What A Yacht Broker Can Do For YouBy Charles Fort
Published: October/November 2013
Especially when buying or selling a large boat, the right broker can reduce stress and make the transaction go smoothly and painlessly.
If You're Selling
There are several advantages to using a broker, the biggest of which is exposure. Plastering "For Sale" signs in yacht clubs and marinas can't equal the power of a broker's listing, especially with larger boats that have a smaller pool of buyers who may not even be in the same state. Brokers typically list boats through websites such as Yachtworld, which is easily searchable by anyone, anywhere in the world. Only brokers can list boats on the site, which functions much like the Multiple Listing Service for real estate agents.
Correctly pricing a boat is critical to getting it sold, and an experienced broker has a very good idea of what a boat will sell for and can price it accordingly. Brokers typically have access to what similar boats have sold for in the local area and they'll prepare a listing based on the kind of boat and type of buyers expected. They'll take photos, write an enticing description, and recommend things to improve the look and marketability of your boat. Brokers can also help you navigate some of the more confusing aspects of selling such as corporate ownership, loan payoffs, bills of sale, and other documents needed for transferring ownership. Aside from listing and advertising the boat, their most important job is helping move the process along once a buyer is found. Brokers can also help a buyer obtain financing and assist with changing the USCG documentation. While the 10-percent commission is usually not negotiable, brokers will sometimes discount it for a sale that might be falling apart because of a survey report or other defects found on a boat. The different listing contracts used by brokers can be confusing, but they're not complicated once you understand the two main types, a central agency agreement and an open listing agreement.
A central agency agreement (sometimes called an exclusive listing) means you've hired a specific broker to sell your boat. With this type of agreement, the broker typically lists your boat on Yachtworld and — this is important — is obligated to sell it through a co-brokerage arrangement. Co-brokerage means that if another broker finds a buyer for your boat, your broker agrees to split the commission with him. This incentive to help each other is why about 70 percent of all brokerage sales are co-brokered. Keep in mind, though, with this type of agreement, even if you bring in the seller or end up donating your boat, you'll still be liable for the broker's commission. The majority of brokerage sales are central agency agreements.
An open listing agreement means you've given more than one broker the right to sell your boat and you also retain the right to sell it on your own. The disadvantage is that because no broker is guaranteed at least a part of the commission, it's not very likely any of them will spend the money to list your boat on Yachtworld or pay for other advertising. There can also be confused communications between multiple brokers and potential buyers. On the other hand, a hungry broker may be more motivated to bring you a buyer because he would get the entire commission. With this type of agreement, if you find your own buyer, you don't owe anyone a commission. For either type, don't be pressured into signing for a longer term than you're comfortable with. Six months is typical, but don't be afraid to ask for less, though a broker typically needs at least a couple of months to generate interest. Usually, you can walk away from any contract after giving 30 days notice. Most agreements automatically renew, so give notice before that if you want to cancel. No matter what kind of listing, ask for biweekly progress reports.
Selling It Yourself
For Sale By Ow ner (FSBO) certainly sounds attractive. Not only do you pocket 10 percent more than if you used a broker, but you're in charge of the whole process. Selling it yourself has drawbacks, however. You won't be able to get the same kind of national exposure a broker can, and you'll be responsible for keeping the boat in top condition and available for showing. And, because most boat shopping occurs on weekends, expect to be tied down during your time off. Finally, like many others, you may simply dislike negotiating. But if you want to save some serious money, BoatUS can help. Our thousands of online classified listings are viewable by anyone, anywhere in the world, and we offer an escrow service that takes the anxiety out of the financial part of the transaction. We also offer members full documentation service, boat financing, comprehensive insurance, and on-water and roadside towing coverage. Check out our website to see sample sales contracts and lists of things both buyers and sellers will need to do to buy and sell boats www.BoatUS.com
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Here's How A Broker Can Help
If You're The Seller, A Broker Will:
- Advertise your boat. Brokers should list your boat on Yachtworld and advertise in other places where appropriate. Find out what their marketing plan is and get it in writing.
- Price your boat realistically. Brokers have access to recent sale prices and know a good starting point.
- Prescreen responses to advertising. This will avoid most tire kickers.
- Show your boat to prospective buyers. This will save you from wasting time with buyers who don't show up.
- Communicate all offers from potential buyers to you.
- Negotiate the selling price. This is where brokers can really earn their money.
- Draw up sales agreements and accept deposits. Many brokers can do this electronically over computers, tablets, and even smartphones.
- Arrange for sea trials and schedule surveys.
- Coordinate closing.
- Transfer funds to you. Now you can start shopping for your next boat.