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Buyer broker and Initial Bidding Strategy

5K views 26 replies 17 participants last post by  artbyjody 
#1 · (Edited)
  1. How many of you all have used a buyer broker what are the pro's and cons?
  2. Does it really make a difference in terms of selection of boats or negotiating?.
  3. I noticed on a few sites that they often offer the buyer service for free - and it comes out of the sellers pocket? If so what is the normal percentage for that or is it usually a straight fee.
  4. And lastly - what resources do you use for finding boats for sale by owner. 99% of ads seem to be brokered....(I already use Craigslist, Yachtworld, and BoatTrader...)
  5. Have any of you negotiated a deal where you paid cash and did 1/2 on initial purchase and 1/2 60 days later?
  6. How do you negotiate a price initially without survey on higher priced boats? Say you have one for 64K is it unreasonable to start at 45 or 50K as initial bid (Anyone with success on that?"
I am currently looking into 34-40 foot range and I would rather this time actually get something that I will be content with for many years. Some of the boats are in the 60K range which I can afford to pay cash for but would prefer to slide it in half as it just makes more sense financially for me as one can never tell when something is going to happen. Naturally I can go for a lesser cost boat (several are decent range of 30K - but then that same conundrum of its not everything I want....
 
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#2 ·
Jody,

I’ve utilized a broker three times in the last 7 years. I bought and sold my original boat a 1976 27 Catalina on my own, Selling period was very short and buyers were numerous. I think it’s got something to do with the price range of the 27 Catalina, and it’s reputation or perhaps ubiquitous nature.

I fell in to the broker relationship at a boat show, and acknowledge it was somewhat of a trap, but I think it worked out to my benefit and the broker, not to me, would say it worked out to his benefit. My wife and I priced a brand new 33 in 2006, and were ready to purchase, when the broker, read tricked, asked why I wanted a new boat. He then produced two used 2005’s at the length of 35 that were cheaper and loaded with more than I priced on my new one. I can say that I was conscious of his bait and switch, but passed it off as his commission was greater on a used boat, which it was. He wasn’t the listing broker, but he later confirmed that he pocketed more of the sellers commission than he would have on the new boat.

Nevertheless, it used the same broker when selling that 2005 two years later. This time I bought the new boat, because of lack of inventory and foolish impatient childlike reactions to the late spring sale of the last boat.

I can tell that the broker placated certain inexperienced ideas I had, and other intangibles. Along the way we did become friends and I came to rely oh his thoughts.

I always felt comfortable with the surveyer.
 
#3 ·
A buyer's broker is actually a seller's broker since they share the commission with the direct seller's broker. Nonetheless, I still recommend the use of one. A good broker will listen to what your needs are and direct you towards boats you may not have thought of. They can also access comps (real selling prices of comparative boats) so you can figure out what to offer. Be careful though - they will make their money if you buy the boat, so they will tend to push you hard down that path.
 
#5 ·
The only other caveat I would have Jody is that when you use a buyers broker you are getting into a split commission scenario and the selling broker has less $$ at stake. I have been in situations where the selling broker has thrown something in on the deal because he was getting the full 10% and could afford to in order to make the deal. This won't happen in a split sale.
 
#7 ·
I also had a similar scenario as cam's. The sales agreement for selling our last boat, was recorded at a lesser amount than the actual selling price, due to a three-way negotiation.

Since I would not bend or compromise on my listed price, and the buyer claimed his offer was as much as he could budget, my broker split the difference with the buyer in a cash settlement - thereby reducing his commission. The higher selling price may have not been possible, if this was a co-broke situation.
 
#8 ·
Thanks for the replies thus far....I think I will shy away from the buyer broker aspect for the time being and try the haggling aspect on my own. So, if I may redirect this to the other 2 points:

  • Have any of you negotiated a deal where you paid cash and did 1/2 on initial purchase and 1/2 60 days later?
  • How do you negotiate a price initially without survey on higher priced boats? Say you have one for 64K is it unreasonable to start at 45 or 50K as initial bid (Anyone with actual success on that approach?)
From what I can deduce is that most sellers expect a buyer to counter with at least 10% reduction of asking price as a bid. But then I am also researching boats interested in and the NADA value is usually 40-50% of the sellers asking price. I have also been doing price compares using the online sites like Yachtworld and even then - it reflects the same discrepancy NADA does (Although I find the more expensive the vessel or the more of them that are out there - the prices usually avg closely....)

