What are broker's fees like

saurav16 · #1 (**permalink**) 04-03-2007

Hi,

Found some boats online on yachtworld.com. Just to get an idea what are the standard brokerage fees. If the boat is $10k will the broker take a percentage or will they take a flat rate like $2k? Thanks in advance for your help.

Sailormann · #2 (**permalink**) 04-04-2007

The broker gets a percentage of the final selling price - around here the standard is 10%. It is unconscionable that they actually earn money for the stunts they pull on innocent, unsuspecting newbies, and they are not shy about trying it on folks who have been around the block a time or two either.

Don't ever believe what a broker tells you until you have verified it yourself. Don't ever agree to anything verbally - have a written letter or an email covering every single detail - keep in mind that the bulk of them were fired from used car dealerships because of unethical behaviour...

Never, Never, Never use a surveyor that the broker "recommends".

Am I sounding a tad bitter here ???

sailingfool · #3 (**permalink**) 04-04-2007

I believe 10% of the selling price is common if not standard. The broker usually collects that fee from the proceeds at the closing. That fee is split with any broker you are working with, the reason I encourage using a broker yourself for any serious boat search. Brokers will generally have an exclusive listing -- they get the fee whether you talk with them or not.

In some cases, the broker may wants the boat payment made out to his firm, who distributes the balances onto the owner and/or prior lender. Find out beforehand who will get what checks at the closing. This is not a good situation in my opinion as if the broker absconds or goes belly up before the onwner/lender has the funds, you are SOL.

saurav16 · #4 (**permalink**) 04-04-2007

if the owner of the boat uses a broker are they barred by a contract to make a deal with the buyer on their own? Which would save me and the broker a lot of money?

Sailormann · #5 (**permalink**) 04-04-2007

It wouldn't save the broker any money - he would lose money as you are negotiating with the owner directly - unless I am not understanding your question correctly.

But to answer the question...there are many different arrangements entered into. Sometimes boats will be listed with more than one broker, sometimes the vendor will have an arrangement such as you asked about, where the broker does not receive any commission if the vendor finds a buyer on his own.

Usually, this will only happen if the vendor has listed the boat independently, and the broker notices the listing on a website or in a magazine. Brokers sometimes contact these vendors and come to an agreement that they will receive a commission if they find the buyer. If the sale process was initiated through the broker, then the vendor is usually liable for the broker's commission, regardless of how the boat is sold.

Cruisingdad · #6 (**permalink**) 04-04-2007

Saura,

Not sure if it was clear, but it is the SELLER that pays the broker fees. You can sit out and wait for the seller to come off contract with the broker (assuming he does not sell it first), but if you initiate any contact through the broker (or he finds out about it) the seller owes him a full fee. That contact is usually good for 12 months after the end of the contract. In other words, you cannot go through his broker, decide to wait a week after it comes off listing, then try to negotiate outside of him... the seller still owes a fee.

My experience with brokers is a bit different than the above. A good, knowledgeable broker with integrity is an awesome assett. If it is someone that is passionate about boats and enjoys what he/she does, you will be pleased. Especially since you are new and boat searching, a GOOD broker will see things you will not and direct you appropriately. I have had 2 different brokers tell me (after seeing a boat that I leaned toward buying) tell me NO, that is not a good deal... walk away from it. However, there are also some real sharks out there... so it all depends on the broker, honestly.

I have no problem using a broker, and have on both sides of the transaction. The issue will be finding a good broker (at a 10k boat, that might be tricky).

Just my thoughts...

- CD

sailingfool · #7 (**permalink**) 04-04-2007

Quote:

Originally Posted by saurav16

If the owner of the boat uses a broker are they barred by a contract to make a deal with the buyer on their own? ...

Depends on the terms of the yacht listing contract the seller signs with the broker. The contact CAN say ANYTHING, but brokers prefer to have an exclusive listing, guaranteeing their fee if the boat is sold while the contract is in effect and exclusive listings are common. The better brokers insist on exclusives, mine did...The seller can sell the boat themselves, they would just still need to pay the broker his fee...so it doesn't happen...

BarryL · #8 (**permalink**) 04-04-2007

Hello,

I have bought two boats from yachtworld. In both cases, I had to leave a 10% deposit (on the agreed on purchase price, not the asking price) made out to the broker. When I made the final payment, that was made out to the seller. So I believe that a typical broker fee is 10%

As previously written, there are good brokers and there are bad brokers (and lots more bad brokers). You'll know pretty quickly which is which.

Also, the contract I signed was provided by the broker. It contained clauses that protected me as well as the seller. So, while the broker works for the seller, a good broker will protect the buyer as well.

Good luck,
Barry

sailingfool · #9 (**permalink**) 04-04-2007

Quote:

Originally Posted by BarryL

....It contained clauses that protected me as well as the seller. So, while the broker works for the seller, a good broker will protect the buyer as well...

Barry,
While I'm sure some brokers do use the standard sale agreement that provides reasonable protections to the buyer, we seen any number of broker agreements in threads on this board that did not...I think it a good practice to have an attorney look at a proposed agreement even if it looks "standard". You need the remember the broker represents the seller and only gets paid if the sale is consumated.

Sailormann · #10 (**permalink**) 04-04-2007

Even in a case where the contract includes a holdback to ensure that all systems are operational and the boat is as represented, it can be very hard to get the broker to compensate for deficiencies...