Lawsuit Rocks the Yacht-Sales World

[DDW]

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.

I bought my trawler with no broker involved. In a clean, ordinary deal this is very straightforward, no different than buying a used car. It helps if the boat is documented. We did the deal standing in front of the desk at UPS (because they had a notary and the title has to be notarized). The paperwork took all of 10 minutes: I handed over a check, he handed over the title. Yes a survey was done (a telephone call and writing a check). And it wasn't the guy next door, I live in California and the boat was in Tennessee. There is nothing, absolutely nothing, that a broker would have added to the transaction other than 10% cost. For a boat not in very high demand, or a messy deal involving difficult characters and lots of questions about boat condition, perhaps they can earn their 10%. Particularly, if there is no trust between buyer and seller, then an intermediary is advisable.

 

[Hippocampus]

Agreed but have sold houses at 3%. Bought commercial property with multiple complications (seller was a town, needed permits from atomic energy commission, hazardous bio wastes, radiographic emissions and wastes, zoning and access permits, town obligated to supply and maintain roadway access etc.) . Done at fixed fees. One fee for all due diligences and negotiations. Second at completion of all zoning and permitting. Third at final closing. Also performance requirements and penalties if not completed by set dates. A huge amount of work. Agency chosen due to knowledge and relationships with involved parties. They had in house legal counsel and other services. In others words they dealt with nearly all soft costs/needs and price negotiations. Their prior relationships and insights made it happen at fair market and in a timely manner. Their total fees were well below 10% (of the land price) and no question they earned it. Unlike a boat none of it was boilerplate. There were nuances that were novel to the town so time was spent handholding and educating that side of the deal. Things like parking requirements and reserving the ability to expand or sell off land for independent development by other entities.
Have two friends who have worked as boat brokers in the past. Push a button the boilerplate fills the screen. Put in the variables for that particular boat transaction and print it out. Even escrow isn’t heavy lifting as they have a previously set up routine. The time spent is interacting with buyer/seller not the paperwork. Yes there’s value added by boat brokers and they serve a very useful function but I don’t think it’s 10%.

 

[Gordon J]

Not much choice

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.

There is injury. One has a binary choice, sell your boat or don't sell your boat. Cheaper boats can be sold on boat trader or perhaps Facebook, but more expensive boats need the coverage of Yacht World. Only brokers can list on yacht World. Brokers collude to charge 10 percent.

Sounds like Collusion to me.

 

[fstbttms]

People got screwed by yacht brokers? Shocking, I tell you. Shocking! :lol:

 

[Todd727]

This same law suite (SIC) 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 you followed the link, there was specific reference to the real estate lawsuit.

 

[ronobrien]

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.

More forms for lawyers to facilitate. I think I see an additional motive.

 

[HopCar]

I had several friends who were boat broker. I often told them the only difference between them and a used car salesman was a pair of Topsiders.

 

[guy with a boat]

Don’t use brokers if you think they are so bad. Or choose one of the many good ones. Ten percent is too much? Negotiate a lower fee. You might/will get less knowledge, experience, commitment, and fewer services, but you will pay a lower fee. Sometimes it works out refuse to pay market fees and sometimes it doesn’t.

I have spent decades in the commercial real estate marketplace. I brokered hundreds of deals over many years and gradually transitioned to the other side of the table. Now I pay the fees (or not) and select the brokers. I could certainly FSBO my own deals and have done some that way. I have learned that, for many reasons, I am money ahead to select good brokers and pay them. They make money and I end up with more in my pocket after the dust settles.

Regarding easy and hard deals, good brokers aren’t charging (and getting paid) for the hours that the transaction takes. They are getting paid for the years of learning and experience that prepared them to guide you efficiently and effectively, and to recognize and avoid land mines before they happen. They also get paid for networking outside of the MLS/YW and putting deals together before they ever hit the market. Many of the best boats and properties are sold before the listing services ever see them.

If you don’t value any of these things or they don’t apply to what you are doing, then don’t use a broker. There is really just no reason to criticize the industry because of the mistakes of a few. Just as bad, don’t overlook the value to be had by using an experienced pro.

 

[rslifkin]

They also get paid for networking outside of the MLS/YW and putting deals together before they ever hit the market. Many of the best boats and properties are sold before the listing services ever see them.

Sometimes that can be a very useful factor, especially if you're working with a broker that specializes a bit in what you're trying to sell (or buy). Someone I know sold a sailboat recently. When they reached out to a local broker to list it, he immediately mentioned that he happened to know someone shopping for pretty much that exact boat. Showed the guy the boat, sold for more than they were originally expecting to get for it and there was never even a listing written. Not a whole lot of work on the broker's part, but him knowing the right set of people got it sold much faster and more easily than it would have otherwise.

 

[Versingetrix]

As a residential real estate broker the debate about the value proposition of brokers is a matter of varied personal opinion. But, what I hope is that this suit opens up the past sales data so that there can be a better general understanding of boat values when considering the purchase of a boat, or help understand the value of the one we are selling.
In real estate you have a myriad of tools to gather data points with and as a broker part of my job is that of guide to understand those data points. I always appreciate it when my clients come in with high level knowledge and an idea of the path that leads to the goal. This generally leads to better informed decisions all around. Like houses, boats come in various conditions that determine value and helping clients understand how condition affects value against past sales of similar widgets is one of the areas where brokers add add value.

 

[SteveK]

@Versingetrix
As a real estate broker myself and multi boat owner of the two, house and boat, are more difficult to compare. A house always has multiple comparisons whereas a boat seldom has identical multiple choices in one market time frame with which to compare data points.

