Boat Brokers: How should we deal with them?

[SV Bowie]

My first post here... I've been reading this forum for some time, finally decided to join.

As a FL broker, I found I needed to clear up some things. FL Statutes:

"A Florida licensed yacht and ship broker is a person who has been licensed by the Division of Florida Condominiums, Timeshares, and Mobile Homes (Division), and who, for or in expectation of compensation: sells, buys, offers, or negotiates to sell or buy; solicits or obtains listings of; or negotiates the purchase, sale, or exchange of yachts for other persons. An applicant for a broker's license must file with the Division a surety bond or letter of credit in the sum of $25,000. Additionally, a broker must maintain an escrow account in a Florida financial institution. A Florida licensed yacht salesperson is a person who has been licensed by the Division, and who is employed by a broker to perform any acts of a broker. Each salesperson's license must remain in the possession of the employing broker until canceled or until the salesperson leaves such employment. Immediately upon a salesperson's withdrawal from the employment of a broker, the broker must return the salesperson's license to the Division for cancellation. An applicant for a salesperson's license must file a surety bond or letter of credit in the sum of $10,000 with the Division."

References:
Sections 326.002(1) & (3) and 326.004, Florida Statutes
Rule 61B-60.004, Florida Administrative Code
For more details:
For publications, forms and other educational material, visit the Division of Florida Condominiums, Timeshares, and Mobile Homes' web page at LSCMH - Home.

Summary:
1. In FL you are licensed as a salesperson under a licensed broker for two years.
2. The broker holds all funds in a separate escrow account.
3. Both are bonded.

Ethics, like everything else, largely depend on the person with whom you are dealing.

[denverd0n]

Originally Posted by BandB

As to all terms of the agreement and placement of escrows and everything else, it's all negotiable. If you don't find the broker's escrow arrangement satisfactory then insist on using a title/documentation service as the escrow agent.

Well, there are some aspects that are not negotiable. In Florida brokers are required by law to maintain a separate trust account that they must use for any and all escrow payments they receive. The OPs statement that they commingle your down payment with their own private accounts is simply and completely wrong. If they do that, they are committing a third degree felony. So if you try to negotiate with the broker to hold your down payment somewhere other than the trust account that he has established, he is not able to do that.

Of course, you are completely correct in that -- if for some reason you don't trust the broker -- you can negotiate that a completely independent third-party handle the escrow. Then the broker is not handling any of the money, so that portion of the law does not apply. That will probably cost you more, so you'd better be willing to pay for it, but it certainly is an option.

[Capn Jimbo]

Oh my... find an uncrossed "T" and reject the whole. Whew! The posts speak for themselves, and I won't join these uh, gentleman in parsing or provocation. Knee jerk responses are performed by jerkers of knees, lol, nicht wahr? To conflate said "jerkers" of knees with the epithet "jerk" is well, a very broad reach. Although based on the pack of pile-on brokers, I could be convinced to make that association...

Time to come about my friends...

Sticking to the issues, the (not) “standard” 10% down payment is a broker invention that has become all too commonplace in this minimally regulated industry. This clause is NOT standard, and does not appear on the standard YBAA (Yacht Brokers Association of America) purchase offer.

It is also worth noting, parsers, that the great majority of states don't regulate, and as I mentioned before, it appears the regulation in Florida is sorely lacking, though I'm confident the pile-on boyz will vehemently disagree.

Nor is this invented addition a legal requirement – a single dollar is sufficient “consideration”, enough to make any purchase offer legal, and it protects you against a deal gone bad. There is no requirement that you, the purchaser, must use the broker's self-serving and altered “standard” purchase offer form, which differs from broker to broker. To the contrary you can and should make an offer either using your own purchase offer document, or by negotiating and modifying the broker's form.

I suggest you submit an offer on your own PO form (they are widely available and like the broker's, can be easily amended to protect your own interests as buyer). The broker is legally obligated to forward all legal offers to the seller. The broker/buyer has every right to counter and/or modify your form (and vice versa). Simple. By keeping in your legal, one dollar down payment, and setting forth say two weeks for a survey you are evening the risk. Your risk is paying for an expensive survey that is not positive. The buyer is risking two weeks waiting for a survey.

Fair enough. At this point both parties want a positive survey. The sad part is that many buyers succumb to broker pressure, and may confuse what may be a considerable boat purchase with a real estate transaction.

For example, in real estate the considerably higher “down payment”, ie earnest money, IS very meaningful. Why? Because if the seller accepts the offer (no counter), the buyer is now obligated to proceed/close and failing same, risks losing his earnest money. In real estate, the larger the down payment/earnest money, the more “serious” the buyer. His only real out? A bad appraisal, out of his/her control. Any of us who have either bought or sold a home are well aware of these factors. Escrow and title insurance are essential A real estate contract is a VERY serious document.

Now while a boat deal may seem to share the terms, they do not share the same effects.

