Lawsuit Rocks the Yacht-Sales World

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Anyone see this? Not that I am a fan of lawyers, yes I know there are some good ones out there and on this forum, what do you think of this? Hmmmmmm.....will there be reduced commissions in the future like in real estate? Any brokers care to comment?


https://loosecannon.substack.com/p/...r=2sl664&utm_source=substack&utm_medium=email


For the past four years, yacht brokers have systematically cheated thousands of people trying to sell their boats in the U.S. market, according to a new lawsuit against some of the biggest brokerages in the U.S. and the associations they support. Lawyers for the one named plaintiff are seeking certification as a class-action.

Filed Thursday in U.S. District Court in Miami, the suit names the following defendants—sometimes referred to as “co-conspirators”—most of them headquartered in Florida:

The International Yacht Brokers Association (IYBA) with more than 1,900 members.
Yacht Brokers Association of America (YBAA) with more than 250 firms with more than 1,000 brokers.

Boats Group, operator of multiple listing services Boat Trader, Yacht World and Boats.com.

Permira Advisers, owners of Boats Group.

Yatco, owner of the multiple listing service of the same name.

United Yacht Sales, which has more than 250 brokers with more than 100 in Florida.

Denison Yacht Sales.
Northrop & Johnson.
Galati Yacht Sales.
HMY Yacht Sales.
Allied Marine.
MarineMax.
Sharon & Jack Malatich LLC.
Tournament Yacht Sales.
RJC Yacht Sales.

The plaintiff is Ya Mon Expeditions, a company controlled by Pennsylvania real estate executive Davin Lamm. In January 2023, Lamm sold a 58-foot sportfish boat named Click Bait in Wanchese, North Carolina, using multiple listing services (MLS) that are participants in the alleged conspiracy.

The boat sold for $1 million, and Lamm alleges he paid a non-negotiable and “inflated” broker commission equal to 10 percent of the price.

Lamm’s pleadings were essentially inspired by recent landmark litigation in a Missouri federal court, where it was alleged that most powerful players in the U.S. real estate market had engaged in a price-fixing scheme involving multiple listing services. In October, a jury found that the National Association of Realtors and large brokerages had inflated broker commissions and awarded $1.8 billion to the class-action plaintiffs.

At the heart of the case against the yacht-sales establishment is the “Buyer-Broker Commission Rule,” which compensates a buyer’s representative broker with funds paid by the seller. According to the lawsuit, the rule has been around since at least 2020 and enforced by the IYBA and YBAA.

Here’s how Lamm’s lawyers1 described a typical yacht sale:

a. A yacht owner enters into a contract with a seller-broker, in which the seller agrees to pay the seller-broker ten percent in total commissions in exchange for marketing and facilitating the sale of the yacht;

b. As required by the Buyer-Broker Commission Rule, the seller-broker makes a non-negotiable offer of five percent commission to the buyer’s broker when it lists the yacht on the MLS;

c. A buyer-broker shows the vessel to a buyer-client who buys the vessel for $500,000 (in this example); and

d. The seller-broker receives ten percent of the sales price ($50,000) from the seller. The seller-broker then pays five percent of the sales price ($25,000) to the buyer-broker.

Based on this example, multiplied by the thousands of boat sales over the past four years, and the dollars involved could run into the tens of millions—or more.

YachtWorld

According to the lawsuit, IYBA and YBAA rules require that brokers list vessels for sale on MLS, which are the main sources for listings on websites such as YachtWorld. “The Buyer-Broker Commission Rule obligates a seller-broker, on behalf of the seller, to make a non-negotiable offer of compensation to buyer-brokers when listing a yacht on an MLS,” Lamm’s lawyers wrote.

“The Buyer-Broker Commission Rule by itself leaves the possibility of buyers seeking to reduce their broker’s commission by making that reduction a condition of a vessel purchase offer. However, both IYBA and YBAA rules identified above require yacht brokers to negotiate and enter commission arrangements before making offers on a vessel.”

If buyers paid their own brokers, Lamm’s lawyers wrote, “Sellers would agree to pay a commission solely to compensate the seller-broker because sellers have no incentive to compensate a buyer-broker negotiating against their interests, and the seller-broker commission would be about half or less of the amount that sellers have paid as a total commission to compensate both the buyer-broker and the seller-broker.”

