What you should know about brokers

[Flyingriki]

VERY informative thread! Am in the market for a cruiser, 40-49', at least 1998 or newer and under $125,000 asking. Want to end up in the Gulf or Caribbean so I don't see paying the surcharge for a west coast boat that has been shipped out here once already to ship back or deal with the hassle of the canal so am looking in Florida where prices seems much better. Sorry to see some of the bad mouthing about buying in Florida - hope it's not all true!!

Visited a buddy near Sarasota for over a week and had a hard time seeing the boats I had in mind. 2 Brokers were great, one was terrific but his boats were overpriced and he kind of shrugged when I asked about that. Maybe I was mistaken? 2 brokers were useless and had every excuse in the book not to show their listings.... Got a good intro to boat buying again since it's been a couple decades since I bought and lived on my C-36 in San Francisco Bay.

Planning another trip back down there soon and hope to narrow down the search a little so I can see some sold data and get a feel for my thoughts on the various models I've been looking at and their respective values. The thread on Marigot Rose saved me that long drive down to the Keys for it! Scared me too because it sounded great and seems to be far from it.

Will keep up reading here and gathering advice from knowledgeable sources! Thank you!!

[FutureStories]

Originally Posted by Thumbs Up

I just want to point out that unless you are paying your buyers broker on a "fee for service" arrangement that he/she is actually working for the seller. Where is his incentive, for instance, to look at non brokered boats for sale? Where is his incentive to negotiate a better price? And with a buyer's broker, the chance of the selling broker reducing his commission to make the sale is about 0%. I think that is really "what you should know about brokers" and that the piece of "the pie" that the buyers broker is getting could be your piece of pie. Comments?

Most offers I encourage my buyers to make are significantly lower than what they think they should offer.

I base my offers on data, condition, time on market and situation.

As a buyer without representation you don't have access to all that information. Buyers make offers based on list price.

Even if they were to get the selling broker to give up 3% (unlikely) the 3% is usually less than the money I save buyers by coming in at a realistic "low" number.

As far as why I would negotiate we'll when getting a portion of the commission. Referrals! If I tell you to offer $5,000 more to push my commission up and you realize later I did that. Not only will you not use or refer me again. You're likely to tell your friends. And that 10% of $5000 gets split 4 ways. So 500/4= $125. So yeah, I'm gonna recommend you go $5000 less and forfeit that $125 10/10 times for the dividends positive word of mouth pays.

Follow the numbers and data, not blanket statements. When you throw statements out there without numbers or logic attached it doesn't mean anything it's just used to create emotion. There's no room for emotion in business decisions.

[sailpower]

Originally Posted by FutureStories

Most offers I encourage my buyers to make are significantly lower than what they think they should offer.

I base my offers on data, condition, time on market and situation.

As a buyer without representation you don't have access to all that information. Buyers make offers based on list price.

Even if they were to get the selling broker to give up 3% (unlikely) the 3% is usually less than the money I save buyers by coming in at a realistic "low" number.

As far as why I would negotiate we'll when getting a portion of the commission. Referrals! If I tell you to offer $5,000 more to push my commission up and you realize later I did that. Not only will you not use or refer me again. You're likely to tell your friends. And that 10% of $5000 gets split 4 ways. So 500/4= $125. So yeah, I'm gonna recommend you go $5000 less and forfeit that $125 10/10 times for the dividends positive word of mouth pays.

Follow the numbers and data, not blanket statements. When you throw statements out there without numbers or logic attached it doesn't mean anything it's just used to create emotion. There's no room for emotion in business decisions.

How long have you been a broker?

How many deals have you done?

[Thumbs Up]

"And that 10% of $5000 gets split 4 ways"

Please explain this, I thought that the commission gets split two ways.

[Jim Cate]

There's no room for emotion in business decisions.

Yep, that's true, but buying a yacht ain't a business decision even if it involves big sums of money, and emotion is a big factor in most yacht sales. Perhaps shouldn't be, but there it is, boat lust leering out at you... unavoidable as death and taxes.

If it was just business, no one would ever buy a boat!! And I bet that you as a broker are well aware of the emotional side of things. If you are as good a guy as you sound like, you will not take advantage of this, and perhaps offer counseling for the lovelorn to your customers.

Keep up the good work... so far I like what you have been saying!

Jim

[weavis]

Originally Posted by Thumbs Up

"And that 10% of $5000 gets split 4 ways"

Please explain this, I thought that the commission gets split two ways.

I dont know boats but my ex wife was a realtor.

1/.Broker takes the money.
2/.Business gets a cut
3 and 4. both realtors share in the deal

[Thumbs Up]

I looked it up and understand now how the commission can get split four ways. The individual brokers have to split the proceeds with the "brokerage house" (their employers).