I plan on looking at two boats on Wed, which I consider the top tier of what I am looking within the budget I have earmarked for this....So buying strategies welcome :)
 
#9 ·
I can't imagine a seller doing 1/2 now 1/2 later and transferring ownership with only 1/2 in hand. Now if you put a 50% deposit down with balance pending survey and told the seller that it would be in 60 to 90 days you might have a chance. Regarding the offer of 10% less is too lean, 25 to 30% under ask is where I would place my initial offer if the boat is up to standards.

Most important issue is there are no rules and it can't hurt to ask.
 
#10 ·
One advantage to a buyer broker is that you will gain access to the Yachtworld sold prices. I don't know how you can obtain these otherwise. In some cases, these may provide a good deal of negotiating ammo.

Personally, I see nothing wrong with an offer of 45K on a boat listed at 64K. In fact, that may well be a good price for the seller in this market. Whether it is a "good" offer or a lowball will depend very much on the make and condition of the boat -- some boats have more active markets and predictable price points.

Luck!
 
#11 ·
Jody-

I'm going to be a bit cynical and say that the reason that most brokers want at least 10% down, is that covers their commission, even if the rest of the payment bounces.

You can't really set a "fixed" discount off the asking price, since there are far too many variables involved. I know one boat at my friend's marina had an asking price about three-times what the boat should be selling for. His wife was making him sell the boat, and wanted to get what they had put into the boat out of the sale... not realistic...but that was the case. Boat sat on the market for a long time, with no one even looking at it... IIRC, it never sold, as it was destroyed in a marina fire about a year later.
 
#12 ·
boat us also has a valuation service. very informative. surf their website.
I have seen brokered boats NOT listed on yachtworld but on other websites. Surf all the for sale websites.
Some sellers sign an exclusive agreement meaning the broker gets a commision no matter. But other brokers will allow sellers to find their own buyer and avoid all commission!
Here is one site that has a lot of by-owner listings Sailboat Listings - sailboats for sale

Also surf the specific boat owner group websites. If the boat is fairly popular it will have an owners group and probably have a for sale by owner section.
 
#13 · (Edited)
FWIW, I don't think any of the above brokers were BUYER brokers...if Jody means the term as used int he real estate business. Here is wikipedia's definition:"
Buyer brokerage (or Buyer agency as it is also known) is the practice of real estate brokers (and their agents) in the United States and Canada representing a buyer in a real estate transaction rather than, by default, representing the seller either directly or as a sub-agent. In the United Kingdom the most common term to describe agent is Buying agent."

I personally have never heard of a real BUYER broker in the yacht sale business, doesn't mean there is no such, but none that I have heard of. In a perusal of the public sections of YBAA : Yacht Brokers Association of America I find no reference to a BUYER broker, the two broker roles outlined in their materials are the selling broker and the co-broker.

Now as a buyer I have used the services of a broker in search of a boat...someone I got to know well and was very knowledgeable. He helped me find a nice boat listed by another broker, and the standard YBAA sales agreement makes it very explicit that the guy I had worked with, was an agent of the seller, and would be paid by the seller.

As I have said before, I think it extremely wise to find and use a capable broker to find the right boat, unless you consider the time, effort and cost for looking at a lot of toad boats before finding a gem part of the fun of boating. I don't think using a broker costs a the buyer anything, it costs the selling broker half the commission..but he expects that, its part of his business model.

As to your last questions. It is very unlikely any seller will let of of a boat without full payment, it would be a legal and financial mess.

You can offer whaterver you want, the trick it you need to know enough about what the boat SHOULD be worth so that you avoid paying more than its worth, if you can pay less than you think it is worth, you should be thrilled. If you pay what you think its worth, then you should be happy you have a new boat at a fair price. I sold my last two boats at my asking prices to the first buyers who looked at them.
 
#14 ·
Jody,

There is a local fellow at Gig harbor yacht sales, Wayne, great guy, sails, cruises, belongs on a local email list, sold us our boat, altho have to admit, he was the selling agent too! A number of folks on the email list have used him for both a buying and selling agent. A straight shooter. If you need a number, Email me and I can get it for you.

