Q: Since brokers work on commission, do they really try to get you a good deal?
A: Yes. A good yacht broker really will work his/her tail off to get you a good deal. As brokers, when we write an offer on a boat, we back our offer up with sold data. We go over sold comps with our clients and we use those comps in our offer to help make an offer that is based on the actual value of the yacht, not what a sales broker or seller thinks it is worth.
Here is the real truth of the matter...
Too often, yacht brokers are given the 'dirty cars salesman' persona (and yes, we do admit some do fit the bill) but it is in OUR best interest to get you a good deal, not misrepresent you for a slightly higher sales price. Let's be blunt. We work for you, and we work for your referrals. Our business relies completely on referrals and word-of-mouth advertising from previous clients. We can't afford to do dirty business and have unhappy clients!! Our goal is to get you a great deal and then to get you to tell all your friends how great we are at getting that deal. It is our ethical obligation to help represent your needs, and in doing that, we want you to help fulfill our needs by sending your friends our way when they want to buy or sell a boat. Under-handing this trust to make a few extra bucks would only hurt both of us.
Q: Can I take a test drive?
A: Test drives are not normal. Many people think that buying a yacht is like buying a car, which is, sadly, not the case (our job would be a lot more fun if we could take all the boats we go on for a test drive, that's for sure!). Yacht shopping more closely resembles real estate shopping. You get to go with a broker to look at the goods, put you can't get down and dirty with the yacht until it is under contract. In real estate, you can't survey a home and run all of its systems until you have ratified a contract. A yacht deal works the same way.
There is a lot of liability involved when a person who does not own a yacht takes it out for a spin so test drives normally do not happen until the boat is being surveyed with a professional surveyor on board as well as the owner or his representative to operate the vessel. It is normal practice for purchasers to write a contract contingent on this survey and sea trial. In other words, if you survey the boat and during the sea trial (a boat's version of a test drive), you don't like the ride, then you can simply walk away with no financial risk.
Q: How do I find the right broker?
A: A yacht broker is your representative. Whether you are shopping for a yacht or looking to sell your yacht, your broker is your front man during the process. Your broker needs to be someone reliable, trustworthy and, most importantly, someone you can be open and comfortable with about your needs and requirements (kind of resembles the definition of a friend, huh?). It really helps when you like your broker and have a great broker-client relationship.
But how do you find all of that??? You should shop around for a broker! Meeting several different brokers can really help you get a feel for who they are and how they do business. Here are some tips for weeding out the bad apples and finding a keeper...
Test 1: Call the broker after 5:00 p.m. on a Friday. Does he/she answer the phone? If not, do they get back to you quickly when you leave a message or do you hear back from them on Monday? (Why do this? A lot of shoppers look at yachts on the weekend because it is their time off to shop, so while weekends are nice to have off, a broker needs to get back to you!)
Test 2: What do their listings look like? Check out some of their listings on YachtWorld. How do they look? Are there actually photos of the boat, or do they use "sistership" or brochure photos and have basic factory specs describing the boat. Basically, does the listing look like it has some meat on its bones? An informed a diligent broker will fill his/her listings with lots of photos, details, and descriptions. You want a broker who is knowledgeable because they will serve as your advisers during the process. No one wants an adviser who has nothing to advise!
Test 3: Get in some face time. Go see some yachts and do some tire kicking with the broker or have him come to your boat that you wish to list. You don't need a dark room with a chair and a spotlight, but you should interview them, asking a lot of questions. Is he/she knowledgeable about the market and the boat? Is he/she attentive to your needs and inquiries? You want a broker who knows their stuff and isn't just going through the motions.
Test 4: Do you like the guy/girl?! You need to get along with your broker because they are your representative, your adviser, your front line, and your friend during the buying and selling process. Selling or buying a yacht needs to be stress free, and that is way easier with someone you get along with!
Q: Do I really need a yacht broker to sell my boat, or can I do it on my own?
A: Is it possible to sell your boat on your own? Yes. With the internet, anything is possible, but there are many more hurdles to jump over in order to be successful. As a seller, you need to make sure that you are marketing your boat at the right price and that you are getting the most exposure possible. This is where a broker comes in very handy.
Brokers have access to a database through YachtWorld that the general public does not. When a boat is sold through YachtWorld site, the sold data (how much the boat sold for, what condition it was in, and any broker's comments) is all submitted into a sold boat database that helps yacht brokers gauge what a specific brand and model of a boat is ACTUALLY selling for after negotiations from the original asking price. In other words, a broker is going to have the best knowledge on how your boat should be priced. Too often, for-sale-by-owner (FSBO) yachts are either way overpriced or under-priced because they just don't have the right insight on the market.
