Broker Fees In Excess Of Commission?

[SeaLion]

As if I need another reason to avoid boat brokers…

I have heard that some brokers are adding extra charges in addition to commission, sales tax and registration taxes (known in the mortgage business as “junk fees”) to transactions. Are buyers and/or sellers seeing these unpleasant surprises? I’m thinking I’d nip it in the bud by stipulating that the other party pays this.

What are people seeing/doing?

 

[tiltrider1]

I have Only seen auto dealers do this.

 

[twistedtree]

I guess the first question is whether they are legitimate expenses, and second question is whether the broker is the appropriate person to collect them.


I believe dealers are often required to collect sale tax unless there is a specific exception. But broker's aren't necessarily dealers. If someone is collecting sales tax, I would want to be certain they are authorized to do so and that paying them absolves you of any further tax liability. You don't want a broker walking off with your money, then have the state come after you for sales tax.


I'm not sure about registration fees. If they are registering the boat for you, then I would expect to pay the normal registration fees. If they are charging more for their "service", I would want to know so I can decide whether to use their service or not.


Anyway, without knowing exactly what fees, it's really hard to say if it's legit or not.

 

[Shrew]

I have heard that some brokers are adding extra charges in addition to commission, sales tax and registration taxes (known in the mortgage business as “junk fees”) to transactions.

The problem here is "Who did you hear this from?"

The examples you give (sales tax and registration fees) aren't really 'junk fees'. I'm more familiar with Dealers doing this, rather than brokers (There is a big difference). However, that is only if you're having the dealer or broker handle that service for you.

I bought a boat a new boat from Marine Max in Florida. I simply asked them to wave the Fl. taxes since the boat was being moved to Rhode Island. Some states, like CT require that you pay the CT state vessel tax if your primary residence in CT, even if the boat is being moved out of state. The state mandates the dealer collect the taxes in that case.

This rumor is too vague.

 

[jgwinks]

I guess the first question is whether they are legitimate expenses, and second question is whether the broker is the appropriate person to collect them.


I believe dealers are often required to collect sale tax unless there is a specific exception. But broker's aren't necessarily dealers. If someone is collecting sales tax, I would want to be certain they are authorized to do so and that paying them absolves you of any further tax liability. You don't want a broker walking off with your money, then have the state come after you for sales tax.


I'm not sure about registration fees. If they are registering the boat for you, then I would expect to pay the normal registration fees. If they are charging more for their "service", I would want to know so I can decide whether to use their service or not.


Anyway, without knowing exactly what fees, it's really hard to say if it's legit or not.

Here in Michigan auto and boat dealers are required to do the registration for you, and they are allowed to charge a certain percentage for this "service". On a high ticket sale that could be a chunk of money. And the 6% sales tax. Probably the same in some other states too. I think the rule was made because people might buy a car or boat, not pay the registration and then sell it again. The state wants to get their cut from every transfer. On my last boat purchase the registration was still valid so all they had to do was transfer the title. $7.00 as I recall and they didn't charge me a fee to do it. If course they did collect the sales tax but that's expected and documented on the sales agreement.

 

[SeaLion]

The problem here is "Who did you hear this from?"

I saw a listing that said an additional fee of “at least $495” would be added to each transaction.


The examples you give (sales tax and registration fees) aren't really 'junk fees'.

Agreed! I didn’t word that very well. Junk fees are, for example, “courier” “preparation” “delivery” “closing” fees. NOT legit taxes and registration.



I'm more familiar with Dealers doing this, rather than brokers (There is a big difference). However, that is only if you're having the dealer or broker handle that service for you.

I bought a boat a new boat from Marine Max in Florida. I simply asked them to wave the Fl. taxes since the boat was being moved to Rhode Island. Some states, like CT require that you pay the CT state vessel tax if your primary residence in CT, even if the boat is being moved out of state. The state mandates the dealer collect the taxes in that case.

This rumor is too vague.

Not a rumor but a question, I hope clearer now.

 

[DavidM]

I was a yacht broker in Annapolis. Unless the boat was leaving Maryland, and you had to sign an affidavit to that effect, the broker collected sales tax, state registration fees and if documented those fees. They are not junk. You can’t buy a boat without them and all brokers charge for them.