One thing to remember tho. If you start to negotiate with a selling agent, then that does not work, bring in "joe buyer rep" there will be NO commission offered to your new agent. So if you are going to use a BB, get and use one upfront!

marty
 
#16 ·
.... A number of folks on the email list have used him for both a buying and selling agent. A straight shooter. If you need a number, Email me and I can get it for you....marty
Marty,
are you suggesting the broker acted as a "buying agent" as referenced in the Wikipedia definition of buyer broker above, or was he a co-broker...? You can clarify that by explaining who paid him for the services he provided...

"Buyer" broker should mean something other than the seller's agent paid by the seller for introducing the buyer to the selling broker, still not a buyer broker...see the definition. The subject of a buyer broker comes up every so often, it would be nice to get a clean answer.
 
#15 ·
I feel your pain, amigo

Jody,

I know how you feel all too well. There's a lot of good advice above.

As far as using your own broker, it's pretty much dependent on how much work you want to delegate and how much you want to do yourself. As the Fool has wisely stated, a broker can weed and cull through a whole lot of boats that are NO WHERE NEAR as good as they look in a listing. I've found recently that a bunch of the photos used are -- ahem -- not quite recent or representatve of the actual condition of the boats in question.

As far as trying to zero in on an offer price, that's a bit of a challenge. It's true that "your" broker can pull a "sold boat" report off of BoatWizard -- which is a firewalled part of the YachtWorld database. However, don't forget that surveyors also use this same service. If you can, spend some time on the phone with a trusted surveyor or two and see if they can't steer you in the right direction.

Keep in mind that some owners may not be willing to part with their baby for a price as paltry as fair market value -- don't take it personally, just keep looking!

Best of luck,
PF
 
#17 ·
hmmmmm.

With what you just described, he was probably a co broker more than anything. But in all honesty, I do not know whom paid him, would assume the seller. Then in that sense, no matter whom you use, the broker is representing the seller as such, there would be no such thing as a buyers agent/broker! IMHO

As he made a statement the other day in an email. He did say, what I was trying to say, and another broker has said the same thing, If Jody does come to them first, saying not represented, negotiates, then tries to bring in another broker, that broker is SOL as far as splitting the commission!

i would assume if I hired "Wayne" to negotiate a price on aboat etc, he would assume and hope he would stick up for my needs, even tho, usually, the seller pays the commissions when it comes time to figure out prices etc.

Some of the folks as I say, used him to sell there boats, then he helped them buy from another brokerage! If I was buying say a boat on the east coast, I would prefer to use Wayne or equal to negotiate a visit etc, then he could also help me find local places to transport the boat to, to fit out etc. Even if this fee cost me something as a buyer to him, more than what would be normal commission. Let him spend and get paid to do what he knows best.

Not sure if I am answering the question, or not, but best as I can. The only other way to truly get an answer to this, is contact a potential broker, and see how they will work, hopefully for you!


marty
 
#18 ·
Xort - BoatUS told me that my Passport 40 was worth $100k-$110k. The last two Passport 40's on the market sold for north of $140k and they didn't have the refit mine does. I'm not sure where BoatUS gets its "valuation" but it seems pretty far off.

With regards to "Half now, half in 60 days" are you talking about getting the boat in between? If not, you can probably work something out in today's market - especially during the Winter (so not much longer). If you want the boat after paying for the first half, I'd say it's probably an impossibility, but that's just an assumption. With regards to bids, start as low as you want and the seller will give you a counteroffer. On my Passport 40, I got it for about $15k under the asking price. Our first bid on a Hallberg-Rassy 53 we were thinking of was almost $100k under the asking price (about 15% under asking).
 
#19 · (Edited)
And lastly - what resources do you use for finding boats for sale by owner. 99% of ads seem to be brokered....(I already use Craigslist, Yachtworld, and BoatTrader...)
I think that the best method is to go to marinas and clubs. Leave an advertisement on the bulletin boards, clearly stating what you are looking for and how much you are willing to spend. There are people out there who would sell their boats if it was easy and they didn't have to deal with brokers.

Also, identify the kinds of boats that you are interested in and log on to the owner's association websites. There are almost always boats offered for sale there. Note that the prices listed tend to be on the high side, as this is usually the first place that people will offer their boat for sale, and they are usually optimistic at the beginning of the process.

