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 ???

 

there are bad apples i every industry. I have been licensed as a securiteis dealer for over 15 years, as a trader and dealing with the public as an advisor and have never been fined/sanctioned etc in any way during that time. While I helped people pay for kids college, retire early etc there were bad apples there too. Moving to brokering a different class of assest, I certainly feel that I am not coming from your 'usedsalescarguy' generalized depiction. I hold myself and my actions to the highest ethical standards, both professioally and personally.
I am sorry, as it appears you had a bad experience, but we dont crucify the whole of any industry due to some bad apples.

 

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.

 

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?

 

it depends... a central listing typically contractually obligates you to paying the broker. If it is open it is different.... 10% is idustry standard and comes out of the sell side. it works a lot like realestate... if a seperate buying broker meets a seller they split it. it is important to remember that there are (ie yachtworld-probably biggest in the game) will not let you list there as a FSBO.

 

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.

 

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

 

Depends

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...

 

yachtworld

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

 

Broker protects the buyer...

....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.

 

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...

 

contract clauses

Hello,

Some of the items in the contact that protected me are:

Included gear:
The sale includes the yacht and all equipment on board and in storage. This equipment will be available for the BUYER'S inspection / survey and will constitute the full inventory to be delivered with the YACHT at closing.

Regarding the survey:
The SELLER agrees to make the yacht and equipment available and ready to survey. The broker recommends that the BUYER employ the services of an accredited marine surveyor.

Acceptance of the yacht:
If the BUYER shall be deemed to have rejected the yacht, the deposit will be returned promptly.

SELLER CONFIRMS:
1. That he has full power and legal authority to execute and perform tis agreement and that he good and marketable title to the yacht.
2. That the yacht will be sold free and clear of any mortages, taxes, fees, lients, bills, encumbrances, or clames whatsoever, and that if any such obligation remains outstanding at the CLOSING, they will be paid from the proceeds of this sale.
3. That he will pay the BROKER at closing, a fee equal to 10 percent of the SELLING price, and authorizes the BROKER to deduct this fee from the DEPOSIT.

==

There is other such language in my first contact (don't have it handy) that specifies dates to be made, etc.

Barry

 

broker sales contracts

If you are a buyer, remember that both brokers, the listing broker and "your" broker are getting paid by the seller. They are both technically "sellers' agents". They get paid by getting you to buy the boat. There are many honest brokers, they are just people, after all.

Many brokers use standard purchase/sale form contracts that are generally seller favorable. One of the really big things I've noticed is that the purchase and sale agreement says that the seller is making no warranties or representations. You have the right to, for instance, require the seller to state in writing that he is not aware of any material deficiencies in the boat, that he is not hiding or failing to disclose something important. This is an important concession to get from the seller, even if you have the boat surveyed. If might be hard to prove the seller knew something he didn't tell you, but you are a lot better off putting the seller on the spot before signing on the dotted line and making sure the contract language states that the sellers' warranty survives closing.

You have the right to add addendums and clauses for things that are important to you as a buyer, to move the deal away from a "caveat emptor" type of deal.

MH

 

Just to be picky, the broker works for...the broker! If they can screw somebody to their benefit, they will.
Take a sellers broker. You'd think they would want to get you the best price so they get the most out of their 10%. NOT. They want the quickest sale they can arrange. Dropping the price 20% costs them very little but can accelerate the sale. You get screwed.

As for rates, 'round here the rate is 10% with a minimum. I saw minimums from $1500 to $2500. This makes the situation even worse. Lets say you are selling a $15,000 boat. 10% is $1500. The broker may have a $2000 minimum so he won't care if the boat sells for $10,000 if you agree to the $2000 minimum. He then tries talking you into the lowest listing price he can sucker you into. He's guaranteed his $2000 no matter what.

 

Just to be picky, the broker works for...the broker! If they can screw somebody to their benefit, they will.
Take a sellers broker. You'd think they would want to get you the best price so they get the most out of their 10%. NOT. They want the quickest sale they can arrange. Dropping the price 20% costs them very little but can accelerate the sale. You get screwed.

As for rates, 'round here the rate is 10% with a minimum. I saw minimums from $1500 to $2500. This makes the situation even worse. Lets say you are selling a $15,000 boat. 10% is $1500. The broker may have a $2000 minimum so he won't care if the boat sells for $10,000 if you agree to the $2000 minimum. He then tries talking you into the lowest listing price he can sucker you into. He's guaranteed his $2000 no matter what.

That may all be true, but no one holds a gun to your head to take the offer.
pigslo

 

Brokers ALWAYS work for the channel from where the commission is coming from!! The 'standard contract' will include clauses to make both parties feel it is all fair and square, but there is no way the broker is looking after your interests if you are not paying him. That is why they get a Sales Commission or a brokerage fees; though they may like to present it to you as 'fees'. It is not fees, it is a commission they get, from the Seller, and the 'first 10%' may be paid to the Broker and the rest is sent to the Seller, if the arrangement says so. But please don't fool yourself into believing that the Broker is working for you. If there is anything that is outright wrong, the Broker will point out that piece to you, but the broker is not going to do more. He needs the sale to complete!! Therefore, it is natural, that, if you want to protect your interests, find your own broker and hire him at whatever fees/rate you are willing to pay (over and above the sale price, whether it is a direct sale, or sale through a seller's broker). For the right boat and right price, you'll be happy to have had a broker on your side! It is like getting the Boat Surveyor more interested in the transaction and actually working for you.

 

It's never a bad idea to "Get it in writing" No matter what kind of transaction you are making. Good for the buyer and seller alike.

 

Everything is negotiable, including death and taxes.

Saurav, if you are buying a boat, don't worry about the broker. The seller signed a contract with them, that's not your concern. it is between the two of them.

If you sign a contract, that's something else again. Contracts, in theory, are negotiated between the signing parties and it is up to them to negotiate their own deal.