The lawsuit is based on the Sherman Antitrust Act, which prohibits anti-competitive agreements and attempts to monopolize a particular market, as characterized by the Medieval system of guilds and 19th century Robber Barons.

Have you got a side? Obviously, the defendants have not had time to respond, but that doesn’t mean that you can’t. Lawyers, brokers or anyone who has bought or sold a boat under this system can comment below or communicate with me privately at petercswanson@gmail.com.

“Other anti-competitive measures abound,” Lamm’s lawyers said, arguing that the yacht sales industry keeps key information from the buying public by not listing previous sales prices, even though they are usually known. The information is hidden in a brokers-only section of soldboats.com. “After a vessel is sold, YachtWorld requires that broker members must input sold price information to soldboats.com in order to access the site,” the lawyers wrote.

“YachtWorld’s policies state that ‘soldboats.com data may not be published onto websites viewable by non-soldboats.com member, unless it is information that has already been published and made publicly available by YachtWorld.’ YachtWorld, however, does not make public previously sold boats, so this information too prevents competitive pricing for vessels resulting in higher commissions for brokers.”

Effects

“Effects of the conspiracy” as summarized in the lawsuit:

Defendants’ conspiracy has had at least the following chilling, anti-competitive effects, in each area in which a Covered MLS operates:

a. Yacht sellers have been forced to pay commissions to buyer-brokers—their adversaries in negotiations to sell their yachts—thereby substantially inflating the cost of selling their yacht;

b. Yacht sellers have been compelled to set a high buyer-broker commission to induce buy-brokers to show their vessels to the buyer-broker’s clients;

c. Yacht sellers have paid inflated buyer-broker commissions and inflated total commissions;

d. The retention of a buyer-broker has been severed from the setting of the broker’s commission; the yacht buyer retains the buyer-broker, while the yacht seller sets the buyer-broker’s compensation;

e. Price competition among brokers to be retained by yacht buyers has been restrained;

f. Competition among yacht buyers has been restrained by their inability to compete for the purchase of a vessel by lowering the buyer-broker commission;

g. Competition among yacht buyers has been restrained by their inability to obtain complete information regarding the previous sale price of a vessel; and

h. Brokerage defendants have increased their profits substantially by receiving inflated buyer-broker commissions and inflated total commissions.

Lamm is asking that a judge certify the case as a class-action, which would include thousands of boat buyers. He’s asking that a judge and jury declare the yacht-sales industry in violation of the Sherman Antitrust Act, force the industry to quit its anti-competitive and pay restitution, damages and costs.
 
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This is why the subspecies Lawyer gives Sharks a bad name. No injured party, both sides were free to pay or receive more or less. So far a class action of 1. The only beneficiaries will be lawyers.
 
Is there no honor amongst thieves? Better call Saul.
 
Is there no honor amongst thieves? Better call Saul.

Now that really did make me laugh out loud..! Perfect example of what most of us think....Avenatti come to mind? THEY even had him as a potential presidential candidate LOL
 
This is why the subspecies Lawyer gives Sharks a bad name. No injured party, both sides were free to pay or receive more or less. So far a class action of 1. The only beneficiaries will be lawyers.

Certainly an interesting question. Price fixing is illegal when done by a manufacturer. If a sales facilitator such as Boat World with its controlling ability, can essentially force compliance by cutting people off, I can see the argument for antitrust.

If I were filing this suit, I would have found a boat broker and seen if Yachtworld.com prevented me from advertising "The home of the 8% boat commission" on my boat listings.

Ted
 
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I've never liked that my "buyer's broker" can see the sold boat prices and he's incentivized (at whatever level) to keep the price high. At least with real estate you can see sold prices and so get an independent feel for a realistic market value.
 
This same law suite has already been filed against the real estate sector. In the end nothing will really change. Possibly new forms and a little more transparency but in the end a sell/buy price will be negotiated and all brokers will get paid.
 
I've got little love for lawyers. But also little love for yacht brokers. Every once in a while, you come across a decent, honest one - but not often.
 
I had hoped boat brokers would fade away like beta max and travel agents. But cockroaches are hard to kill. Even after the lawsuit there will be the tiniest print at the bottom illegible without electron microscope print that will describe the outcome.
 