Have any of you negotiated a deal where you paid cash and did 1/2 on initial purchase and 1/2 60 days later?
No. Have you ever received title to a house wihtout paying the entire purchase price ? That said, it is standard practise that you will put down a deposit, in escrow, arrange your survey(s), and then either complete the sale, renegotiate the price, or back out of the deal depending on the surveyor's report.
How do you negotiate a price initially without survey on higher priced boats? Say you have one for 64K is it unreasonable to start at 45 or 50K as initial bid (Anyone with success on that?")
If your vendor is selling the boat through a broker, ask the broker to provide you with a 12 month sales history of like and similar boats in your region. If they won't give you that, they are probably trying to get more than market value for it. I think that it's a good idea to open with as low a figure as you can without feeling embarassed. Do your research - look at what smilar boats are listed for on Yachtworld, etc. and then offer about 50 to 60% of that. In this market - you might even be able to offer 35% of asking...you never know until you try.

Don't ever buy a boat without a survey, and make sure that your sales contracts include the right to renegotiate your purchase price based on surveyor's report. If the broker won't co-operate - walk away.

Note: I have heard about honest brokers but have never encountered one.
 
#23 ·
If your vendor is selling the boat through a broker, ask the broker to provide you with a 12 month sales history of like and similar boats in your region. If they won't give you that, they are probably trying to get more than market value for it. I think that it's a good idea to open with as low a figure as you can without feeling embarassed. Do your research - look at what smilar boats are listed for on Yachtworld, etc. and then offer about 50 to 60% of that. In this market - you might even be able to offer 35% of asking...you never know until you try.

Don't ever buy a boat without a survey, and make sure that your sales contracts include the right to renegotiate your purchase price based on surveyor's report. If the broker won't co-operate - walk away.

Note: I have heard about honest brokers but have never encountered one.
Good advice. I'm in the market for a boat and I'm wary of getting ripped off. Is the boating market anything like the housing market?

35% seems low... would anyone actually accept that price? Like, I'm looking at a boat that is listed at 18k, which is over my budget. 35% of that price is $6300, does anyone have any experience getting a boat at such a price from a broker under normal circumstances?
 
#20 ·
Thanks for all the insight. I have always bought boats for sale by owner, in which case NADA values were usually the guide (for both parties). However, now that I am infinitely more knowledgeable about the systems, problems, and relative costs to to fix or add-on options that should be onboard the range of boats...I can understand why boat values reflect more of a 'open market' approach.

One of the things I am doing now is creating spreadsheets that compare stuff like:

Tiller vs Wheel Steering
Automatic pilots
Radar
Instruments
etc...
Based on year, condition, installed etc...


Depending on the age of the boat, I am calculating what the perceived value is to me. For the most part I look at a boat having changed hands a minimum of 3 times, and of those three times (33%), a cruiser boat owner would of been upgraded beyond stock at sometime in its 20 years (all pre-1990 vessels), and that becomes part of the criteria. This I use to compare to what other vessels have and the deviation in price....not truly scientific as I hate math but...looking at it on paper helps narrow down the right boat and what I need to add if I were to buy it etc...

Interestingly enough I thought I could of found a perfect fit this evening, a 40 footer for around 43K. However, the boat looked worse than what G's neighbors boat did after that young man's attempted remodel. Ie: No Electric, no batteries, no lights, cabinets just ripped out, engine never run, etc...

Since it was a friend that referred me to friend selling it... Kinda like as SD stated - the one partner wanted a little some extra over what hubby paid for not realizing that hubby thought 40K for a fixer upper was doable because he had the cash (and she made it clear she was the negotiator as she wants the boat gone )...I told my friend that I would offer 12K for it - but only to save them expense of doling out another 10K for moorage this year...I do not expect a offer back as its not worth any higher IMHO...

I am going to hold off on a Buyer broker (technically known as the co-broker (thanks for legal definition most sites call them buyer broker)...I have some time for this and since I do not have a real job I can afford drive around and look at things...

And SD I realize 10% if I make serious offer, and the 1/2 split option, held in escrow - allows me negotiating power to a certain extent to get more boat for my money.


ie: I will not be financing so having the two options drawn up - the one with the lower cash upfront will be more of appeal one would hope. I have done this process on RV purchases both ways as the contract is drawn up to reflect said agreement and if not met then seller keeps the money...I have done that with real estate as well...I would think if a seller has paid in full their note - then it is an option to get it off the market with money in hand it can be an attractive solution versus waiting for buyer financing etc...Additionally if I find a boat a bit higher in cost that meets the needs I have flexibility financially and maybe able to get more boat for the money ..but my intent is all cash buyout if and where possible... and again - nothing but time on my side.