Using a broker can also seriously increase your boat's market exposure. Only brokers can insert a listing into YachtWorld, THE site for selling boats. When a boat shopper hooks up with their broker to start searching the market, they go through YachtWorld. Do brokers look at other sites for boats? Yes. But many brokers actually avoid or ignore FSBO listings because it means twice the work with half or no commission. As a seller, this can drastically hurt your market pool.
Q: What does it mean when a brokerage does not list boats for co-brokerage?
A: Having a listing with a brokerage is very beneficial because it vastly increases your exposure, but you need to be sure and check if a brokerage has listings available for co-brokerage. Why is this so important and what does it mean? Brokerages list their yachts as either exclusive listings or co-brokerage listings. When yachts are listed for co-brokerage, the listing agent is advertising it with the agreement that other yacht brokers can bring an interested buyer. If a boat is not available for co-brokerage, interested buyers can only approach the seller directly through the listing agent (the listing broker represents both the buyer and seller; they do not work with other brokerages). This can seriously limit your yacht's exposure because the listing agent does not work out of house, meaning your yacht only gets exposure through your agent because outside brokers cannot show your yacht to their clients. This can lead to more time on market, a lower sales price and a guaranteed full commission for the listing broker....Hence why we say we play well with others. A broker's job is to sell your boat as quickly and $uccessfully as possible, not try and maximize their own commission. The best way to do this the RIGHT way is to cooperate with all other brokers and ALWAYS list our yachts for co-brokerage. You never want to shrink your possible buying pool.
**Note: Not all brokerages share with you how they list their boats. Be sure and check with a broker before listing your boat and make sure your listing is available for co-brokerage.
Q: Why should you be wary of discount brokerages?
A: Most brokerages charge a 10% sales commission fee that is split 50/50 between the buying and selling brokerage houses. While this is typically the going standard, some brokerages offer 6-7% sales commission deals. If a brokerage down the street will list your boat for 7%, why should you think about using a brokerage that lists for a 10% commission rate? If a deal looks to good to be true, it sometimes is. Discount brokers will offer to list your boat for a lower sales commission, but when they list the yacht, they maintain their normal 5% sales commission on the listing side and cut the buying commission. Buying brokers with interested buyers are far less interested and motivated to show your yacht because it is the same work, but for often less than half of the pay. Because other brokers don't show the boat, the buying pool for your yacht is diminished. This means that your yacht is not getting nearly as much exposure as it could have been through a full-commission brokerage, which can lead to longer storage periods/fees, added insurance fees, more monthly payments, and more waiting for a sale.
So why is the discount commission sales approach becoming so popular with some brokerages? Because outside brokers are not as likely to bring clients to buy your yacht, most often, the listing broker finds a buyer directly and therefore, ends up on both sides of the deal. Rather than making 5%, they make the whole 7% instead, which from the brokerage perspective, is a great business plan, but it doesn't always put the best interests of the sellers first.
What if you are working with a buyer broker and the best boat out there is listed through a discount broker? There is always room for negotiation. Some good discount brokerages will negotiate commission splits. If not, a buyer can always cut a deal directly with their buying representative so he/she doesn't get shafted.
Q: Why isn't my boat selling? How do I get the most exposure for my boat listing?
A: How do 99% of boat buyers shop for a new yacht these days? YachtWold.com and Boats.com. Potential buyers sit on their living room couch watching television and perusing through YachtWorld ad after YachtWorld ad. Out of all of the ads available out there, you need to make your yacht ad stand out of the pack. It's simple. You need to have a sexy ad. What do we mean by this? The ad should have beautiful and appealing photos and be stock piled with information.
Look at 90% of the ads on Yachtworld. They feature generic manufacturer's basic specs and a few photographs taken with the broker's cell phone on a dark and cloudy day. The instrument and wheel covers are still on, the yachts are covered with clutter down below, and some of the photos even force you to turn your head (or computer) sideways because they are crooked or weren't even rotated before going into the ad. As a buyer, would that appeal to you in any way?....Nope...
An ad needs to tell the story of the yacht and visually present it in a way that makes potential buyers feel like they already know and are familiar with the boat without even having seen it. This means no photos of "sisterships" or cut and pasted "manufacturers specs." A listing should have a breakdown of absolutely everything that the boat features: systems, electronics, canvas, layout, etc. Who wants to buy a boat without knowing how many hours the engine has? Too many brokers don't even include this important info in their listing.
Your boat also needs to be in a high traffic area. Is your boat on the hard, in a shed with a winter cover on it? As a buyer, you lose perspective of the boat when you have an unpleasant experience while shopping. You need your yacht to be easily accessible for showing, meaning it needs to be easy to get on and it cannot be too far off the beaten path. Three factors that you can control affect the speed with which we sell your yacht: location, condition, and price.
