Boat Sales in trouble?

[Babylon]

Its facile to compare broker's and estate agent's percentage fees

One cannot compare broker's 3% fee percentage with the 1% of estate agents.

Say selling a boat worth £20k, a 3% broker's fee is £600. Compare that to selling a house worth £200,000, a 1% fee is £2,000.

Make the comparison for a £50k boat and a £500k house and the broker is still getting a third less than the estate agent, even though the percentage of sale value is three times as much.

Are the administrative and marketing costs of brokers and estate agents that much different? I wouldn't think so; and both are effectively small businesses and both operate in modern competitive environments (where fees find their natural level).

At a rough guess, the average self-employed local residential estate agent makes - over the long term - marginally more than the average traditional broker - usually with less passion and technical knowledge for bricks and mortar than a yacht broker has for yachts. And, excepting the very big players in both markets, both only make relatively average small-business net incomes.

One other point: when I was enquiring about selling my boat (but thankfully decided to keep her), my broker of choice made it absolutely clear that:
1. I had to clear and present the boat in the best possible state as possible.
2. I had to provide every last bit of information about the boat in advance, including previous Bills of Sale, registration documents, etc.

If I was going to sell (c£30k) privately, I could have left her on her mooring rather than hauling out onto the broker's hard, paid the costs of advertising (in YM, PBO and online), dealt with a load of casual enquiries, and have had to travel a 2.5hr round trip (plus mucking about in a small tender) every time someone wanted to have a gander. For all the effort and cost of a DIY job, I'd have been quite happy to pay the broker 3%.

So I don't agree that brokers are 'highway robbers' at all. If you choose your broker carefully, you'll find that they provide a service at a competitive cost for what they do, which is to provide the facilities and do all the work to actually sell people's boats for them. If the boat is **** and/or the seller has an inflated opinion of its value, then all broker gets for NOT selling such a boat is the cost of cranage and hard-standing.

If there is a shortage of quality boats, then its simply to do with current macro-economic conditions and uncertainties, and the way boaters have been adjusting and responding to them over the last couple of years.

 

[chinita]

"One cannot compare broker's 3% fee percentage with the 1% of estate agents"


Which broker is this? I was charged 8% + VAT by Berthon.

 

[Babylon]

?!?

"One cannot compare broker's 3% fee percentage with the 1% of estate agents"


Which broker is this? I was charged 8% + VAT by Berthon.

8%? You were had!

 

[BurnitBlue]

"One cannot compare broker's 3% fee percentage with the 1% of estate agents"


Which broker is this? I was charged 8% + VAT by Berthon.

I am also amazed at this 3% claim.

The two main brokers in Greece charge 10%. That 10% is paid up front by the buyer in Euro's, despite the yacht selling in sterling. The broker gets his cut first, he calls it a deposit which is non-returnable unless a serious problem with the yacht comes to light. The seller is paid the balance in sterling. I believe the 10% so called deposit includes VAT so the deposit is 23% light when (if) it is returned.

 

[brians]

The best I have been offered is 6% and I think that is fairly standard.

 

[Tranona]

It is not reasonable to compare practice in Greece with UK. It is quite reasonable that he should want his commission in Euros - after all his costs are in Euros. Apart from the higher rate it is essentially no different from UK except that they do not have the same concept of client accounts as in the UK. Remember most of their clients are not Greek residents let alone Greek citizens so it is not unreasonable for them to seek security for their payments.

Commercial practices develop to reflect the nature of the business. In the UK the brokerage market is much more competitive and relatively straightforward. Many brokers will work for a lot less than 8%, although some believe they offer value at that rate and are successful. Remember the only thing that matters to a vendor is the net amount they receive for the boat. Just do the sums. 92% of £100k is better than 95% of £95k. So why should you (as a vendor) care what the rate is if the broker gets a higher price. Equally as a buyer, how much the broker charges the vendor is irrelevant - you just want the boat at an acceptable price with no hassle.

 

[BurnitBlue]

Apart from the higher rate it is essentially no different from UK except that they do not have the same concept of client accounts as in the UK. .

Your argument reminds me of that quite famous statement by the Mayor of Washington DC during a TV inteview. "Apart from murder, crime in our city is no worse than anywhere else."

 

[Ex-SolentBoy]

I really do not at all go along with the idea that a broker, or an estate agent should get a percentage.