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This same law suite has already been filed against the real estate sector. In the end nothing will really change. Possibly new forms and a little more transparency but in the end a sell/buy price will be negotiated and all brokers will get paid.

^^^ This

Its a copycat suit. I believe the one in real estate ruled against the broker industry.
 
If the plaintiffs prevail, there would be a sea change in the boat sales business model. There are many points at issue, among them the 10% sales commission that is pretty universal and the 50-50 split of that commission with a buyer-broker. The other big one would be Yacht World's proprietary control over Sold Boats. Too early to guess outcomes, but one certainty would be that the rule of unintended consequences will rear its head. Stay tuned.
 
My buyers' broker was as useful as t!ts on a boar.
 
If the plaintiffs prevail, there would be a sea change in the boat sales business model. There are many points at issue, among them the 10% sales commission that is pretty universal and the 50-50 split of that commission with a buyer-broker. The other big one would be Yacht World's proprietary control over Sold Boats. Too early to guess outcomes, but one certainty would be that the rule of unintended consequences will rear its head. Stay tuned.

It is not an auto 50-50 split on the commission. It is often a 75-25 split when the market heavily favors one side over the other.

Yacht world does not control boat sold data. It gathers it by its own means and then shares that data for a fee.

Even with the price fixing argument as a possibility, nothing will really change. Someone needs to make a market or buyers and sellers won’t find each other. No one is going to do it for free.

Is 10% fair? That depends on The boat. My broker friends won’t handle a boat worth less than $100,000. At 10% there is not enough money in it to be worth the effort.

I do know a broker who is a very nice guy. He is lazy, sloppy and not very bright. His average transaction is $40,000. He doesn’t make much but he doesn’t do much either.
 
Our last boat sold through a broker for a 5% total fee.
 
There is also the issue of "double-ending" the deal. This happens in real estate as well. The seller's broker also acts as the buyers broker, and gets the full fee, while, I'm sure, representing both without any conflict of interest.
 
There was a time not so long ago when if Mikey wanted to buy a widget from David, they approached each other and spoke with words and arrived at an agreement. They then concluded their transaction and went their separate ways. The End.

Crazy idea, but it could work again. Revolution....
 
Has anybody here bought a boat only because the saleperson talked them into buying?
IMO they are order takers who fill out the forms.

Here 10% on boats across the board is normal.
Real estate on the other hand is 7% on first 100K and then 3.5% on balance is standard but there are lesser rates.

A dirt home is necessary, a boat is luxury. There are $100,000 boats, are there any $100,000 homes left?

IMO realtors are under paid in this comparison, they provide an essential service.
Both are necessary I suppose, but people that want to liveaboard are being ripped off.
 
So what is exactly the problem here ? A seller, out of free will, agrees to pay a broker 10 % when the boat sells. Should the seller care what the broker does with that money ?
This practice is very common, has also been explained in many videos, so not exactly a secret. If this sells boats faster than no harm done and the seller knows exactly what it will cost him.
Frivolous law suit if you ask me.
 
The fact that is it universally 10%, and just about no one will negotiate that downward, suggests collusion. You'll have more luck negotiating the fee in real estate. Around here homes start at $1M and go up from there, so 6% commission is $60,000. Sometimes they work hard for that, but often not.
 
I bought a 100 grand boat. Well 93 to be precise. But it was over 100 after cleanup and install 2 heads with bidets.

Broker was an honest guy and misrepresented nothing. Also had a Captain that trained us (no charge) for more than 20 hours. Scheduled around his open time, not ours.

Helped me shlep the 2 new heads into the boat.

No problems with this broker dude and when I sell, I'll look him up - :)
 
The fact that is it universally 10%, and just about no one will negotiate that downward, suggests collusion. You'll have more luck negotiating the fee in real estate. Around here homes start at $1M and go up from there, so 6% commission is $60,000. Sometimes they work hard for that, but often not.
A $600K boat gets the same commision as a $1Mil home. Does not sound right. :nonono:
 
It's easier to sell a house, more buyers.

You don't have to move a house to your marina so you can show it.

You don't have to hire a Captain for sea test and survey.

You don't have to wash the bird doo off for show.
 
It's easier to sell a house, more buyers.