[Boat_Girl]

The brokerage house is paying for tons of advertising and proprietary software (YachtWorld and SoldBoats and all the others aren't free!); plus an office staff to handle closings (with the bigger brokerage houses). Once you look at where that 10% goes, it makes a lot more sense. Imagine paying for ad space on 50+ sites, taking the time to advertise on 50+ sites, and then paying for print ads? This is why I'm happy to work for a house, even though it's tempting to go on my own! For example, I have a current co-broker deal on a nice sailboat for $40,000. From that $4,000, I will make $1,440 (my house gets 60% because the other broker is out of town and it's not worth the money on this one for him to travel, plus my split with my house is 60/40). To earn this, I will have spent 2 hours on the listing appt., 3 hours on photos and videos, 4 hours posting the ad (I'm very thorough...I don't just slap things up online), about 10 hours on phone calls, emails, etc. to market the boat, another 10 to 15 showing her, 8 for the survey and sea trial, and another 5 on paperwork dealing with the close. Plus the boat is an hour away from me, so there is travel time (thank goodness I ride a motorcycle). So break this down, and I make about $30 an hour on the deal before taxes. Some deals, I might make $5 an hour, some I might make $150 an hour.

This seems like a lot of info, but I think it's important for clients to know where their money goes. Plus I've just saved them about 50 hours of work and a fortune on advertising!

I don't do this for the money. Money doesn't motivate me, even though I'd sure like more than I have! But seeing people find the boat of their dreams, introducing them to a lifestyle I love, and having a flexible schedule so I can be with my 6-year-old daughter motivates me. I was laid off after 10 years in a good corporate job, and making the decision to become a broker has saved me in so many ways. Plus, after living aboard and cruising for 2/3 of my life, it's in my blood.

Anyway--I thought the breakdown of numbers would help. This is a great thread. Happy to see it discussed.

--Melanie Neale

[Jim Cate]

Boat Girl... that's an informative post Thanks for breaking down the numbers for us. And good onya for the adaptation to the exit from the corporate world!

Jim

[FutureStories]

Originally Posted by sailpower

How long have you been a broker?

How many deals have you done?

I am a new broker. I personally have only been a part of a handful of deals.

That is why I aligned with a strong company. My GM has overseen over 10,000 boat deals in his life, so I rely heavily on him.

Boat deals I have only completed several. But I opened 2 restaurants last year and was in Medical Software sales when I was 19 organizing deals with CEOs CFOs and CTOs of hospitals with minimum 500 bed systems. But my biggest accomplishment was getting better cell phone rates from Verizon and AOL for my parents when I was 12

[FutureStories]

Also,

If I missed anyone's message please send a new one while at the boat show this weekend my account was changed from a supporting member, to a commercial account and my inbox got shrunk and filled.

So please if I missed you I'm not another broker ignoring you I had technical difficulties.

[Boat_Girl]

Originally Posted by Jim Cate

Boat Girl... that's an informative post Thanks for breaking down the numbers for us. And good onya for the adaptation to the exit from the corporate world!

Jim

Thanks, Jim! I feel very blessed to be doing what I do!

[sailpower]

Originally Posted by FutureStories

I am a new broker. I personally have only been a part of a handful of deals.

That is why I aligned with a strong company. My GM has overseen over 10,000 boat deals in his life, so I rely heavily on him.

Boat deals I have only completed several. But I opened 2 restaurants last year and was in Medical Software sales when I was 19 organizing deals with CEOs CFOs and CTOs of hospitals with minimum 500 bed systems. But my biggest accomplishment was getting better cell phone rates from Verizon and AOL for my parents when I was 12

OK, so when you make statements about "most of your buyers" you are not speaking from actual boat sales experience. Or maybe you are repeating your understanding of your GM's stories? It's a bit hard to see where he has been successful by encouraging "significantly lower" offers on his new powerboat inventory. That would be a story worth hearing.

For now, judging by your listings, you are in the lower end of the market which makes sense for a beginner. Best of luck in your future career. As you progress to listings where you can actually make a living it will be interesting to hear your perspective on the industry.

Meanwhile, good luck.

[Capn Jimbo]

Question for all, and a good one I hope:

I live in south Florida, found a nice boat in Maine, private seller. We have negotiated and agreed on a price, subject to the usual survey, et al.

Although the price is under $29K and I have a good as-is boat sales contract, and could do this deal myself - well, I would still be more comfortable if I could find a broker to simply handle the paperwork/escrow only. A few hours work.

My questions:
1. Fair price
2. Should I engage a Florida broker, or one in Maine and why?

Muchas gracias...

[sailpower]

Originally Posted by Capn Jimbo

Question for all, and a good one I hope:

I live in south Florida, found a nice boat in Maine, private seller. We have negotiated and agreed on a price, subject to the usual survey, et al.

Although the price is under $29K and I have a good as-is boat sales contract, and could do this deal myself - well, I would still be more comfortable if I could find a broker to simply handle the paperwork/escrow only. A few hours work.

My questions:
1. Fair price
2. Should I engage a Florida broker, or one in Maine and why?

Muchas gracias...

A ME broker should be versed in ME sales tax requirements/collecting, etc but you are still sending money to someone you don't know.

A FL broker would still be someone you don't know.

If your plan is to USCG Document the boat why not ask the Doc service to handle the escrow?

If you are moving it down to FL a FL Doc service could handle the FL paperwork also. Not sure about them paying the tax but that is easy for you to do.

Do you need some names?