $9,000 to the broker.
3. Buyer writes a check for $99,000 to an escrow service, who in turn writes checks for $90,000 to the seller and $9.000 to the broker
4. Seller writes a check for $9,000 to the broker before the buyer has even paid; buyer then writes a check for $90,000 to the buyer.

The result is exactly the same in all cases: the seller has $90,000 more cash than before the deal, and no boat; the buyer has a boat and $99,000 less cash than before the deal, and the broker has $9,000 cash. It doesn't really make sense to talk about whether the buyer or the seller "paid the broker" -- the broker's fee comes out of the transaction. The broker is getting paid pursuant to having fulfilled a contract entered into with the seller.

[S/V Illusion]

Putting aside the semantic arguments, a broker works for only one person - the broker.

It’s naive to think otherwise particularly when many of these people do little more than answer the phone. No matter how many words someone types here citing contractual language, brokers serve primarily themselves.

[Cwens]

Originally Posted by S/V Illusion

Putting aside the semantic arguments, a broker works for only one person - the broker.

It’s naive to think otherwise particularly when many of these people do little more than answer the phone. No matter how many words someone types here citing contractual language, brokers serve primarily themselves.

This is correct and worth remembering.

[valhalla360]

Originally Posted by S/V Illusion

Putting aside the semantic arguments, a broker works for only one person - the broker.

It’s naive to think otherwise particularly when many of these people do little more than answer the phone. No matter how many words someone types here citing contractual language, brokers serve primarily themselves.

Sort of but not really.

This is the same as saying an hourly worker at McDonalds doesn't work for McDonalds but for themselves. Ultimately, they only show up because it serves their interests but it's silly to claim they aren't working for McDonalds.

While it is important to understand the underlying motives and not presume they have your best interests at heart, a broker is very much paid to work for you.

PS: As far as the false idea that broker being paid by the buyer: If the seller cuts a separate check for the commission and everything else goes thru without problem. If the seller's check bounces, the broker has no claim on the buyer to undo the sale or get the commission from the buyer (this is why they typically want the commission taken out of the sale proceeds, so the seller can't stiff them on the commission that is paid by the seller). The buyer could care less if the broker gets paid or not. It's not their problem.