A Rant About Brokers

[Microship]

Another gotcha... when I bought my Amazon 44, I ended up paying .8% more sales tax than I would have without the broker. The boat was in Skagit County, closing was in Skagit County, and I am in Island County... but the broker's office is in King County (Seattle). Even though I had never even been to their office, that determined the tax rate since they are the receiving agency. I tried to get the Washington State DOR to let me go direct, but no dice.

The difference would have paid for a 12" Furuno NavNet 3D.

Steve

[Traveller]

Originally Posted by Pblais

The broker does not tell you what price to offer nor do they force the seller to accept a price.

No they can't force you to sell at anything lower than the listing price in the contract, but they can get damn pushy. I know this from selling a house. And whether a house or a boat...same thing.

One thing brokers love to do is give you hope. They price your house so that you'll be ecstatic (why should I do market research to find out what it is worth...thats why I hired a real estate broker). Then as the weeks go by with no offers, they start to work on you and have you lower your price.

Another big lie is "I'm here to work for YOU". Now that is the biggest lie I've ever heard. A broker is there to work for himself. So sale...no commission...no pay.

You can tell I have zilch respect for that crowd.

Do you think the seller should pay a commission to a broker if I found the boat through a private source?

[Traveller]

Originally Posted by xxuxx

DO NOT USE A BROKER! Why do you need one?

I would like to here from a broker as to why you guys are necessary? The same goes for real estate brokers.

Exactly!

[Pblais]

One thing brokers love to do is give you hope. They price your house so that you'll be ecstatic (why should I do market research to find out what it is worth...thats why I hired a real estate broker). Then as the weeks go by with no offers, they start to work on you and have you lower your price.

Not a broker that sells a lot. They want the sale faster so they show you the market information so you price the house right. We got in the car and got dragged round to all the homes in the neighborhood that were competition. It didn't take too long to figure the right price. The real trick was we never listed the house overvalued in the first place. You buy and sell in a market there is no "real value". If a buyer can get a better deal some place else you should assume they will. Brokers should be able to show you the market place.

Brokers always know why they can't sell something, buyers know they could have bought for less and sellers are positive they sold too low.

[nautical62]

I'm closing on my new boat in 2 days and in the process of purchsing that boat and looking at others had contact with several brokers. A few of my thoughts related to comments people have made:

Avoiding Brokers: Several people have stated as a buyer they would never deal with a broker in any capacity. I see no reason to hire a broker as a buyer, but would rather research what's out there through sites like Yacht World. However, many boats, especially larger boats have broker prepresentation and it seems unnecessarily limiting to not consider these boats. The broker gets their fee from the seller, so as a buyer why puy these boats off limits? As I'll mention below, I think a broker paid for by he seller may even be advantageous.

Who does the broker represent?: Although the broker may represent the seller, I feel they generally want to do good by both parties and have an incentive to get the seller to lower their price not increase it if they feel doing so means closing the deal. While they might get more from a higher price sale, my recent experience was what they really want is to get the boat sold at what ever price both parties will agree to so they can collect their comission and move on. Finding an agreeable price and closing the deal is also usually in the interest of both buyer and seller. Of course, if they realize you will pay more, or really want a particular boat, they'll probably take advantage of that, so even if you feel this way be smart and don't tell the seller's broker that.

I feel the broker also offers the experience to act as a middle man and make sure all paperwork, agreements and disputes are taken care of properly. I had an incident with one boat I was looking at where the thru-hull failed during the sea trial when the surveyor tested the seacock. An immediate haul out was warranted. On a private sale, this might have been a real mess, but in this case it wasn't because the broker had previously made both parties sign the proper agreements and was there to be sure the proper actions were followed.

What does a broker know about the boat?: My experience in dealing with about 6 different brokers representing even more boats was always: not much. I think there were several reasons for this: Partly it's not just worth their time on a low-comssion sale. (I was looking at boats with an asking price of 16-29K). Much of what they know comes from the owner who may be ignorant or purposely hides issues. I think it's also in their interest to be a bit ignorant so they can honestly tell you they know of no problems when you ask. While I found this a bit frustrating and wasted time on boats in the end I wasn't interested in, I don't really feel it's the job of the broker representing the seller to give me as the buyer a lot of detail. That's why I inspect the boat myself and get a survey.

My final thought is that brokers have to do a lot of work, work some really lousy hours and in the end have no guarantee of making anything. They have to deal with owners who feel their boats are worth much more than they are, buyers who are not serious and expect a great deal and people on both side who use them unethically. I think few make a good living easily.

Just my thoughts based on recnet experiences...

[xxuxx]

[[/code]

Originally Posted by Microship

Exactly. I've been trying to get a friend of mine to hang out a shingle to do this, as he was very helpful with mine, but he has other things on his plate. I believe there is a real market for this service.

