Negotiating boat price without a broker

[66replica]

Hi,

I'm currently in negotiations on a boat. I have enough cash to make a good offer on the boat (within 5%) but the seller wants full price.

I do not have a buyer's broker and the seller's broker is on another continent and largely checked out. Most communications have occurred directly with the seller with their broker CC'ed.

To get the sellers their full price, I suggested my cash offer + the traditional 5% a buyer's broker would receive from the seller's broker commission. Everyone wins. I pay using the cash I have allocated, the seller gets their number, and the seller's broker still gets 5%.

However, the seller's broker insists that there is no buyer's broker commission.

What's your gut? Is the seller's broker full of it? I'm guessing the seller wouldn't know the terms of any potential buyer broker split, just that they are getting charged x% by the their broker.

[CarlF]

Because the buyers broker wasn’t involved from the start, the seller’s broker will claim the whole 10% commission. His listing agreement with the seller most likely just specifies the total commission. It’s up to him whether any other brokers get a piece and how much.

He may have another potential buyer who he’s trying to get into a bidding war. You may find that even if you offer the full price that you’ll be told you have to higher. If you want a lower price, you’ll have to walk away and call his bluff.

[ItDepends]

The broker is completely within his rights to insist on the deal he negotiated with the seller.

Your suggestion that the broker take a 50% pay cut on the deal is inappropriate. I find it hard to imagine how you can see that as a "win" for the broker. The broker's contract is with the seller, and you can't renegotiate that from your side.

There are a lot of brokers who run all, or at least their best, listings as exclusive, and will NEVER deal with a buyer's broker. Your assumption that a buyer's broker is a routine part of the deal is wrong.

[66replica]

Originally Posted by ItDepends

The broker is completely within his rights to insist on the deal he negotiated with the seller.

Your suggestion that the broker take a 50% pay cut on the deal is inappropriate. I find it hard to imagine how you can see that as a "win" for the broker. The broker's contract is with the seller, and you can't renegotiate that from your side.

There are a lot of brokers who run all, or at least their best, listings as exclusive, and will NEVER deal with a buyer's broker. Your assumption that a buyer's broker is a routine part of the deal is wrong.

LOL at "within his rights" and "inappropriate". It's a negotiation. I can offer whatever I want and they can accept it or not. The broker can choose to make the deal happen by reducing their commission.

[danstanford]

It is the vendor's problem and responsibility to pay his broker so I suggest you give him your number and if he is smart he will take it. Any deal within 5% of asking in these conditions is pretty good.

[letsgetsailing3]

Originally Posted by 66replica

Hi,

I'm currently in negotiations on a boat. I have enough cash to make a good offer on the boat (within 5%) but the seller wants full price.

I do not have a buyer's broker and the seller's broker is on another continent and largely checked out. Most communications have occurred directly with the seller with their broker CC'ed.

To get the sellers their full price, I suggested my cash offer + the traditional 5% a buyer's broker would receive from the seller's broker commission. Everyone wins. I pay using the cash I have allocated, the seller gets their number, and the seller's broker still gets 5%.

However, the seller's broker insists that there is no buyer's broker commission.

What's your gut? Is the seller's broker full of it? I'm guessing the seller wouldn't know the terms of any potential buyer broker split, just that they are getting charged x% by the their broker.

I like what you're trying to do, but you're really suggesting two negotiations, and the broker knows he has 10% of whatever deal the seller gets if you didn't bring along a broker. And now you've already shown your cards.


A different approach may have been to work out an arrangement with the broker that you may not bring along your own broker if he cut his commission. But alas, too late for that.


So I think you're stuck with the overall negotiation. Make your offer. They seem to think you'll come up to full price. To negotiate hard, you have to be willing to walk away over that 5%. If you're not, just pay it and get the boat you want.

[wingssail]

Originally Posted by 66replica

LOL at "within his rights" and "inappropriate". It's a negotiation. I can offer whatever I want and they can accept it or not. The broker can choose to make the deal happen by reducing their commission.

Yep, you can. Go for it and see how you fare, and why ask us if you're going to scoff at answers you don't like?

[66replica]

Originally Posted by letsgetsailing3

I like what you're trying to do, but you're really suggesting two negotiations, and the broker knows he has 10% of whatever deal the seller gets if you didn't bring along a broker. And now you've already shown your cards.


A different approach may have been to work out an arrangement with the broker that you may not bring along your own broker if he cut his commission. But alas, too late for that.


So I think you're stuck with the overall negotiation. Make your offer. They seem to think you'll come up to full price. To negotiate hard, you have to be willing to walk away over that 5%. If you're not, just pay it and get the boat you want.

Thanks for the perspective. Good points.

[ItDepends]

Originally Posted by 66replica

LOL at "within his rights" and "inappropriate". It's a negotiation. I can offer whatever I want and they can accept it or not. The broker can choose to make the deal happen by reducing their commission.

You asked what we thought of your negotiating "strategy." You were told. You didn't like what you heard. You got snooty. If you don't want an honest answer DO NOT ASK.

[goboatingnow]

You either buy the boat or you don’t. Rationalising how you should arrive at the final cash payment is just coding yourself.

[Mike OReilly]

Your initial question illustrates a misunderstanding of how brokers are paid in this case. There is one broker fee; usually 10%. This fee goes to the brokers involved, and is paid by the seller. If two brokers are involved, the fee is divided in 1/2. The same amount gets paid, either way.

So you got your answer.

But this situation raises a question about the use of buyer's brokers. I've never used one, but I question whether they could be a negative, especially at the lower end of the market (and by lower I mean anything less than around $100k).

