Broker's listing agreement language; question

[mvweebles]

Some material posted above is astounding. A broker is your agent. He has authority, real and ostensible, to bind his principal, and that`s you. He has a duty of utmost good faith. He might be in business for himself but he`s your agent, and responsibilities come with that.
He should be giving you advice as a deal works towards agreement. If you can`t trust him to give you honest in your interests advice, and use his sales ability on your behalf to get you as good a deal as is available, you don`t want him. You certainly don`t want him,as Shakespeare put it, operating as "a servant of 2 masters", it`s not possible.

In the US, there is a term "Fiduciary," usually used in financial advisor circles, were the agent/advisor must stand in your shoes. It's a fairly rare relationship and carries legal obligations. It is extremely rare for even a fiduciary to have the power to bind his/her client without explicit permission such as a power of attorney. Again in the US, I believe there are only two states - Florida and California - that register and license yacht brokers, a strong step towards complying with specific codes-of-conduct.

My reaction when I read threads like these that often bash agents/brokers is folks do not know how to use an agent/broker. If the broker is conflicted due to circumstances, you really should be the first to know it not because they tell you so, but because you're a big boy/girl buying a 6-7 figure boat. Good agents/brokers bring a lot to the table beyond pricing negotiations. A skilled agent will act as a thoughtful intermediary to present and/or receive offers in context of the market and other factors such as contingencies on the offer, whether they have concerns about a buyer/seller earnestness to complete the deal, etc. Brokers bring a lot of value beyond pricing knowledge, which often isn't that good in the first place.

Common sense prevails here.

Peter

 

[Cold Duck]

I hope I didn't sound like I was bashing brokers because that certainly was not my intent. As Peter says, a good broker can look at your boat and make suggestions as how to show it. They show boats every day and have great feedback on what turns buyers off, sometimes the littlest of things. But if you have been in the field a long time and know these things don't be afraid to deal without a broker. It is just the situation that defines the requirements.

 

[BruceK]

Me neither. I think mvweebles has misconstrued. A Broker is an Agent, Agents carry considerable power. Consider ostensible authority.

The "she`ll be right, Bob the Broker is a good guy" view is risky, especially where the broker has 2 inconsistent loyalties. No way would I have one who acts for buyer as well as for me as seller(or v.v.), the 2 duties are irreconcilable. Declaring/admitting the conflict, seeking absolution, solves nothing.
Of course the Seller/Buyer must have regard to their own interests. I have no problem with a Broker representing my interests only, whether selling or buying.

 

[Seevee]

Me neither. I think mvweebles has misconstrued. A Broker is an Agent, Agents carry considerable power. Consider ostensible authority.

The "she`ll be right, Bob the Broker is a good guy" view is risky, especially where the broker has 2 inconsistent loyalties. No way would I have one who acts for buyer as well as for me as seller(or v.v.), the 2 duties are irreconcilable. Declaring/admitting the conflict, seeking absolution, solves nothing.
Of course the Seller/Buyer must have regard to their own interests. I have no problem with a Broker representing my interests only, whether selling or buying.

Totally agree. When one hires a broker, they hire for their expertise to represent them to get the best price/terms. The "dual agency" representing both sides is CLEARLY a conflict of interest and should be illegal. A broker cannot represent both sides and maintain a fiduciary relationship with both buyer and seller.



Also a good point, just because your broker is a "good guy" doesn't mean you'll get good representation or someone that will let you slide on some of the conditions in the brokerage agreement. Qualifying a broker is about as hard as selling the boat yourself.

 

[smitty477]

Totally agree. When one hires a broker, they hire for their expertise to represent them to get the best price/terms. The "dual agency" representing both sides is CLEARLY a conflict of interest and should be illegal. A broker cannot represent both sides and maintain a fiduciary relationship with both buyer and seller.



Also a good point, just because your broker is a "good guy" doesn't mean you'll get good representation or someone that will let you slide on some of the conditions in the brokerage agreement. Qualifying a broker is about as hard as selling the boat yourself.

"Qualifying a broker is about as hard as selling the boat yourself."
This is the key to the problem, and accurately stated.

 

[Jeff F]

There should be a realistic expectation about the manpower that goes into the search and sale relative to the budget. There is a world of difference in a $50K boat sale and >$1M sale when it comes to compensating brokers but some boaters don't seem recognize this.

Right. Lots of local brokers dealing primarily in <$100k deals expect to represent each side of the deal and pocket the full commission. It's only on larger deals where it becomes common to have a split agency.

 

[Jeff F]

I'm considering listing our boat with a broker. They sent their standard contract language which has a paragraph:

"AGENCY. Broker may act as an agent for both the seller and the buyer. Owner consents to such and any related additional compensation payable to the broker from the other party..........."

There are some stipulations as to what may not be discussed with either party, but it seems like a built-in conflict of interest. ...a different spin on the buyer's broker routine? Thoughts?

I can point to an example of where the broker might get paid by both parties. Maybe unusual, but it can happen.

When I bought Escapade through a broker the seller accepted my old boat on trade. So the broker got a full commission on the sale, but the seller paid commission on the cash portion, while I paid a commission on the value of the trade in.