The alleged “standard” PO's – almost all subject to survey and sea trial – are wide open, and favor the buyers, who are under no obligation to accept any survey, regardless of what it finds. The acceptance or rejection is entirely subject to your discretion. You, the buyer, have the right to easily walk if you don't like the survey, for any or no reason at all. A survey is NOT the equivalent of a bank's real estate appraisal, and has little if any weight beyond being informational.

Generally speaking, you can accept or reject it in your sole discretion, and that's that.

With a proper down payment, you can kill the deal ten minutes after you sign it. You can kill it before the survey is due. You can kill it after the survey has been done, in your sole and private discretion, and either renegotiate or walk. Same for the sea trial. You don't like the way it handles. Walk. Get it? Even brokers will promote an offer on this basis.

Typically, and only if and when you legally accept the survey (usually in writing) and trial (or fail to timely perform them) are you then obligated, and only then do you risk your “down payment”. If you don't like the boat, don't accept the survey/trial and walk and your “down payment” is refunded. Easy peasy.

Then why do brokers try so hard to force you to sign their self-serving, “standard” 10% PO?

It's really very simple. They want to take you, the seller and the boat out of the market. They know that many buyers – knowing how easy it is to walk – may keep looking at other boats (you should until you get a good survey). They also know that most buyers either cannot afford multiple, 10% “down payments”, or want to avoid what they perceive as a time delay in getting it back. They believe that forcing an expensive survey will keep you in the deal (it won't).

Does this mean the buyer is not serious?

Not at all. The broker knows you can back out, regardless of the amount. He simply wants to tie you up for the boat he represents. He wants to run the clock, tie you and the buyer up and take you out of the market.

To me the real indicator of “seriousness” – as stated – is when the buyer, per the PO, must pay for his/her own expensive survey, and does so. Any buyer who ponies up to a thousand dollars (or more), gone forever, just to find out IF the boat is viable is a very serious buyer. “Seriousness” is not a flimsy and mislabeled “down payment”/PO that the buyer can easily cancel or walk from. Keep in mind that the seller risks little, short of taking the boat off the market (maybe). Consider that you yourself may discover serious deficiencies before the survey. Consider that you may have the skills to do your own survey (if you do, you can add a clause to your own PO that notes the survey may be your own – an excellent provision).

Ever have a broker show you a boat that has an offer on it (pending)? I have. The broker's 10% - like all the other elements of their “standard”, self-serving listing agreement and PO – are all in their own interest.

Should we be surprised? Carry on.

[NevisDog]

Originally Posted by Pelagic

I agree David, especially as the OP is in Florida, where the large boat brokers firms have their own special form of Mafia, that is well known and despised in other regions of the industry...

Now that's an INTERESTING snippet, which seems to have been entirely overlooked in the discussion that followed... Baseless? Scurrilous? Or does Pelagic know something that's best kept quiet?

[denverd0n]

Originally Posted by Capn Jimbo

...the great majority of states don't regulate...

You have already demonstrated quite clearly that you are COMPLETELY unfamiliar with the laws that regulate boat brokers and boat sales in your own state, yet you expect us to believe that you know about "the great majority of states." Nope. Not buyin' it.

Originally Posted by Capn Jimbo

For example, in real estate the considerably higher “down payment”, ie earnest money, IS very meaningful. Why? Because if the seller accepts the offer (no counter), the buyer is now obligated to proceed/close and failing same, risks losing his earnest money. In real estate, the larger the down payment/earnest money, the more “serious” the buyer. His only real out? A bad appraisal, out of his/her control.

Once again, another statement that is COMPLETELY WRONG!

Home purchase deals almost always contain a variety of contingencies that might give the buyer an out. One that is extremely common is a contingency on an inspection. This is EXACTLY like the contingency on a survey that you find in boat purchase contracts.

I have personally bought and sold seven different homes over the course of my life, in six different states, and in EVERY case there was a contingency for a home inspection. And in EVERY case the contingency was written just like those that you find in boat purchase agreements -- acceptance of the inspection results was at the sole discretion of the buyer, with no explanation required for a rejection of the results.

Other common contingencies when buying a home are acquiring financing, review of HOA documents, and even the selling of a previous home.

This is not about dotting I's or crossing T's. These are issues that are fundamental to the purchase process, whether we're talking about boats or homes. With so many fundamental mistakes in your various statements, your postings simply lack any credibility.

As you yourself said, time to come about.

[skipmac]

Originally Posted by denverd0n

You have already demonstrated quite clearly that you are COMPLETELY unfamiliar with the laws that regulate boat brokers and boat sales in your own state, yet you expect us to believe that you know about "the great majority of states." Nope. Not buyin' it.


Once again, another statement that is COMPLETELY WRONG!

Home purchase deals almost always contain a variety of contingencies that might give the buyer an out. One that is extremely common is a contingency on an inspection. This is EXACTLY like the contingency on a survey that you find in boat purchase contracts.

I have personally bought and sold seven different homes over the course of my life, in six different states, and in EVERY case there was a contingency for a home inspection. And in EVERY case the contingency was written just like those that you find in boat purchase agreements -- acceptance of the inspection results was at the sole discretion of the buyer, with no explanation required for a rejection of the results.

