Tuesday, May 29, 2012

The Baffling Business of Boat Brokers

It's a virtual sea of yacht brokers out there - they can either make you sink or swim!!
If you are in the market for a sailboat, you will most likely (but not always) be dealing with a broker.  A boat broker is to a boat what a realtor is to a home - though the industry comparisons really stop there.  Before I go on, it is important to make the distinction between a "listing broker" and a "buyer broker" as the two will serve different functions in the boat buying process but are not always mutually exclusive.

When Scott and I find a boat we are interested in on Yachtworld (for example), we typically use the "contact broker" button and send them an email.  The broker we are contacting is the "listing broker" (also known as the "seller's broker").  He or she will usually respond to us within 24 hours and we will go back and forth with questions and, if things go well, it will be their job to show us the boat.  It is important to note that the listing broker represents the seller.  This is a relatively simple way to go about boat buying, however if you are not experienced in buying a boat or don't really know what you are looking for - it is very possible to end up buying the wrong boat at the wrong price this way.

While Scott and I have never used one, a "buyers broker" is someone that represents the buyer.  It is this broker's responsibility to find them the right boat at the right price.  A good broker can smell a bad deal from a mile away and can help pull back the reigns on an overly eager buyer.  It is tough to negotiate a deal for something you really want, and a buyer's broker will help temper this.  They can also provide crucial information about what boat's of a particular model have been listed for and what they sold for over the past few years.  This information (only available to yacht brokers) is invaluable to have in your wheelhouse when it comes time to make an offer on a particular boat.

Many people think that using a "buyer's broker" will be expensive.  Brokers only get paid when a boat is sold and their "cost" is simply a percentage of the agreed upon price.  It is a commission-driven job and if you don't buy a boat, they don't get paid.  The price of the boat is no different to you whether enlist the assistance of a buyer's broker or not.  In fact, if you have a good one, that broker will often save you money by helping you make a wise decision, advocating on your behalf and negotiating a better price on the boat in question.

We have a close family friend, Allen Schiller of East Coast Yacht Sales who - while he has never acted in an "official" capacity as our broker - has been a fantastic resource for us.  He is honest, extremely knowledgeable, an avid sailor (definitely helpful when buying a sailboat!) and won't mince words about boats we're looking at.  When we find a boat we "think" we like, he'll either tell us that it's a good idea to continue pursuing it or he'll tell us we're veering off course and why.  His unwavering guidance and objective perspective have been incredibly helpful throughout this process.  He has suggested boats and listings we might not have previously considered and helped steer us away from boats that, ultimately, wouldn't be right for us.

One aspect of boat brokering that is unique and often unclear, is the fact that no broker "owns" a particular client or boat.  Anyone can show you any boat - it does not have to be the listing broker.  Similarly, if you are dealing with a broker who rubs you the wrong way - you can step away from them at any time.  You owe them nothing.  For example, when we were in Florida we were dealing with a listing broker who was incredibly unhelpful.  He did not return our calls or emails and was very evasive with our questions.  We did not end up looking at the boat because of this person.  Had we had our own broker - or enlisted one of the other listing brokers in Florida that we met and liked - we could have asked him or her to show us that boat.  The listing broker still would get his commission if we had bought the boat, but we wouldn't have had to deal with him directly*.

You might find a broker you like who might also happen to have a listing that works for you.  In this case, the broker can act as both the "buyer" and "seller" broker.  Unlike the real estate industry, the Yacht Brokers Association of America (YBAA) took a position that a broker can be a dual agent and represent both the buyer and the seller.  If you find yourself in this situation, you should make sure that you absolutely trust that the broker has your best interest in mind and won't try to sell you a boat that perhaps he/she shouldn't just to collect commission.  It is beneficial to be prudent and trust your gut.

Many people forego the use of a buyer's broker, but usually these people are knowledgeable about the boating industry, have bought a boat before and feel confident in their negotiating skills.  However, if you are not an educated buyer and have never bought a boat before - enlisting a broker to advocate for you is something you might want to consider.

Alright - it's back to Yachtworld.com for me!


Brittany, Scott and Isla

*While there are very few 'rules' in the world of boat brokering, the only move that is considered unethical is if you were to have a "buyer broker" show you a particular boat - and then cut him out of the deal by using listing broker as both the "buyer broker" and the "seller broker".  While this might not always be the case, some (unethical) people would do this to convince the listing broker to sell the boat at a lower price because the other broker's commission is no longer factored in.  You are free to cut your buyer broker out of the deal, but it is expected that you choose another one if that broker had already shown you the boat.


SailFarLiveFree said...

Some clarification and a word of advice: Read your contract before you sign with a "buyer's broker" (buyer's agent). The total commission a seller is paying does not change if a buyer's broker is also involved, but rather it gets split between the two brokers (just like in real estate). Dual agency and transaction coordinators (paperwork only) are actually fairly common in real estate. I would actually say that if you're familiar with real estate transactions, you'll have valuable experience when it comes to purchasing a brokerage boat.

Leah said...

Can't agree with you more! We had such a mixed experience dealing with boat brokers, I started considering becoming one! That or slapping a couple in the face... seriously, there are some crappy slimy brokers out there!!

But in the end, mostly despite bad brokers, we got lucky & found a boat that we really do love :)

So good luck with your continued searching... and if you're looking for a second career, maybe think about becoming a broker (not like you're busy with baby or anything, right? :P) But seriously, I'd buy my next boat from you!!

s/v Brio

Paul A said...

Finally got back around to read this one, thanks, really good info.

John Klovt said...

This was a good suggestion that you put up here...dude…..hope that it benefits all the ones who land up here. 

Business Broker

perfent said...

Thank you for the information. I'm looking for my first boat. Right now it's an Albin Vega 27. It fits my style.

Gino & Carolyn Del Guercio said...

We took your advice and hired Allen Shiller as our buyer's broker and boy are we glad we did. He was everything you said he was: intelligent, friendly and honest. If you're thinking of buying a boat we'd highly recommend that you use Allen as your buyer's broker.

Gino and Carolyn Del Guercio

Lauren Bootfall said...

Are there lots of boat brokers? Don't really know too much about this industry but it sounds good. I think dealing with money can be really confusing but I have found a great forex trading robot

Claudia Goffe said...

This is a really interesting blog, if you feel like you would benefit from reading about web design to showcase your boat, I recommend PWD.

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