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Go Back   SailNet Community > On Board > Boat Review and Purchase Forum > Choosing a buyer's broker
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Thread: Choosing a buyer's broker Reply to Thread
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Topic Review (Newest First)
05-31-2010 09:14 PM
sailingfool
Quote:
Originally Posted by dschwenk View Post
....
I certainly do not speak for everyone and their business operations, and in my legal practice I have seen bad people do bad things. But in our operations, if we are representing a buyer, we are representing a buyer in contract and in reality.

Dirk Schwenk
Well. I guess we would all understand how this might work if you could share with us a copy of the contract that you intend to use... I find it hard to understand how a seller will compensate you...if you are not a sub-agent...but I guess your contract will clear all this up.
05-31-2010 08:24 PM
dschwenk
Attorney-Broker

So in net, if you provide a broker's services, you do so with the same compensation and contractual arrangements as ALL the other brokers in the USA, so you are a "buyer's" broker in spirit only.

The compensation may be the same (or it may not), but the contractual obligations are not the same. If we sign up a client to represent them in a boat purchase, we represent them in the purchase. Period. If we were both the listing and selling broker on a deal, then as attorneys, we are required to disclose that potential or actual conflict and have the client waive that conflict. We disclose our conflicts when they arise.

So should you participate in a yacht sale to a "customer", will you have your customer sign one of those forms where they acknowledge you are acting as an agent of the seller?

If we are representing the buyer, we are not agents for the seller. If we were agents for the seller (ie the listing broker), then we disclose that.

You may have great intentions for the buyer and as much as I LIKE the concept of a buyer's broker, this seems like a lot of mumble-jumbo for an underlying broker-business-as-usual, (which is not a bad thing...as long as everyone understands who is in whose corner...).

I certainly do not speak for everyone and their business operations, and in my legal practice I have seen bad people do bad things. But in our operations, if we are representing a buyer, we are representing a buyer in contract and in reality.

Dirk Schwenk
05-28-2010 03:22 PM
sailingfool
Quote:
Originally Posted by dschwenk View Post
Yes. We enter into an attorney client relationship with our clients. Attendant to that are all of our obligations of confidentiality, competence, lack of conflicts, etc. that go with being a lawyer. In some cases we charge our clients up front and refund those fees out of the transaction, in some cases accept the work on the eventual broker's fee.

And not to quibble (but being a lawyer its hard for me to help it), I understand your argument that if the broker's fee comes out of the seller's column on the closing sheet, then that means that the seller is paying. But at least in my line of work, there are lots of examples where one person pays and another person is the client. This happens in contingent cases (if the Defendant pays, then the plaintiff and attorney get paid) in divorce cases (if a parent pays for a child or if one of the two parties has all the money) in criminal cases (parent/friend/relative puts up the money), etc. It is up to the thoughtful, ethical and smart to be able to separate where the fee is coming from the question of who is owed the duty of care. I will readily agree with you, however, that there are many, many, many examples of situations in which this line was not properly drawn and that the power of money can corrupt this thinking.

Dirk Schwenk
Baylaw, LLC
So in net, if you provide a broker's services, you do so with the same compensation and contractual arrangements as ALL the other brokers in the USA, so you are a "buyer's" broker in spirit only.

So should you participate in a yacht sale to a "customer", will you have your customer sign one of those forms where they acknowledge you are acting as an agent of the seller?

You may have great intentions for the buyer and as much as I LIKE the concept of a buyer's broker, this seems like a lot of mumble-jumbo for an underlying broker-business-as-usual, (which is not a bad thing...as long as everyone understands who is in whose corner...).
05-28-2010 01:02 PM
dschwenk
Buyer's Broker II

Yes. We enter into an attorney client relationship with our clients. Attendant to that are all of our obligations of confidentiality, competence, lack of conflicts, etc. that go with being a lawyer. In some cases we charge our clients up front and refund those fees out of the transaction, in some cases accept the work on the eventual broker's fee.

And not to quibble (but being a lawyer its hard for me to help it), I understand your argument that if the broker's fee comes out of the seller's column on the closing sheet, then that means that the seller is paying. But at least in my line of work, there are lots of examples where one person pays and another person is the client. This happens in contingent cases (if the Defendant pays, then the plaintiff and attorney get paid) in divorce cases (if a parent pays for a child or if one of the two parties has all the money) in criminal cases (parent/friend/relative puts up the money), etc. It is up to the thoughtful, ethical and smart to be able to separate where the fee is coming from the question of who is owed the duty of care. I will readily agree with you, however, that there are many, many, many examples of situations in which this line was not properly drawn and that the power of money can corrupt this thinking.

Dirk Schwenk
Baylaw, LLC
05-28-2010 12:46 PM
sailingfool
Quote:
Originally Posted by dschwenk View Post
Buyer's brokers perform three main functions: ....
As a licensed broker and a maritime lawyer, ...
Dirk,

Way cool, so are you a buyer's broker?

If you chose to say "yes", can you clarify who pays you and with whom you have a contractual relationship?

Just checking...
05-28-2010 12:10 PM
dschwenk
Buyer's Brokers

Buyer's brokers perform three main functions: 1. identifying suitable boats for a purchaser; 2. assisting with the review of specific boats to see if they are a good match for a buyer; and 3. assisting with the buy/sell transaction to be sure that the buyer gets a good price, gets title free and clear of liens or other nasty surprises, and makes sure that taxes and other obligations are either paid or planned for.