You don't have to move a house to your marina so you can show it.

You don't have to hire a Captain for sea test and survey.

You don't have to wash the bird doo off for show.

None of the last 3 items come out of the commission. For most brokerages, owner pays slip rentals, moving the boat, periodic cleaning, electric, and other maintenance. Some brokerages that own their slips, get commissions (kick backs) for services they subcontract. Brokerages can be very lucrative businesses, just like real estate companies.

Ted
 
It's easier to sell a house, more buyers.

You don't have to move a house to your marina so you can show it.

You don't have to hire a Captain for sea test and survey.

You don't have to wash the bird doo off for show.

lol. Find a broker who pays for any of those things out of their eventual commission. lol.
 
This same law suite has already been filed against the real estate sector. In the end nothing will really change. Possibly new forms and a little more transparency but in the end a sell/buy price will be negotiated and all brokers will get paid.

Real estate potentially a huge shakeup as Zillow Redfin and maybe others might offer direct sales at much lower rates. They scrape MLS for data. Nobody does that in boating.
 
... just like real estate companies. Ted


Real Estate companies as most people understand them are not the money makers. It is the title and insurance companies that make the monies...
 
Real Estate companies as most people understand them are not the money makers. It is the title and insurance companies that make the monies...

Maybe in US, here a realtor makes $7K on 100K and notary or lawyer conveying it makes $500-1000. Maybe we have a simpler system.

I bought a boat, the broker got 10% and told me who else to pay to transfer title. Did not even withhold sales tax. :nonono:
Realtors and boat brokers make too much on one sale, but at the end of year not many are well off due to not enough sales.
 
Think we as a group need to play hardball. Not contract to pay 10%. If they are willing to accept 5% when there’s a buyer and seller broker involved they should accept 5% when there’s only one broker. There isn’t significantly more work involved. Say this after buying and selling innumerable boats. One talk to your broker he calls the other broker. He speaks with his client. He calls your broker who talks to you. Or you call your broker. He talks with the seller/buyer. He talks to you. Same work.
Or reality for most interactions. Both parties have been down the road before and are reasonable people. Initially broker(s) involved. Then parties talk directly. Broker(s) on the sidelines for negotiations.
The 10% is not justifiable in my view. Have no issue with it being a sliding scale. Just about the same work to sell a 200k boat as a 1m boat. Higher the actual selling price lower the commission %age. Or even bill by billable hours and cost of ads.
The last boat I sold. Buyer contacted me. Knew me through salty dawgs. I told him which broker to contact. Throughout negotiations buyer and I directly communicated. Broker got 10% for no heavy lifting. ~50k for maybe 5-10h of work. Both of us wanted brokered deal to ensure clean deal, transfer of funds and title. We could have used a lawyer for less money but buyer wanted boat yesterday to start cruising and do passage. Going through a broker was faster. In retrospect should have done a private deal. My bad. Fell into “get her done “mentality.
Think Iboat, yachtworld etc. should allow private individuals complete access (including ability to list) at a discounted cost for running a single listing or buying a single vessel. This would create significant downward pressure on broker fees. 10% is ridiculous.
People have compared to house sales. Think brokers(real estate agents) fall into two groups. Those doing nothing else and working full time. Those holding a license and working as time and need allows. These folks aren’t the primary bread winner and their real estate activity is supplemental income. Work involved for large scale commercial properties or multi million dollar residential properties is a different skill set than for 300k-1.5m single family. But proportionally the former gets a much lower %age as their fee given the size of the transaction.
 
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I haven't been on BoatTrader website for a while but it looks very similar to Yachtworld now. They even have the same annoying popup to contact broker when you scroll down to the bottom of the page, very annoying.... I've tried everything to try and stop that popup with no success. If someone has had luck with some combination of popup blocker please let us know.
 
I fail to see an issue. If you buy a boat sooner or later you’ll have to sell it. Ditto cars, airplanes, houses and raw land. . Sales costs apply to everything in life. If you buy the right boat and keep it up to a high standard you can likely cover the sales costs by a higher sales price.

Try doing a FSBO and handling the paper work, titles, financing, escrow funds by yourself. It is a lot of work and aggravation especially when dealing with banking and financial regulations. Then comes the listing of a flawed vessel, no joy at all.
 
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