The seller's broker has done their work based on the idea that they will see 10% of the sale as income. They are then approached by a buyer's broker. The seller's broker knows they will cut their income in half if they make a deal through the buyer's broker.

Does this not incentivize the seller's broker to avoid dealing with buyers' brokers? Stories of seller's brokers simply not responding (at all) to queries from potential buyers are already all-too-common.

[Fore and Aft]

66Replica I think it really depends on the boat type and price. If it's a good boat and price, I can see why the broker is not negotiable. He is probably confident another buyer will come along. Did he offer you a short contract? I often see good boats sell quickly and the brokers really are not interested in mucking around with negotiating on price.
Cheers

[goboatingnow]

Originally Posted by Mike OReilly

Your initial question illustrates a misunderstanding of how brokers are paid in this case. There is one broker fee; usually 10%. This fee goes to the brokers involved, and is paid by the seller. If two brokers are involved, the fee is divided in 1/2. The same amount gets paid, either way.

So you got your answer.

But this situation raises a question about the use of buyer's brokers. I've never used one, but I question whether they could be a negative, especially at the lower end of the market (and by lower I mean anything less than around $100k).

The seller's broker has done their work based on the idea that they will see 10% of the sale as income. They are then approached by a buyer's broker. The seller's broker knows they will cut their income in half if they make a deal through the buyer's broker.

Does this not incentivize the seller's broker to avoid dealing with buyers' brokers? Stories of seller's brokers simply not responding (at all) to queries from potential buyers are already all-too-common.

It’s not that simple Mike. custom and practice is also different from brokerage to brokerage.

I know of the following combinations

1.selling broker refuses any commission split

2. Selling broker will not deal with a buyers brokers at all.

3, selling broker accepts a broker client referral and agrees the “referring broker” payment

4. Commonly also I’ve seen selling brokers cut the commission rate to facilitate a discount with the buyer. Ie both the seller and selling broker accept a lower figure.

5.buyers brokers are very much a US thing , possibly stemming from the very different US real estate procedures. , in Europe it’s not unusual for clients to engage with multiple selling brokers and also for a selling broker to “ refer” on a client to another broker who has a suitable boat on his lists. A referral fee ( ad hoc ) is typically ( but not always ) paid.

Also it’s not usual though not common to see a boat represented by multiple selling brokers

At the end of the day a “ broker “ is just that an intermediate between the seller and the buyer working on a commission paid from the proceeds on a “ no foal no fee “ basis.

Many brokers are appalling at customer relations that’s sadly not unusual. I know one big broker who will not respond to his emails for example. ( irrespective of who’s emailing him ) he’s still a very wealthy man

[letsgetsailing3]

Originally Posted by Mike OReilly

The seller's broker has done their work based on the idea that they will see 10% of the sale as income. They are then approached by a buyer's broker. The seller's broker knows they will cut their income in half if they make a deal through the buyer's broker.

Does this not incentivize the seller's broker to avoid dealing with buyers' brokers? Stories of seller's brokers simply not responding (at all) to queries from potential buyers are already all-too-common.

Interesting.

Often there is a minimum fee brokers for a boat sale, to cover lower-cost boats.

But it seems to me that a seller can look at the contract when negotiating commission, and account for a buyer with no broker. Write it so that the selling broker gets 5%, and if the buyer DOESN'T have a broker then you don't have to pay that additional 5%. You could even give the selling broker an extra percent or two if there's no buyer broker, for the extra leg work.

[Mike OReilly]

Originally Posted by goboatingnow

It’s not that simple Mike. custom and practice is also different from brokerage to brokerage.

I know of the following combinations

1.selling broker refuses any commission split

2. Selling broker will not deal with a buyers brokers at all.

3, selling broker accepts a broker client referral and agrees the “referring broker” payment

4. Commonly also I’ve seen selling brokers cut the commission rate to facilitate a discount with the buyer. Ie both the seller and selling broker accept a lower figure.

5.buyers brokers are very much a US thing , possibly stemming from the very different US real estate procedures. , in Europe it’s not unusual for clients to engage with multiple selling brokers and also for a selling broker to “ refer” on a client to another broker who has a suitable boat on his lists. A referral fee ( ad hoc ) is typically ( but not always ) paid.

Also it’s not usual though not common to see a boat represented by multiple selling brokers

At the end of the day a “ broker “ is just that an intermediate between the seller and the buyer working on a commission paid from the proceeds on a “ no foal no fee “ basis.

Many brokers are appalling at customer relations that’s sadly not unusual. I know one big broker who will not respond to his emails for example. ( irrespective of who’s emailing him ) he’s still a very wealthy man

Interesting... Yes, in the end it all depends on the contract in place between the owner, seller's broker, and potentially any other brokers involved. I didn't realize (although not surprised) that the buyer's broker is mostly an American thing. I've not encountered it up here -- remember, I'm Canadian.

My questions spring from the fact that buyers are often given the advice here: "get a buyer's broker." I think this makes sense for high-end boats. But at the lower end of the market, the fee paid to brokers is already low. Dividing this fee in 1/2 seems like a clear disincentive from the seller's broker standpoint.


letsgetsailing3: Thanks for this... I didn't know the 'minimum fee thing' had become normal. I haven't been in the market (buying or selling) for over a decade now. It wasn't a thing back then, but I'm clearly out of date.

My understanding though, is that 10% is still the standard commission paid by the seller to their seller's broker. Everything is negotiable, so a seller could certainly try for a different arrangement, but at the lower end of the market I doubt if they would be successful. Seems to me at this end the fee paid to the broker is already quite low.