Q: When purchasing a yacht, do I really need to have it professionally surveyed?
A: Is it required? No. Should you have one done? Absolutely. Many lenders and insurance companies actually require you have the boat surveyed in order to acquire financing or insurance coverage, but if you are a cash buyer, you are not required to professionally survey the yacht, but all brokers and experts highly recommend that you have one done. A professional surveyor is going to check all of the systems, mechanics, and even light bulbs on a boat. NO one wants to buy a boat that is going to need $40,000 of work for hull de-lamination repair a few years down the road. Professional surveys can find things that can be issues requiring immediate repair for the safety and integrity of the yacht, moderate issues that could use repair in the future, and wear and tear items that often come up on a survey with used boats. Having a survey done helps protect your investment by assuring the yacht you are purchasing is not a lemon. You always want to be as informed as possible about what you are getting for your money.
Q: When I buy a boat, should I register it through the Coast Guard or through my state? What is the difference?
A: How you register your newly acquired yacht with Uncle Sam should depend completely upon what type of cruising you are looking to do with your new boat. If you are planning to be a weekend boater who enjoys local cruising, you should register your yacht through the state. If you think you will be heading offshore, island hopping, or doing any coastal cruising, you should register your yacht through the Coast Guard. Registering through the state is like having a state license plate while registering through the Coast Guard is like having a United States Passport. In order to leave US waters, you are required to have your boat registered through the Coast Guard, so many people who are even just thinking about international and island cruising register their boat through the Coast Guard. If you are planning on sticking with Bay cruising only, then you can easily just register with the state.
We do note (because there can be some confusion) that even if you register your yacht with the Coast Guard, you still need to pay sales taxes to the state in which you are planning on using the boat. For example, if you buy a yacht in Connecticut and are planning on using the vessel in Maryland, you owe Maryland sales tax on the vessel.
Q: Online "How-To" websites say you should automatically assume a boat will sell for 10-20% less than the asking price. Is this true?
A: The listing market can never be summed up with generic sales trends. Listing prices can be affected by a number of variables including the motivation of the seller, how informed their broker is, what condition the boat is in, how the boat has been outfitted, whether or not a seller is upside down on a loan...the list goes on...Every boat is different. Some yachts ask a reasonable sales price and others are way off the mark. You may end up getting a boat for 40% less than the original listing price or you may end up escalating past the asking price because of competing offers.
In other words, no, you should never assume that the boat will automatically sell for 10% less than the list price. So how can you tell what the expected sales cost will be? A broker has access to a part of YachtWorld that the general public does not have access to that provides us with sold boat data. The bellwether for a yachts value is always what other yachts of the same make/model are ACTUALLY selling for. It is just like real estate when your agent prices a neighborhood before going to put an offer on a house. What has everyone else been paying? A yacht can be overpriced or it can be listed at a fantastic price because the owners might be trying to get rid of it quickly. Every case is different.
Q: How important are engine hours? Should I only be looking at yachts with low engine hours?
A: When you shop for a car, you want to make sure you are getting a low mileage car so you can get as many miles out of it as possible. Yachts do not work the same way. What? That doesn't make sense! Here's why....
A yacht owner may have been what we like to call a 'dock potato.' The boat serves as a floating condo on the weekends for owners who like to relax at the dock with cocktails and friends so there are very low hours on the engine. The boat may be cosmetically well taken care of, but the boat has been sitting. This means that systems, mechanics, and fuel that are all meant and designed to be used and moving regularly have all been sitting. A 2006 yacht may have 150 hours on the engine, but it may be far more of a maintenance project because the engine has suffered from lack of use. (When we sit in a car for a long cross-country trip, we get stiff...a yacht can be the same way!) On the other hand, you can be looking at a boat that has had 5,000 hours put on the engine. For example, a boat that was formerly chartered often has high engine hours with hard use and little maintenance.
A buyers goal should be to find a happy medium. You don't want a boat that has suffered from lack of use and you don't want an engine that has spent its entire life as a work-horse. It can cost anywhere from $15,000 to $25,000 to replace an engine so you want to be sure the engine/yacht you are buying is running well. How do you know? You can hire an engine surveyor to come out and test the engine and oil to make sure the engine is running properly. You can also hire a mechanic to stop by and run some basic tests like checking an engine's blow-by. An engine survey can help diagnose a motor before you invest in a possible project down the road. Most diesel engines can run for 7,000 to 10,000 hours healthily. Most gas engines can run healthily for 1,500 to 2,000 hours if well maintained.