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 Buying
While owners may find the process of selling to be an anxious one, buyers are looking for their next dream boat and are likely to be enjoying looking around, trying to find the perfect fit. But buyers tend to get apprehensive once it comes to plunking down hard cash. This is where a broker can make the process less stressful. Brokers should have a separate bank account for holding deposits and there should be wording in the contract specifying what the sale is contingent upon as well as how and when the money will be returned if the sale falls through.
It's important to remember that the broker in a typical sale is getting paid by and working only for the seller, not the buyer. A broker will try to get the highest possible price (that's what his commission is paid from) and will try to sell his client's boat even if it's not necessarily the best deal for you. You're on your own with negotiations and paperwork advice. You can, however, enter into an agreement with a broker through a buyer's broker arrangement. A buyer's broker will represent you, not the seller. Once they know what you're looking for, they can scour their sources and suggest likely boats for you to view, assist in negotiating a price, and help with the paperwork. Typically, a buyer's broker gets a commission split from the seller's broker so there's no cost to you, but read the agreement before signing.
When it's time to seriously consider a boat, it will need to be hauled out and surveyed — something that's usually paid for by the buyer, though as with anything in a sale, that's negotiable. Never use a surveyor recommended by the broker or seller; it's critical to hire an independent, qualified surveyor (see links, below) who has no stake in the outcome. Not only will the survey uncover needed repairs and deficiencies, it will also establish a fair market value, all of which can be used for negotiations. It will almost certainly be needed for financing and insurance as well.
Here's How A Broker Can Help
If You're The Buyer, A Broker Will:
- Accurately represent a listed boat. It's also the broker's job to determine whether the boat is free of liens.
- Arrange for you to look at boats.
- Disclose any serious known issues. There's a fine line between passive failure to disclose information and active concealment. Brokers should disclose anything they know that might affect a buyer's decision to purchase a vessel, such as a previous sinking or major repair. Keep in mind that even though a seller is obligated to mention serious issues, brokers only know what a seller discloses.
- Accurately transmit offers to the owner in a timely way.
- Place deposits in a separate escrow account. Be sure to ask where and how deposits are held and have them clearly state why, how, and when any deposits will be returned should the sale fall through.
- Assist in scheduling haulouts, surveys, and sea trials. As a potential buyer, you're probably paying for the haulout and survey, so you should choose the boatyard and surveyor. Brokers can help with the scheduling, but never hire a surveyor recommended by anyone with a stake in the sale, including the broker and boatyard (see links).
- Collect funds for the seller and make sure that any loans are paid off. In the past, BoatUS Consumer Protection has received complaints about brokers not paying off the seller's loan, which can be a nightmare for a new owner. With wire transfer of funds, which is more typical now, there is much less concern. If you hire a buyer's broker, they'll work on your behalf with the selling broker to make sure all of this happens accurately and efficiently.
- For a seller, whether or not you choose to hire a broker depends on the value of the boat, how complex the sales transfer may be, and how much of your own time you're willing to invest in the process. The decision is easier for a buyer since a large percentage of bigger boats are broker-listed. Hire a buyer's broker if you want someone who will work for you, instead of the seller. If you want to try to go it alone, see the sidebar on selling it yourself.
BoatUS Consumer Protection may be able to help you find a workable solution. If you need help, email us at consumerprotection@BoatUS.com or call (703) 461-2856.
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