Houses are fixed to the land they occupy whereas a boat can be moved to a new location. Location, location, location comes to mind as the determining value of a house.

Seldom is a boat value near a house value, the land being the greater of the total cost in most cases. A boat value is based on what is available in the market when the buyer is looking.

 

[Versingetrix]

@SteveK
Houses, like boats, are never exactly the same, and its not unusual that here in Seattle you DO NOT have multiple like for like comps unless you are buying in a new development…and even then, how many of the update packages did one owner spec for that floor plan versus the other? Lot location premium? View?
Sure, there are typically more recently sold houses to comp to versus boats, but CMA’s are also about a myriad of other variables and sometimes no direct comps…kind of like boats. To your well-worn location mantra, yes things will have different values based on their geographical location much like the rents I can ask for in my rental houses based on their locations. And all the above are data points, which was the gist of my OP that I would like access to past sales data along with the rest of the research one can glean from past solds; spec, hours, configuration, condition, etc. and the relative values they represent and then extrapolate what the current value might be and talk it over with my broker.
Am I using a broker for the next boat we are looking at? Yup, as one worth their salt is also worth their weight in gold...kind of like a good real estate broker right?[FONT=&quot][/FONT]

 

[DDW]

Actually since you mention it I'm not fond of real estate brokers either. Occasionally you get one that earns their fee, usually not - just like boat brokers.

 

[Nick14]

The ramifications of recent legal actions continue to unfold in the real estate world. Wonder what the intimate impacts will be on boat broker commissions? Seems like a very strong precedent.

https://www.cnn.com/2024/03/15/economy/nar-realtor-commissions-settlement/index.html

 

[DDW]

I'd guess the days of a fixed 10% are numbered.....

 

[SteveandZoila]

Just a different thought, I own an office bldg. I pay 6% per year of the lease to my broker. I did a 10 year lease once and had to pay 60% of the annual lease up front!!!! I had no broker at that time. The guy probably still brags about the deal. Tough business,

 

[BruceK]

Australia is fortunate to have www.boatsonline.com.au. FSBOS welcome and afaik no attempt to control brokers and brokerage.
But,we also have www.boatsales.com.au.

 

[sunchaser]

For those complaining about commissions, Mecum and BJ charge a 10% or higher sales fee. Then comes a sales tax. I missed out on a vehicle and gladly would have paid it. Cars, boats, airplanes, race horse etc are optional toys. One just has to pay to play - or walk away for free.

 

[GrandWood]

Purchased my boat with just the sellers broker, hella nice guy, always returned my calls and answered all my questions. 1972 GB36 woodie, which when looking they are in all kinds of condition. For me it was like buying a classic car, seller feels its worth a certain amount, you look it over, test drive it, operate the systems, talk about how it was maintained, it’s history and if you like the vehicle/boat you make a offer and squabble over the final price. The seller pays the broker, and off ya go. For me it was an easy uncomplicated deal, all paperwork was handled by sellers broker and title company.

 

[Mako]

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.

That's very nice to hear. The brokers I've come across have either been neutral or professional / motivated to help. In the last 6 months I've only come across 1 who was quite arrogant still, which was weird because the market is softening significantly.

However I have come across many owners who my gut instinct told me were hiding or misrepresenting. I recently terminated my purchase Contract on one in fact.

 

[Mako]

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?

Some lawyers aren't fans of themselves either. One in particular even told me this joke:

Q- What's the difference between a catfish and a lawyer?
A- One is a scum sucking bottom dweller, and the other is a fish.

 

[FoxtrotCharlie]

We sold our boat (on the left) by ourselves using the AGLCA classifieds - low six figure amount. But if it had not sold quickly we would have used Curtis Stokes & Associates. Curtis has been a great supporter of AGLCA. We did use a buyers broker six years ago when we bought the boat - and yep, the seller had to pay the fees. Sellers broker did not like that he had to split the fee.

 

[Cold Duck]

How's this for a buyer's broker. Looked at his listed boat and declined but was going to continue looking elsewhere. He said if I used him as the buyer broker he would split his commission with me. So he gets a client he wouldn't have and we both get $10,000 each paid by the seller. Gawd I love enterprise LOL!

 

[Seevee]

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.

baloney...... I've done many many transactions myself. The paper work is simple, Dirt simple if you know what you're doing. I've bought and sold numerous boats, planes, cars, and houses. Some with representatives some on my own, and I'll do it on my own if I had the choice. MUCH easier. It's NOT hard.

 

[Bud]

I love my broker. I went to her house after the sale and did some pro bono work. I guess it depends on the person. She went to west marine and got me some gasket material so I could make a gasket for the salt water heatexchanger pump so we could run the engines. She was very helpful.
Bud

 

[mikehar]

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.

They are owned by the same parent company…

 

[category4]

That is a tough spot i know on smaller vessels it's a volume issue but on larger and when more money changes hands the 10% is a chunk. In our area of SE North Carolina i drive past 10 or more boat builders locally. they sell 2.5-million-dollar and up boats like candy at the fair. The starter boat business is out of control one of my boat buddies made the move to smaller used boats and his turn around is just a few days on boats in the 10-35K range. The mid-range offshore fishing boats are suffering. boats from $100-540K are sitting i think it's the interest rate and fuel cost topped by outboards being $10,000 more than they were 5-6 years ago. Add some lack of customer service and the middle boats are a tough sell and at 10% i am sure some balk but it's all relative and moves with the interest and fuel prices normally. price fixing is an issue but if you're willing to pay to play who knows. We have sold our home and moved 3 times in 5 years, so my real estate lady is happy to see me and i do get a discounted rate. My boat broker not so much so only the wind knows what lay ahead!