As a licensed broker and a maritime lawyer, I have found that most people that are buying a larger boat already have a very good handle on what kind of boat they are looking for and what boats are available on the market. There are always some boats out there that are not on Yachtworld or a similar site, but many, many boats can be vetted that way. We therefore focus on the last two items -- making sure that a particular boat is right and making sure that the transaction is right. Buying a good boat isn't so good if you do not get good title, and good title to a bad boat is no picnic either. Even if you get good title, it can be very frustrating to find out that you didn't receive what you paid for and that you have no recourse under the contract that was used. It's easy to whip through the papers at closing, and most times things work out fine, but in that 1 in 100 situation in which they don't, the papers take on a life of their own and someone with your interests in mind better have read them. It goes without saying that there better be a good plan in place to either pay sales/use tax or to maintain the boat in a manner in which it does not come due.

My advice for those looking at brokers is to evaluate them on how they plan to help you with the specific boat -- do they think you should save a few hundred bucks by avoiding a survey? Surveyors perform an important function and they have no interest in making a quick sale. Secondly, evaluate them on their thoroughness in the transaction. Does their brokerage contract protect you or does it protect them? Can you rely on what they tell you about tax planning? Do they understand what is required to have a boat that is to be used for charter or professional entertaining? These are important issues and it can be tough to keep a clear mind when you fall in love with a boat.

Dirk Schwenk
Baylaw, LLC
05-11-2010 09:13 PM
sailingfool There is no such thing in boating as a buyer's broker.

Only broker's paid by the seller, per a contract signed by the seller, all work for the seller.

That said, it's a good stategy to find a knowledgeable, personable broker that you are comfortable with, who will help you through the boat finding and purchase process, as if the best of buddies. Just keep in the back of your mind...the seller is paying him or her.

(If someone wants to object that buyer brokers abound...just upload the contract that proves it so...).
05-11-2010 07:43 PM
Paul_L I think you may be expecting too much from a buyer's broker. At the end of the day, the brokers make their money when a sale closes. There are scum brokers and there are quality ones. With the access to info on the web and web based listings, you can do most of the leg work yourself without a broker involved. When you find something of interest, call the broker and get a showing. You'll learn from each boat you look at and each broker you deal with. To protect your side of the deal, find a good surveyor and discuss with them before you start looking. A surveyor suggested by the broker in the deal is not generally the best choice for your interests.

Paul L
05-11-2010 07:04 PM
Minnewaska I've never met a listing broker that wasn't happy to move on to showing other broker's inventory, if their listing didn't seem like it would work for you. They still want to make a sale. No doubt there would be other boats for sale in the same marina. However, if they bring you to another broker's listing, they become the buyer's broker. Inserting a third party then would be difficult.
05-11-2010 08:44 AM
jordanship
Quote:
How to select a good "buyer's broker" and what type /quality of service to expect from that relationship?
The advantange of a buyer's broker is that you should receive higher quality service. The broker will honestly tell you *not* purchase the yacht you are in love with if he/she thinks it is a mistake. The broker will discuss with you about the boats you see and advise you on correct valuations. The broker will be protecting your funds in the deal. He/she will advise you on a list of surveyors in any region and other support groups. Because you are dedicated, the broker will not be respresenting the seller side but your side protecting your negotiating position and long-term interests. Expect and demand that a buyer broker represents you. He/she has a fiduciary responsibility to protect you whether or not it is in his/her interest. If it is not in your interest to purchase a boat at all, the broker should advise you of this.

Quote:
Should we expect a broker to show us a variety of boats like a real estate agent to get us started? (we do have some pretty specific ideas of what we're looking for.)
If you know what you are looking for, then there is no reason to waste time. For instance if you know you want a centercockpit design, then there is no reason to look at aft cockpits. Sit down with the broker and tell him what price, style, performance, accommodation, size characteristics you are looking for. The broker may come up with yachts to consider.

Quote:
If we find a buyer's rep that we like in one region, can/should we expect them to assist us if we find a boat we're interested in in another region? (eg a broker shows us some boats in Florida and we later want to see one in the Chesepeake.)
Absolutely. Your buyer representative will ask for a courtesy showing from out of town brokers. The seller's representative will show you the boat understanding that if you make an offer your buyer broker will be representing you.

Quote:
We're vacationing in So Florida next month. Are we wasting a listing broker's time buy asking him to show us one or two specific boats in his listings although we know 1) we won't buy until late 2010 and 2) if we wind up seriously interested in the boat he shows us then we'll certainly be consulting with a different broker prior to writing an offer?
Yes, you are probably wasting their time but maybe not. Any brokerage will be happy to show you yachts. But, you should absolutely tell them you have or will have a buyer agent. Not disclosing this will create a huge problem for your eventual buyer broker. You should be very upfront with brokers that you have or will have a buyer broker. They are showing you the boats as a courtesy for another broker under the assumption that some day in the future they will need him/her to courtesy show for them. Be very upfront. In your first inquiry, you should lead off with something to the effect of "I have a buyer's agent."
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