Buying or selling a boat can be a long, agonizing process. Nowadays, even the cheapest boats are expensive, and there are seemingly endless options of builders, sizes and models. We often deal with brokers in the maritime legal profession, and it is remarkable how much a quality yacht broker can do for his or her client. I am not talking about the brokers from Nevada who see your boat for sale on a forum or Craigslist and then hound you for months about listing your boat. Rather, I am talking about the brokers who properly treat their career as a profession. Whether purchasing or selling a boat, a professional yacht broker can ensure it is a relatively smooth process.
Listing a Boat
The more expensive the boat, the more likely the seller is to list it with a yacht broker. Sure, the Internet alone provides a quality avenue for owners to advertise their boat without a broker, but brokerage firms offer a vast array of additional resources that simply cannot be matched by an individual owner without spending a lot of cash on advertising. In addition to placing ads in magazines and other mediums, brokers use multiple listing services, such as YachtWorld and Yatco, most of which can be used only by approved brokerage firms. These sites are normally the first place people look when searching for a sport-fisherman or motoryacht, and potential buyers from around the world can access this information. These resources allow brokers to follow the market value of boats over a period of time and assist the owner in pricing the boat correctly, which is one of the first steps in listing a boat.
Perhaps the most important service a broker offers is his or her time. It takes time to build a quality listing, shoot pictures and videos, field phone calls, perform showings, and attend surveys and sea trials. Brokers spend countless hours handling each listing, and it can take months or even years for a boat to sell. While some owners have the time to manage such a task on their own, it makes more sense for most people to have it settled by a broker. Sacrificing 10 percent of a commission can be tough to swallow, but the good brokers are typically worth it.
Open or Central Listing
We get many questions on whether a client should agree to an open listing or a central listing. An open listing allows multiple brokerages to offer a boat for sale. A central listing gives the exclusive contractual right to one brokerage to place a boat on the market. There are varying schools of thought on this, but I believe sellers should be wary of open-listing arrangements. Frequently, an open listing results in duplicate advertisements and detracts from the professional look for a seller. Also, during an open listing, there isn’t one broker solely dedicated to the sale of the boat because no one is guaranteed a commission from the sale. The contract may also leave the door open for the owner to sell the boat himself. Imagine spending months trying to sell a boat only to find that another broker sold it. Brokers know this can happen, and thus, none of them put in the required effort to market the boat properly.
On the other hand, a brokerage with a central-listing agreement will be motivated because they are certain a commission will be earned as a result of their efforts if the boat is sold. This results in higher quality advertising and more attentiveness from the brokers. And remember, owners can always negotiate the terms of a listing if it makes them more comfortable with an exclusive agreement. For example, we often adjust the length of the agreement, notice requirements for cancellation and other provisions on behalf of our clients. An owner can also designate certain individuals or entities, if to whom the boat is sold, the broker is owed a reduced commission or flat fee. There may be a reason for some to consider an open listing, but typically, an exclusive listing will be more productive.
All buyers should consider the use of a broker to represent their interests, especially when searching for boats of considerable value.
Buying a Boat
All buyers should consider the use of a broker to represent their interests, especially when searching for boats of considerable value. It is important to remember all brokers in a transaction typically split the listing broker’s agreed-upon commission, so a buyer normally does not come out of pocket for the broker’s services. More importantly, the broker will listen to a buyer’s specific wants and needs and zone in on what type of boat fits their criteria. A professional broker will be patient, even if it takes months or years to find the right boat for his or her client.
Most brokers also have extensive knowledge on the technical aspects of boats and, as mentioned before, a better understanding of the relevant market value. Additionally, brokers are experienced negotiators, which can be especially useful after surveys and sea trials reveal potential issues with the hull or mechanical components. Perhaps most importantly, a broker typically offers buyers a litany of good resources, including familiarity with surveyors, marine-insurance agents, financing specialists, documentation agents and maritime attorneys. This allows the broker to keep the deal moving along once it is under contract so the buyer can start enjoying the boat as soon as possible.
Find the Right Match
Like any profession, a few ineffective and untrustworthy individuals can hurt an industry’s reputation. However, we get to witness how much a quality yacht broker can do for his or her client. It is important to call multiple firms and reach out to friends who could have quality referrals. Normally, you will be able to find a broker who does things the right way and someone you can build a lasting relationship with for years to come.
Raleigh P. Watson is a contributing author, and a Partner at Miller Watson Maritime Attorneys.