I realized when I bought my first - I could of gotten a better boat for what I paid. This time out though I am looking for the right one and not a training / its cheap enough to buy that if I hate sailing vessel...

Again thanks - very insightful comments....and re-formulating my procedures / processes to consider as I learn more....

Its been eye opening :)
 
#21 ·
When making an offer on a boat, it should be based on what you're willing to pay for that boat. Irregardless of the asking price. That doesn't mean you can't or shouldn't start with a lower offer, but you should go into it with a top price in mind.
 
#22 ·
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#24 ·
Jody,

You may want to consider contacting Boat US Valuation Services as they will provide no charge current value estimates of the boats you are looking at. They use their most recent survey and insurance data as part of the source. I was very suprised at the large difference (much lower) between their market value and a few seller asking prices.

Good Luck!

121Guy
 
#25 · (Edited)
Jody,

You may want to consider contacting Boat US Valuation Services as they will provide no charge current value estimates of the boats you are looking at. They use their most recent survey and insurance data as part of the source. I was very suprised at the large difference (much lower) between their market value and a few seller asking prices.

Good Luck!

121Guy
Jody,

Establishing the value of the boat, at least to you, is key. Any purchase price less than or up to that value is good, after all you are looking to buy what should be a treasured personal possession, not to make $$ by flipping a one-time steal.

To establish value you need to know what 3-4 examples of the same boat sold for and be able to adjust their prices for condition and equipment. this can take time and until you have established this knowledge you need to be comfiortable with other people buying a boat out from under you - that's OK you learn something from it and can get ready for the next one.

If you want to enjoy your boat ownership, release any expectations that it'll be a good financial opportunity. Boats are called "holes in the water in which you pour money" for a reason.

I offer these guidelines:
1. the best you can hope for in buying a boat is at least get what you pay for.
2. the cheaper the boat is, relative to others, the more expensive or less satisfying it will turn out to be to own.
3. remember the seller has perfect knowledge of the boat, its strengths and problems. You will at best have less or much less knowledge, only good surveyors (hull/engine/rig) get you close.
4. when you see the boat you really want to own, be willing to make a fair offer, negotiate up to your determined value as needed, then enjoy your new pride and joy.
5. If someone makes a killing in a boat sale, its far more likely to be the seller.
 
#26 · (Edited)
35% seems low... would anyone actually accept that price? Like, I'm looking at a boat that is listed at 18k, which is over my budget. 35% of that price is $6300, does anyone have any experience getting a boat at such a price from a broker under normal circumstances?
Some might, some might not. Each situation is unique. If someone owes money on a boat, then they are usually going to have to sell it for enough to cover the outstanding balance of the loan, or very nearly so.

If the boat is owned outright, and if it has been on the market for a while, the owner may just be willing to sell cheap in order to avoid having to invest the time and money to insure it, maintain it, launch and dock it, etc.

You never know until you try. And you if you are polite about the process, you may get lucky. If you see that a boat has been on the market for a while, contact the owner and explain to them that you don't want to insult them, but you only have X amount of money, and if they ever decide to consider a price like that, you'd be very interested in their boat. (It helps if you butter them up a bit - tell them how well they have maintained the boat, how smart they were for selecting it in the first place, you'll give the boat the best home possible, etc., etc.) They might not end up selling you the boat, but you never know until you try...

But still NEVER buy one without surveying it first.
 
#27 ·
Thanks again everyone - I utilized a majority of the advice here today. Placed a reasonable bid on what I believe is a suitable boat for me. I did a thorough inspection, asked lots of questions in terms of the boat, the owner, history etc... as well as in general got to know the broker. And instead of quibbling over things - I made a very reasonable offer with very few contingencies based on my observations and the discussions, and what needed to be done (it is a slight project boat).


I had explained my findings as I was examining the boat the issues as I saw them, and we discussed the already known issues, and I let the broker know what my straight up thoughts and strategy was. I also let the broker understand how I approach a deal and had the contract reflect that (Which meant instead of earnest money - the contract dates reflect 2 weeks to sign, seal, and deliver if the contingencies are met. I'll write more in detail later as I do not want to jinx but based on the invaluable advice here - I was much more informed on what to expect, as well as how to handle the first stage of negotiations and tailored my conversations with the broker in a manner that would / will curtail a long winded process....

Again thanks everyone - as usual, awesome discussion and advice....I'll update at a later date - keep your fingers crossed for me :)
 
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