Brokers are dumb? Or just us...

[Caribbeachbum]

What would you do here?

We are trying our best to buy Last Boat III, and a few days ago had a 43' catamaran under contract.

The survey turned up some problems, chief among them areas of delamination on both hulls. Nothing serious, nothing soft, but still ... our surveyor recommended against proceeding with the purchase. But we liked the boat. So we instead asked for $10.5K in price adjustment. I'm pretty sure the delamination alone would have cost us more than that, either in repair bills or in the resale price. And there were other issues.

The seller was apparently angry about this adjustment and said "no."

Now here's the fun part: we did not use a buyer-broker, so that 5% co-broker commission was just hanging out there off the edge of the deal.

The way I see it, the broker could have paid the $10.5K adjustment, pocketed $13K, and everyone would have been happy. The seller gets what he wants for the boat, we get a boat we want at a fair price, and the broker gets a reasonable commission (more than he would get if I bring in a buyer-broker).

Instead, the broker allowed the deal to blow up and nobody is happy. The seller was apparently so angry he ordered the broker to raise the listing price of the boat by $10K (I guess to give more room for negotiations).
The broker is out several hundred dollars in actual cash, because he hired a diver to clean the bottom and a skipper for the sea trial; and further out at least $13K+ in unearned commission. And while we had a nice vacation as part of the survey and sea trial, we still spent a fair bit of money to end up with no boat.

So ... back to boat shopping.

[Wotname]

You are joking aren't you, the broker didn't "blow up the deal". You and the vendor blew the deal because you couldn't come to an agreement over the price versus condition of the boat.

The broker was dumb to put his own money into the bottom cleaning and skipper which should have been paid by you (the potential purchaser) or the vendor. A written agreement with the vendor about paying for these services should be in place before the survey is undertaken.

And just why should the broker pay for your price reduction out of his commission. Remember the broker is working for the vendor, not for you.

Methinks your attitude of who pay should for what when buying a boat is not going to make it enjoyable experience for you

[Tetepare]

Co-commission? How does this work? Do you have some sort of contract?

[Danm1]

As a real estate broker I have cut my commission to make a deal (although not by the whole amount of the price reduction). You don't get paid if you don't close. Massaging sellers is also part of the job. Bottom line, the broker should have the best handle on the true market and move everyone in that direction or he is no good at the job.

[Sir_Crabs_A_Lot]

Brokers know EXACTLY what they're doing.

Decades ago I was shopping for a trawler and came across a CHB in Port Orchard, WA, USA. I scheduled a survey, and the broker suggested he and the surveyor could take the boat to the yard and I could drive there to meet them. OK.

Boat surveyed, Surveyor paid by me (in cash) who leaves. I, however, insist on riding back to the marina in the boat with the broker, who is hesitant but finally agrees.

The moment the Perkins is started, a loud alarm starts and stays on.
"What's that?" I say,
Broker: "Oh, it's nothing, just ignore it."
Me: "Was it doing this on the way here?"
B: "Y-e-e-s-s-s. But it's OK, the marina is only a mile away."
When we arrive, I pull the dipstick -- no oil! I phone a marine mechanic and begin to relate this tale, when he stops me cold and says: "I know exactly what the problem is -- it's very common with a Perkins -- you see, the oil cooler is saltwater cooled but it's made out of copper and aluminum, so a stray current makes it into Swiss cheese. The oil pump then proceeds to pump all the oil into the ocean."

I tell the broker I don't want this boat. He argues with me for a half an hour but finally gives up. Back home I get the survey report and it doesn't mention the alarm. I ask for my $300 back, and I can get it, but by contract I have to get another surveyor to verify that THIS survey was in error (and pay him $300 for his work).

They're all bast*rds, and in collusion with each other.

[boatpoker]

Originally Posted by Sir_Crabs_A_Lot

They're all bast*rds, and in collusion with each other.

Not all ... I work with brokers everyday of the week and after 4621 surveys I can say I have met six brokers whom I respect. No different than any other profession , a few exceptional, a few dangerous and a great many incompetent.

Your responsibility is to find the good ones. Most people are not very good at this.

[Paul L]

One of the main benefits of a broker is closing the deal when things get sticky near the end. Maybe the broker figured he already had another buyer lined up. If not, it was dumb of him to not take his portion of the commission and give up the buyers broker half to make the deal close. Even with two brokers involved, they sometimes each cut their commission to make the deal close. Better to have cash in hand than holdout for the future.

[Suijin]

How do you know that the broker did not offer to cover the reduction in your offer? If the seller was so angry that they raised the price out of spite they may well have refused any offer on the part of the broker.

When I bought my current boat negotiations stalled over a $12k adjustment based on the survey. Buying and selling brokers split the difference out of their commissions and every one was happy, so it does happen. So brokers are not dumb, maybe just your seller’s.

[sailorboy1]

I understand what the OP is saying and see no reason to be fighting over it.

[Caribbeachbum]

Originally Posted by Tetepare

Co-commission? How does this work? Do you have some sort of contract?