[php][s][/s][/php]

The worst mistake a buyer can make, I believe, is to innocently click on the link at the bottom of a listing. The moment you make contact with the sellers broker, you are "owned" by them, and bringing in a buyer's broker later for a co-bro deal is difficult. I've been through this thrice, and have never felt that the broker had my interests uppermost in mind.

PHP Code:

[html][code][/code][/html] 


Steve

PEOPLE!! ARE YOU PAYING ATTENTION TO THIS STATEMENT! JUST ONCE CLICK AND YOU'VE LOST 10% of your boats value

[nautical62]

Originally Posted by Microship

...The worst mistake a buyer can make, I believe, is to innocently click on the link at the bottom of a listing. The moment you make contact with the sellers broker, you are "owned" by them, and bringing in a buyer's broker later for a co-bro deal is difficult. I've been through this thrice, and have never felt that the broker had my interests uppermost in mind.

Steve

After purchasing four cruising boats now and having contacted seller's brokers many times, I've never experienced this and don't understand how the seller's broker would "own" a potential buyer.

When I was boat shopping a few weeks ago, I had one day where I met 4 separate seller's brokers and talked to owner's selling their own boats all in the same day. Even after making an offer on the boat I eventually purchased, I continued to look at boats for sale by other brokers and for sale by owner.

As a buyer, you have no contractual agreement with the seller's broker until you submit an offer. Take advantage of that and consider any boat you are interested in, even after approaching one seller's broker. There's no reason to feel locked into one broker or brokerage.

Steve, I'd love to hear more about how you feel "owned" by the seller's broker since that's something I've never experienced.

- Dave

[nautical62]

Originally Posted by xxuxx

[[/code]
PEOPLE!! ARE YOU PAYING ATTENTION TO THIS STATEMENT! JUST ONCE CLICK AND YOU'VE LOST 10% of your boats value

XXUXX - This is another statement I don't understand and hope you are able to explain more. I don't see how as a buyer clicking on the link of a broker representing the seller of the boat causes the boat I'm buying to loose 10% of it's value.

In fact, I did this recently. The seller had to pay the broker 10% of the selling price. I didn't. I paid a lower price for this boat than one of the same year and model offered for sale by owner would accept. I don't see how this decision can be construed as me loosing 10% of the boat value. If I'm to sell the boat, I don't think the next potential buyer will be less willing to buy this boat because I bought it through a seller's broker.

(The fact I got this one cheaper had nothing to do with broker, it had to do with the seller.)

If you read this and have the time to reply, I'd appreciate it.

Thanks - Dave.

[Microship]

Originally Posted by nautical62

As a buyer, you have no contractual agreement with the seller's broker until you submit an offer. Take advantage of that and consider any boat you are interested in, even after approaching one seller's broker. There's no reason to feel locked into one broker or brokerage.

Steve, I'd love to hear more about how you feel "owned" by the seller's broker since that's something I've never experienced.

Ah, yes, I'm sorry - I wasn't clear at all. I meant that purely in regard to the boat in question, not any other relationship. What I found was that if I followed up on an interesting boat on Yachtworld, for example, it was then difficult or impossible to bring my own "buyer's broker" into negotiation on that particular boat unless the seller's broker felt some compelling reason to relent.

Cheers,
Steve

[nautical62]

Originally Posted by Microship

Ah, yes, I'm sorry - I wasn't clear at all. I meant that purely in regard to the boat in question, not any other relationship. What I found was that if I followed up on an interesting boat on Yachtworld, for example, it was then difficult or impossible to bring my own "buyer's broker" into negotiation on that particular boat unless the seller's broker felt some compelling reason to relent.

Cheers,
Steve

Thanks Steve - That makes sense...

[xxuxx]

Originally Posted by nautical62

XXUXX - This is another statement I don't understand and hope you are able to explain more. I don't see how as a buyer clicking on the link of a broker representing the seller of the boat causes the boat I'm buying to loose 10% of it's value.

Wow, Nautical, looks like we are worlds apart. My affirmation of the "click" statement was not for the buying or selling broker but rather any broker in general. Once you click the button, they have the right to claim their 10%. I don't care if it is the seller or the buyer broker, its academic.

In fact, I did this recently. The seller had to pay the broker 10% of the selling price. I didn't. I paid a lower price for this boat than one of the same year and model offered for sale by owner would accept. I don't see how this decision can be construed as me loosing 10% of the boat value. If I'm to sell the boat, I don't think the next potential buyer will be less willing to buy this boat because I bought it through a seller's broker.

You are funny. Do you really honestly believe that you could not have purchased the boat for less if you did not have a broker? The brokers price is always folded into the price, whether the seller paid the broker or you, it's all academic. You used a broker, hence, you OVERPAID. Sorry.

(The fact I got this one cheaper had nothing to do with broker, it had to do with the seller.) Imagine if the broker was not involved, how much cheaper you would have gotten it for. The fact that your boat was less than a FSBO boat means absolutely nothing.

If you read this and have the time to reply, I'd appreciate it.

Thanks - Dave.