Other common contingencies when buying a home are acquiring financing, review of HOA documents, and even the selling of a previous home.

This is not about dotting I's or crossing T's. These are issues that are fundamental to the purchase process, whether we're talking about boats or homes. With so many fundamental mistakes in your various statements, your postings simply lack any credibility.

As you yourself said, time to come about.

[Dave22q]

I do not understand the fuss. A legitimate offer is generally required to include 'earnest money'. That money is refundable under specified conditions such as a satisfactory survey (in the buyer's eyes). I would never accept an offer that would let the buyer off if he does not proceed to a survey (assuming he wants one). Earnest money is just that, a way to separate the serious from the curious. If you think 10% is excessive, I question your seriousness.

[Capn Jimbo]

Please take note that the barstool expurts have now officially stolen the thread, and now wish - in typical fashion - to pile on and turn the discussion to - really - the many subtleties of real estate, not to mention the not so subtle ad homs. The descent into smug condescension is complete and admirable.

Barkeep, another round for my new good friends... let the fun begin!

[NevisDog]

Originally Posted by Capn Jimbo

Please take note that the barstool expurts have now officially stolen the thread...

Don't feel bad about it - lots of folks will have read your post and some of what you said was enlightening, some maybe not accurate, some will agree, some won't. Thanks for posting.

[skipmac]

So I guess three current or former yacht brokers who actually know the rules and regulations are bar stool experts?

Or members that understand and know the actual regulations in Florida and point out your misstatements are bar stool experts?

Complain about comparisons to real estate when you introduced the comparison in your very first post.

Can't admit the the valid points from those that disagree so call them a bunch of bar stool experts and chimpanzees?

[Fore and Aft]

That 10% deposit gives the brokers some leverage when dealing with a buyer when the sale falls through.
Just this month I surveyed a fly bridge cruiser that did not meet the buyers expectations and the buyers tried to get out of paying my surveyors fee. Before the broker refunded the buyers deposit he rang me to make sure I had been paid for the survey I performed. I explained that Vicky (the buyers wife) had used the wrong account details twice so my payment had been delayed.....Basically after a number of calls they did not want to pay for a service they had no further use of.
But when Vicky was told by the broker why their deposit refund was being held up they suddenly got it together and deposited my fee into my account that day!
If that had been a $1 deposit I would have screwed and had to waste more of my time chasing up an $800 payment.
So I am all for a 10% deposit.
Cheers

[sailpower]

Originally Posted by Capn Jimbo

Please take note that the barstool expurts have now officially stolen the thread, and now wish - in typical fashion - to pile on and turn the discussion to - really - the many subtleties of real estate, not to mention the not so subtle ad homs. The descent into smug condescension is complete and admirable.

Barkeep, another round for my new good friends... let the fun begin!

There certainly is smug condensation in this thread and it is coming from the OP so I will ask the OP again, please tell us about YOUR personal experiecess buying or selling a boat with a broker.

Bueller? Bueller? Bueller?

LOL

[SVTwilight]

Originally Posted by denverd0n

You have already demonstrated quite clearly that you are COMPLETELY unfamiliar with the laws that regulate boat brokers and boat sales in your own state, yet you expect us to believe that you know about "the great majority of states." Nope. Not buyin' it.


Once again, another statement that is COMPLETELY WRONG!

Home purchase deals almost always contain a variety of contingencies that might give the buyer an out. One that is extremely common is a contingency on an inspection. This is EXACTLY like the contingency on a survey that you find in boat purchase contracts.

I have personally bought and sold seven different homes over the course of my life, in six different states, and in EVERY case there was a contingency for a home inspection. And in EVERY case the contingency was written just like those that you find in boat purchase agreements -- acceptance of the inspection results was at the sole discretion of the buyer, with no explanation required for a rejection of the results.

Other common contingencies when buying a home are acquiring financing, review of HOA documents, and even the selling of a previous home.

This is not about dotting I's or crossing T's. These are issues that are fundamental to the purchase process, whether we're talking about boats or homes. With so many fundamental mistakes in your various statements, your postings simply lack any credibility.

As you yourself said, time to come about.

Exactly right. I have bought half a dozen houses and as many boats in as many states. In each case I added multiple contingencies, including a home inspection and often hold backs for various reasons to ensure seller performance on certain issues. I did the same with the boats.

There was really very little material difference in the offer letters or transactions, save for the extensive title searches and code compliances for the houses. And as a result significantly more paperwork on the houses.

[denverd0n]

Originally Posted by skipmac

Can't admit the the valid points from those that disagree so call them a bunch of bar stool experts and chimpanzees?

Oh come on! He had to lead with his best argument. Didn't he?

The really funny thing here is him accusing others of ad hominems when, in this entire thread, the only ad hominem I have seen is the one that he posted!

Once again, to the OP, time to "come about." Either that, or you could just keep on digging yourself in deeper and deeper. Your choice.

(And I bet I know what you'll choose. )

[skipmac]

Originally Posted by denverd0n

(And I bet I know what you'll choose. )

A pretty safe bet I think.