What does a yacht broker do? A guide for buyers & sellers

Like any other sales service (brokers are salespeople), the premise is very straightforward, one person has a product to sell and another has a desire to buy it, in the middle is the broker, their job is to get the sellers products to the buyers and they take a commission for their efforts, simple. There are good and bad yacht brokers, so today we will see what a broker is and is not responsible for and how to work with them. All three parties, buyer, seller and broker have jobs to do for a smooth transaction.

Choosing a yacht broker

“If it looks like a duck and quack likes a duck” as the saying goes, I know you shouldn't judge a book by it´s cover etc. But there is a point to be made, both as a seller and a buyer, do you like and more importantly,  trust the broker you are dealing with? Do they look like a yacht broker, the de facto uniform for a yacht broker is, in winter, long chino trousers (usually beige), a shirt, usually blue or white, often with their company logo and a blue blazer (for boat shows and the yacht club), deck shoes, in summer it´s the same minus the blazer and, long trousers can be swapped for short ones, the point being does the person who will be carrying out your sale look and sound like they belong around a boat.

I would be the first person to say if I don´t get a good vibe from someone, that gut feeling then I would walk away and find someone else to sell my boat, ditto if I was buying one, is this person on the up and up or some fly by night type who might take my money and disappear?

There are several professional associations that yacht brokers can belong to including YBAA (Yacht Brokers Association of America), ABYA (Association of Brokers and Yacht Agents´) and IYBA (International Yacht Brokers Association), that said the two largest brokers that I know are not members, one has been in business for more than 50 years and the other about 30, but, if a broker is a member it shows they have taken the effort to fulfil the requirements for membership and paid the fees, also as a buyer or seller if the broker is a member you would imagine you have some recourse in the event of a complaint, an ombudsman or similar.

Never confuse directness with being rude, some of the most effective brokers are the ones who are most direct and matter of fact, they have done this sort of thing many times, have nothing to prove and will have all their ducks in a row with minimal efforts wasted.

Tell tale signs that should warn you

No or incomplete paperwork

Little or nothing in writing, all by word and nothing in writing is a sure fire way for disputes in the future.

Lack of premises

Although there are some legit brokers who work from a home office, the lack of premises or a registered office could be cause for concern. Where this becomes a problem is when boats are listed with brokers who are a long way from where the boat actually is, it´s possible the broker will not even go to the boat and so rely on the seller or another third party to take photos and supply information for the listing. As a seller it might pay you to use a broker who is more local.

If a broker knows your boat or has sold it previously or is familiar with the make then the process is usually easier, the broker will arrange a visit to your boat, shoot some photos, take a note of the engine hours (a question always asked by a savvy buyer) and make a note of anything important like maintenance invoices (seller should have these), where battery switches are for viewings at a later date, the electronics installed and so forth. Be aware of any broker that shows up without pen and paper or tablet to note down details.

Cash is not king

Perhaps back in the day it was, a lot of companies now will simply not accept it, a bank transfer is the accepted means of paying for a boat, it is traceable and should go into a bank account in the name of the brokerage company and in the country of the brokerage company, anything else should be a warning flag. I am talking about the large number of boats sold in normal transactions, not superyachts registered in company names in tax havens, then you will need very specific counsel and this is outside of the general remit  of most yacht brokers.

“And other considerations”

You may well see this phrase on a Bill Of Sale (An official document of transfer of a boat from one party to another) with an extraordinarily low price such as 1 pound or 5 dollars, this practice is becoming less common, the Bill Of Sale must be signed by both the seller and the buyer, both should know the price for which the vessel is being sold for.

Seller, things you do for an easier sale

You want to sell your boat? Will you be using it any more or are you changing boat or finishing your boating life? Take the opportunity to strip the boat of your personal belongings, although brokers may help box up your personal items, it´s not really their responsibility, items that are boat centric, such as fenders, ropes, boathook are usually sold will the boat.

Have all of the relevant documentation (originals) available, this includes the registration of the boat, insurance (the boat must always be insured until the date the boat is signed over to it´s new owner). Any invoices for works carried out, especially the big ticket items, such as engine works, exhausts, antifouling, any recent surveys are a good selling point too. Documents proving tax status (having been paid) is a common question asked by potential buyers, so having the documentary proof is essential.

Selling price

The broker may be able to offer some guidance as to the market value of your boat, you can of course do your own research too, be careful on this as its easy to get mislead, you should check same and similar makes in the area in which you are selling, the same boat in the USA will likely have a very different market value in Europe.

Unless you are confident in the broker, do not disclose what the bottom line offer you would accept is, a lot but not all brokers will have this figure in mind and simply pass you the first offer they get over the asking price and call it job done. If a broker is working on a percentage of sales price commission (the most common method) it´s in their interests to get a higher price. Some brokers will work on a fixed fee, however much the boat sells for they will get “X” amount of money, make sure this is all in writing before signing the listing agreement.

There are too many instances at the time of writing with demand being so high and used boats being more expensive than ever, sellers are pricing their boats with sky high prices, some brokers are happy to list you boat with it´s moonshot price just to have “another listing on the books and webpage”, it looks good to potential buyers that a broker has many listings, makes them look like a large and serious enterprise, but don´t be surprised when you get no enquiries, other brokers will tell you straight that your asking price is unrealistic and might flat out refuse to list your boat as they don´t want to waste their time.