The only thing that might be iffy is adding those fees to the commission base, which the seller pays anyway. My brokerage scrupulously only charged their sales commission on the base sales price. Others ???

David

 

[Fleming]

It's not uncommon in Florida to see these fees. Usually phrased as 'administration fees' and usually in the $300-$400 range. If it's not in the contract you signed they can't make you pay it. If you're a Seller and it's got you bent out of shape then don't agree to it and go find another broker. If you're a Buyer and you object then don't submit your offer without removing it from the contract first. Of course, if you're buying a $400,000 yacht then you have some leverage, if you're making a lowball offer on a boat listed at $70,000 they will probably tell you to they can't remove it, take it or leave it.

 

[SeaLion]

I was a yacht broker in Annapolis. Unless the boat was leaving Maryland, and you had to sign an affidavit to that effect, the broker collected sales tax, state registration fees and if documented those fees. They are not junk. You can’t buy a boat without them and all brokers charge for them.

The only thing that might be iffy is adding those fees to the commission base, which the seller pays anyway. My brokerage scrupulously only charged their sales commission on the base sales price. Others ???

David

Sorry, again Junk fees are, for example, “courier” “preparation” “delivery” “closing” fees. NOT legit taxes and registration.

I’m glad some brokers aren’t getting greedy.

 

[SeaLion]

It's not uncommon in Florida to see these fees. Usually phrased as 'administration fees' and usually in the $300-$400 range. If it's not in the contract you signed they can't make you pay it. If you're a Seller and it's got you bent out of shape then don't agree to it and go find another broker. If you're a Buyer and you object then don't submit your offer without removing it from the contract first. Of course, if you're buying a $400,000 yacht then you have some leverage, if you're making a lowball offer on a boat listed at $70,000 they will probably tell you to they can't remove it, take it or leave it.

Makes sense. That’s what I was wondering about. If a broker makes $40,000 commission on a deal and wants to squeeze the parties for another $400, that’s pretty pathetic.

 

[Fleming]

Makes sense. That’s what I was wondering about. If a broker makes $40,000 commission on a deal and wants to squeeze the parties for another $400, that’s pretty pathetic.

Keep in mind, the salesperson you're usually working with is often not the Broker. At least in Florida, the Yacht Salesperson is licensed and bonded, but is a different role with different requirements from the Broker of Record. There are plenty of small operations where the Broker of Record is the main person running the show and showing boats, but there are also lots of large brokerages where the sales people are working for a negotiated commission. The Broker of Record is the one paying the ridiculously high Yachtworld monthly fee, paying the receptionist, office rent, advertising bills, etc. and they are the ones that set policy and fees for their office. Quite often the salesperson you deal with does not have the ability to change office policy, negotiate reduced commissions, dismiss administrative fees, etc. These sales people often don't get anywhere near the imagined commission that many buyers/sellers think they are getting paid for their effort.

 

[twistedtree]

Sorry, again Junk fees are, for example, “courier” “preparation” “delivery” “closing” fees. NOT legit taxes and registration.

I’m glad some brokers aren’t getting greedy.

I have not seen any of those, but it doesn't surprise me at all that they are starting to show up. I find 'fees' incredibly offensive. I think as customers/consumers, we should all tack-on a "Customer Access Fee" to any purchase that includes seller fees. If they want access to you as a customer, they should pay for it, right? After all, you have administrative expenses, filing, bookkeeping, and other tasks associated with the purchase, right?

 

[SeaLion]

I have not seen any of those, but it doesn't surprise me at all that they are starting to show up. I find 'fees' incredibly offensive. I think as customers/consumers, we should all tack-on a "Customer Access Fee" to any purchase that includes seller fees. If they want access to you as a customer, they should pay for it, right? After all, you have administrative expenses, filing, bookkeeping, and other tasks associated with the purchase, right?

Exactly.

 

[Delta Riverat]

I didn't have any "broker fees"

I paid the haul out and the survey. I paid the slip rent at the broker's dock after the sale while she was being serviced and we were getting trained.

I paid the Title Co for clear title and documentation direct also.

The training (about 20 hours total) with a licensed captain was no charge.

I guess there are brokers and other brokers. Glad we got a good one.