Hey yes, in general a seller's listing contract for a yacht includes a 10 percent sales commission. In many (most?) cases, a buyer-broker takes 4 or 5 percent and the listing broker gets the rest. The buyer-broker part is the co-broker commission. When you, as a buyer, go directly to the listing broker, then he is set up to keep the whole 10 percent. I was suggesting that in this case the listing broker should have given up the buyer-broker portion of that to make the deal work.

In truth, it probably worked out best for us. A boat with delamination is arguably a poor choice.

It's just that we're unemployed and homeless and need to buy a yacht in a hurry...

[Caribbeachbum]

Originally Posted by Wotname

You are joking aren't you, the broker didn't "blow up the deal". You and the vendor blew the deal because you couldn't come to an agreement over the price versus condition of the boat.

The broker was dumb to put his own money into the bottom cleaning and skipper which should have been paid by you (the potential purchaser) or the vendor. A written agreement with the vendor about paying for these services should be in place before the survey is undertaken.

And just why should the broker pay for your price reduction out of his commission. Remember the broker is working for the vendor, not for you.

Methinks your attitude of who pay should for what when buying a boat is not going to make it enjoyable experience for you

I think you're missing a bit here, mate. The bottom cleaning and the skipper are the seller's responsibility, and while the broker paid it, my guess it will eventually come out of any sale proceeds on that boat.

As to why the broker should pay out of his commission? It's just business. The co-broker part of his commission is pure windfall. In many (most?) cases, that money goes to a buyer-broker. Since we didn't have one, he was set up to get both sides of the deal. As the seller and I got to loggerheads over a few thousand dollars, it would have been in everyone's benefit for him to kick in some of that co-broker part of the commission.

He would have $13.5K in his pocket right now, a happy seller and a happy buyer. Instead, none of those things exist, and in all probability, when he does sell the boat there will be a buyer-broker and he'll still get only ~$13K...

This is my fourth time dealing with the yacht buying process, it's never been pleasant nor unpleasant, it's just business.

[ShellBack89]

Brokers aren’t dumb. Some lack common sense but not dumb. In this case depending on the manufacture, model and year of the Cat, the seller can holdout for another offer. This is the Cat buying time and they are in demand. The 43s are selling hot right now. Agree that it turned out for the best but I’m not sure why the broker paid for the captain. Anytime I’ve bought boats that require a captain, it came out of my pocket. Helps elimate the tire kickers.

[hamburking]

I enjoyed your story, thanks for sharing.

The reality is that it had nothing to do with money. It was all about egos. Who is right, who is the "winner".

I agree with you...no sale=no commission. The broker could easily have stroked some egos and made the sale. A good broker/agent works both sides, so everyone thinks they won.

I've met sellers who say they would rather burn their boat than sell for any less than asking. Other sellers offer their boats for (almost) free, if they can find a worthy and caring buyer.

[Bulawayo]

Its interesting to see how US brokers behave. My own experiences in Europe and Southern Africa have been quite different as the brokers are paid only on a sale - and by the seller (indirectly, the buyer, of course).
However, it seems to me that you likely had a lucky escape - from potentially very expensive yard bills. I would follow the advice of the surveyor - it also sounds like the boat was not hauled, so who knows what else might have come to light once she was out of the water.
Good luck with the hunt.

Originally Posted by Caribbeachbum

What would you do here?

We are trying our best to buy Last Boat III, and a few days ago had a 43' catamaran under contract.

The survey turned up some problems, chief among them areas of delamination on both hulls. Nothing serious, nothing soft, but still ... our surveyor recommended against proceeding with the purchase. But we liked the boat. So we instead asked for $10.5K in price adjustment. I'm pretty sure the delamination alone would have cost us more than that, either in repair bills or in the resale price. And there were other issues.

The seller was apparently angry about this adjustment and said "no."

Now here's the fun part: we did not use a buyer-broker, so that 5% co-broker commission was just hanging out there off the edge of the deal.

The way I see it, the broker could have paid the $10.5K adjustment, pocketed $13K, and everyone would have been happy. The seller gets what he wants for the boat, we get a boat we want at a fair price, and the broker gets a reasonable commission (more than he would get if I bring in a buyer-broker).

Instead, the broker allowed the deal to blow up and nobody is happy. The seller was apparently so angry he ordered the broker to raise the listing price of the boat by $10K (I guess to give more room for negotiations).
The broker is out several hundred dollars in actual cash, because he hired a diver to clean the bottom and a skipper for the sea trial; and further out at least $13K+ in unearned commission. And while we had a nice vacation as part of the survey and sea trial, we still spent a fair bit of money to end up with no boat.

So ... back to boat shopping.

[DEAN2140]

Bear in mind that the seller and his broker are obligated to tell any prospective buyer of the delamination uncovered by the survey and the buyer will probably ask for a copy of the survey. In light of this, the seller decides to raise the price??? Some people are so wacko its best to just steer clear. Consider yourself fortunate.