Can't use the quote tabs just yet LOL

[DavidGC]

What is the commission rate for boat brokers?

I have no idea how it works for boats, but anyone who thinks a real estate broker -- buyer's or seller's -- is working for anyone but themselves is living in a dreamworld. They both have a monetary interest in getting the house sold -- for ANY price -- as soon as possible.

Common real estate commmissions in my area are around 6%.

Say I want to get $200,000.00 for my property. If my broker tries to get me to accept an offer $20,000.00 less than I want (a 10% reduction), I am out of pocket $20,000.00. as long as my house is on the market, the broker makes $0. Six percent commission on my $200,000.00 house is $12,000.00. Discounting my house by 10% only results in a single broker coming down $1200.00 in commission. If there are two brokers in the deal (as is common these days), they are each only discounting their own profit by $600.00.

So, I lose $20,000.00. The Broker makes $10,800.00. Does the broker have an incentive to get me to accept that lower offer? You bet he does.

So, tell me now -- who is the broker working for?

DGC

[Traveller]

Originally Posted by Pblais

Not a broker that sells a lot. They want the sale faster so they show you the market information so you price the house right.

Sometimes. My experience after trying to sell on my own was that everytime a broker showed up at the door (without an appointment) they tried their best to get you to list with them and they'd make it sound sweet with an appealing listing price. They try to hook you...just as car salemen try to hook you with 0% financing which really doesn't exist...show me a bank that lends money for free.

But back to "I'm here to work for YOU". Yeah right . Trust me, if my broker brings someone around and they're not interested in the house, do you think my broker will let them go? Of course not, they'll try to find them another property...any property. So how is that "working for me"?

To me that line of business, no matter what they're selling has me raise my eyebrows often. For the amount of money that a seller is charged, they do very little.

BTW Paul, I'm having a hoot taking courses this winter. I completed the 3 evening VHF Radio Marine Operator's course and now I'm in the 10 evening Coastal Navigation course. Both of them are a walk in the park for me, having been a flight instructor for many years. Amazingly, after 25 years I still know that stuff like the day when I taught it. Next summer: basic cruising, then intermediate cruising and then my own boat. What will I buy..without a broker?

[Hyprdrv]

I wonder if we all are talking apples for apples on some things.
The experience level of the buyer would dictate bringing someone on board to help them.
The location of the boat in respect to the buyers location is a factor.
The purchase price has a lot to do with how you would approach this.

As I mentioned I have NO experience purchasing a boat. You would suggest that I go it alone? Someone mentioned this was a potential life or death situation. I no nothing about title transfer from one state to another, some minimal info on registration, and enough about a cat to be dangerous. I have a few friends who sail and would like to keep them, I'll abuse them once I bring the boat home.

As I stated in my earlier post I'm in the market with what was an interesting circumstance. I have a seller who is selling a boat on his own. Very nice guy who is working very well with me however his knowledge of all the ins and outs of the sale may be limited. I've been working with a broker for about a year and I could have simply blown him off but I don't do business like that. Plus I'm not paying the commission so why wouldn't I use a broker? An extra set of eyes in this case doesn't hurt as well. The seller agreed to my broker as the "agent", he and I will continue to communicate and make the decisions however the broker will handle the paperwork for both of us. This was mine and the sellers decision, to remain in contact, to keep things simple.
As to the commission rate, 10% seems to be the going rate for a 2 broker sale. To high, yes, on a $200,000 boat your talking $20,000. Now how much was the broker's expenses? Did he have to travel by air? Did it involve months of hand holding? How many hours did he actually spend with the client?
What this really breaks down to is the Broker's office getting his cut, just like the car dealers and real estate brokers who have been paying the overhead for their agents. Their the ones who set the rate. They can also change the rate and should be based on the conditions and expenses. I believe in most cases the boat "broker" is an independent contractor to the "office" and the "office" handles the tech stuff.
Mind you that in the real estate world the Broker is the "office" and the licensed entity to handle the contracts. The Agent is independent without the resources provided by the Broker however is responsible for all expenses including renting his desk space in the Brokers office. In the real estate world typical the combined commission is 6% even on a $200,000 condo.
So today I got the contract to review, a transfer of funds info letter for the deposit (10%) and a nice note from the seller that he found a haul out marina offering an early discount hall out rate and some prices on a few items I want to do. Things are moving nicely.
Still looking for an answer about "Broker" travel expenses, who pays for them?

Steve

[Pblais]

So how is that "working for me"?

Do you work for you or someone else? We all have our bias and to think no one else does you are living in a world beyond. You take a fair amount of responsibility and you still have to pay. It's the bottom line. For boats the rule is if you can't buy one you sure as anything can't operate one. It's a complicated set of mechanical devices that break down, wear out, and always want your time on the best day.

After all that I still love doing it. If there is any logic to that or money to be made I never found any, but I'm still doing it and happy. Buying a boat is a means because it isn't much for an end. The worst days of my life never included the worst days sailing I ever had. If you can do that good you done right.