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June 14th 2013. By Jeanne Craig.

Buying from a Yacht Broker: Commission, Surveys, Offers

It can often pay to have a professional intermediary work on your behalf when buying a boat via a broker. What’s more, this doesn’t have to cost you anything, as Jeanne Craig and Rupert Holmes explain

If you’ve ever purchased a home you know it can be a complex process, one that most of us wouldn’t attempt without the help of a qualified agent to represent our interests. Buying a yacht is a similar process and best done with the help of a professional yacht broker.

 

Yacht for sale

The whole buying experience can be much easier with the help of a broker

 

It’s easier to negotiate the multistep procedure with the counsel of a professional, someone who’s trained to help you with everything from finding the right model, to financing the deal, to managing finances and VAT. The difference, however, is that many buyers don’t know they can hire a professional yacht broker at no cost to them.

Too often, buyers make the mistake of finding a boat they’re interested in and then simply calling the listing broker. When this happens the buyer may be venturing into shark-infested waters. Here are a few tips for the boat buyer on how to save time, headaches and money by working with a broker.

The process begins when the boat seller lists the yacht with a broker. Generally, the seller agrees to pay a commission (usually 8-10 per cent of the purchase price) to the selling broker on completion of the sale. So even at this early stage the seller has professional representation in the transaction.

 

Selecting a yacht broker
Now what about you, the potential buyer? If you pick up the phone and call the listing broker, you’re beginning the transaction on your own, but a better approach would be to select your own broker, a buyer’s broker, to help guide you through the sales process. It has long been accepted in brokerage that, only around half a broker’s work is in finding a buyer for a boat they have listed – the rest is in ensuring paperwork is in order, organising sea trials and so on. As a result there is a long-established principle of brokers sharing fees, where one broker has introduced a buyer to another.

In the UK you should start by looking ABYA (Association of Yacht Brokers and Agents) member to represent your interests. These professionals are experts at all phases of the buying/selling process and are required to submit proof of experience, pass an exam, and complete ongoing training.

In short, a broker with these credentials is a certified professional who is bound by a strict code of ethics and should give a high level of customer satisfaction. Nevertheless, it’s worth interviewing several brokers to ensure you’re compatible with the one you choose, especially if your requirements for a boat are a little out of the ordinary.

 

The yacht buying process
Once you’ve settled on your broker, you can begin the buying process. Your broker will provide a host of services, and he does this for free because he receives his fees through a co-broker arrangement that he sets up with the listing broker. Some of the services your broker will provide include a yacht search and recommendations based on the size and type of yacht you’re looking for, along with a value analysis of the asking prices.

If you’re interested in one of his recommendations, he’ll prepare a written offer called a Sale and Purchase Agreement, which must be submitted to the listing broker along with your 10 per cent deposit. That deposit will be held in your broker’s dedicated client account.

Tip: If your broker doesn’t have a dedicated account for this purpose, that should be a red flag to you that you might want to find another broker. They should also send you a copy of their professional indemnity insurance certificate.

 

Making an offer and getting a survey
Your broker will submit the offer and negotiate with the listing broker on your behalf. The seller can reject it, accept it, or make a counter offer. Once the buyer and seller have agreed on the price and terms of the sale, the buyer’s broker will assist in setting up a sea trial. The broker can also refer you to a professional yacht surveyor, who can inspect the boat for you. Ideally, this will be a member of the Yacht Designers and Surveyors Association (YDSA).

 

In the event the survey or sea trial turns up a defect in the boat, several options are open to the buyer:

1. reject the vessel outright and get a full refund

2. ask the seller to fix the defect before accepting the boat,

3. renegotiate the price down and fix the boat after the sale.

 

It’s worth noting that some agreements there is no provision for price negotiation. As the buyer, you should ensure that a negotiation provision is in the offer agreement before your broker submits it to the listing broker.

Once you and the seller agree on the final selling price after the survey, the buyer’s broker continues to assist you by offering financing options, and by making sure the yacht has clear title with no outstanding liens or encumbrances so the ownership will pass smoothly to you at completion.

Because a buyer’s broker offers so many valuable services, you can see why it makes sense to have a dedicated representative looking out for your interests throughout the process. And what’s not to like about free?

 

 



Jeanne Craig has been covering powerboats since 1988. She spent ten years as a senior editor at Boating magazine and ten more as executive editor at Motor Boating. She’s now an independent writer based in Rowayton, Connecticut, where she’s close to the cruising grounds she most enjoys.