A yacht brokers nightmare is divorce, division of funds during a divorce, the boat has to be sold, one party in the separating couple want it gone as soon as possible whereas the other party wants to hold onto the boat for grim death for whatever reason and so refuses any reasonable sales offer whilst maintaining the face of “well it´s not my fault it hasn't sold”.

Paperwork

Not the paperwork for the boat but the sales listing agreement (or similar document) between the broker and the seller, this document states that the broker has permission to list your boat for sale, use photos in the advertising and the two most important factors, how much commission the broker will be taking and giving their permission to the broker to act on their behalf for the sales transaction and permission to sea trial the vessel, this is another reason why the insurance must still be in date, some larger brokerages might have a special insurance policy in place for certain tasks but it does not usually cover third party vessels that are for sale.

A switched on broker should be able to advise you of the extra costs you are likely to incur during the sales process, some examples include, bank charges for receiving your money from the broker, yes banks charge you for everything, especially when the funds are coming from abroad and / or in a different currency, another hidden charge is courier services, contracts and Bills Of Sale need original signatures (unless some power of attorney or similar is in place and a third party can sign for the seller), very often buyers and sellers are in different countries and so an international courier company is used to deliver and collect documents for signing, with the associated costs.

Buyers obligations

Even the buyer has some responsibilities, be they legal or at the very least moral. Typically a potential buyer makes an enquiry via email or through a contact page on a boat sales website. The broker will hopefully answer the questions or contact the seller for answers not noted when the boat was listed for sale, an appointment is made and if all goes smoothly, buyer, seller and broker are all happy, well sometimes that happens, sometimes not.

Deposit

Indulge me for a moment whilst I compare the fine upstanding members of the nautical industry with real estate agents or realtors as they can be known (I know, I know they're incomparable) but they have some similarities, they both are intermediaries between a buyer and a seller, they have to deal with people at both ends of the process and they both sell high value items.

I happen to know quite well a real estate agent (who is actually as honest as the day is long) and they told me something both interesting and a bit shocking, they now regularly have to ask people for proof of finances, be it a letter from the bank or mortgage approval in advance, I asked if this was normal and the emphatic answer was no, but it has become a necessary evil as, get this, some people make a pastime of going to view houses for sale, not for any nefarious purposes but just to wander around and look at houses for sale.

The point of my sidetracking for a moment is if you are a serious buyer, have your finances in place and if you are viewing a boat with a broker don´t be surprised or insulted if the broker puts off a sea trial pending receiving a deposit, it´s the brokers way of asking you to prove you can buy the boat, they work for the seller and cannot have every potential buyer going for a spin around the bay without any intention of buying the boat.

Hauling the boat for inspection (or survey), mechanical inspections and the hiring of captains for sea trial are all examples of charges that will be taken from your deposit, it´s another reason why when buying a boat the buyer also gets everything in writing, typical clauses include paying the balance when boat has been hauled for inspection or survey, the bottom (of the boat) has been cleaned and a second sea trial is carried out to ensure the boat performs as intended etc.

Surveys and sea trials

There will be in the future a separate article regarding surveys, but in a broad strokes, the surveyor works for the buyer, not the seller or the broker, they are there to be an independent inspector of the boat, some brokers prefer working with certain surveyors but a buyer should not let the broker dictate which surveyor is to be used, a broker can supply a list of surveyors and the buyer can talk to them and choose one or obviously appoint their own.

Brokers will often be on hand to assist in the survey or appoint somebody else, it´s impossible for a surveyor to know everything about every single boat.

The next stage can be dependent upon several things, a satisfactory survey and sea trial is usually the important part, on the buyers agreement the broker would usually note the price offered is dependent upon a satisfactory survey and the price is open to negotiation for defects found, this is the job of the broker as an intermediary to find a happy medium between buyer and seller so everybody can walk away happy.

If all of the criteria laid out in the buyers agreement are fulfilled, including any dates that might have been stipulated and you as the buyer choose to back out of the deal, then it´s most likely you´ll lose your deposit, this is why it´s important to get everything in writing, this goes for the seller too as if the deposit is lost, who gets to keep it or how is it divided?

All of these things said, in my experience, most people around boats seem to be genuinely nice and if there is a problem, agreements can be made and problems solved.

The Bill Of Sale

You will have seen this document mentioned a few times in the previous paragraph, so what is it? A Bill of Sale is the legal document that transfers ownership of a watercraft from one party to another, they are usually internationally recognized. I am sure other specific documents exist for certain countries, but generally speaking a Bill of Sale from the UK (MCGA, Maritime & Coastguard Agency) or from the USA is often accepted as proof of sale and proof of title, even if the boat is not registered from either the UK or the USA.

The 64,000 Dollar question

Well actually 64 shares and some boating trivia. I am sure some of you have seen this before, especially with a UK registered vessel, the 64 shares in a boat, there seems to be many theories, the two that seem to be most common are there was originally 100 shares and 36 were deducted for tax leaving 64 dividends or shares to the owners of the vessels, usually large trading ships. The second answer is up to 64 companies or individuals had shares in a boat as sea faring was not the same as today and up the 64 shares were divided up to share the risk, as well as the rewards.

Summing up

The process all sounds complicated, it´s not really, most sales go through without any problems. I have heard so many horror stories, especially when an unsuspecting or inexperienced buyer was duped, that´s why it´s especially important to get an independent survey done.

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