If the amount or risk they took, or effort they put in was in any way proportionate to the sale value, then I can see that a percentage is a possible fair solution. However, this is flatly not the case.

For most boats, advertising costs that they absorb are similar, and as soon as you get into the expensive stuff they charge for advertising separately anyway.

My approach has always been to agree a fair price for the effort involved irrespective of the sale value. By all means offer a bonus for a quick sale, or a bonus above a certain price, but a flat percentage is a bad deal for any seller - the broker just does not feel enough pain for price reduction, or benefit enough from upselling.

 

[Tranona]

Your argument reminds me of that quite famous statement by the Mayor of Washington DC during a TV inteview. "Apart from murder, crime in our city is no worse than anywhere else."

Its not an "argument" - just when in Rome ... or Greece, then recognise there are similarities and differences!

 

[Greenwichman]

Market forces

Not at all sure the issue is only about the brokers. Has a lot to do with owners who don't maintain their boats regularly and then try to get A1 prices. The market is currently very wise and discerning.

Like one or two others around here I have been studying the market for at least a year. I am looking for a quality, well-maintained, sensibly-priced 32-36 foot sloop in which to do a round-UK sail in 2011/12.

The closest to my specification was put on the market almost a year ago for £53k. I estimated it as at least £10k over-priced owing to it needing a substantial amount of upkeep. The owner has belatedly reduced the price to £48k in the autumn. The other potential buyers and I are all equally unimpressed; it's still over-priced and under-maintained.

The broker says the price is 'fair'; the boat is still unsold.

Meanwhile, I continue to sail (and maintain) my Beany 285, confident of a very prompt sale when I find something to shift up to. The boat is in weekly use and in excellent nick; I have already had two expressions of interest and haven't yet put the vessel up for sale.

Message so far as I am concerned is the market is awash with high-priced tat. No wonder owners are starting to reduce prices, but it would be much better if they started a proper upkeep schedule! Better for the market; and better seamanship, too.

And brokers need to press owners to be more realistic.......

 

[Babylon]

Apologies

"One cannot compare broker's 3% fee percentage with the 1% of estate agents"

Which broker is this? I was charged 8% + VAT by Berthon.

My error. The figure I was in fact quoted was 6% and not 3%, so my figures need adjusting accordingly - but 6% of £30,000 is £1,800, which is a not unrealistic figure for people who're not in a position (eg retired and live in a flat above the marina they keep the boat in) to easily arrange viewings and handle a sale directly. To those that can (or who have a local key-holder to arrange access), then sell privately by all means - but don't have unrealistic and rigid views about value (something else my broker was pretty firm on, as he likes to actually sell boats).

 

[Twister_Ken]

Having recently sold through a broker, I can say - in my case - that the broker did loads of work showing the boat which if I'd have had to manage from two hours away would have been difficult - effectively costing me a day and half a tank of fuel for the car each time. They also arranged a surveyor (at the buyer's expense), managed some rectification (shared expense), organised relaunch and temporary berthing, and did all the paperwork. My involvement - once I'd prepared the boat for sale and left all the documentation with the broker - was limited to 'advertising' her on the Twister Owners and Cruising Association sites, answering the occasional phone call or email and passing the enquirer on to the broker, and writing out a couple of modest cheques.

So, worth it from my POV.

 

[jonic]

OK with the risk of getting shot down in flames (and I'll preface this with the fact that I am a long term forumite who became a broker after a long bluewater odeyssey).

Please do not compare a yacht brokers fee with an estate agent. They do not do the same job. If you instruct an estate agent he values the house, photographs it, prepares the advertising and sales literature, handles the enquiries, conducts the viewings, negotiates the price and then he STOPS and hands over to two sets of solicitors. Who then charge another two sets of fees.

The two sets of solicitors check title, prepare and administer the sale and purchase contracts, and do the conveyancing of the funds through dedicated client accounts.

The professionally trained yacht broker does exactly the same as the estate agent but does not stop at the point where the estate agent hands over the transaction. The yacht broker continues and does similar work as the two solicitors.

For example he checks title of the boat as much as possible, pulling together Bills of Sale, Builders Certificates, evidence of VAT status and RCD status. This often involves lengthy paper trails with HMRC, previous owners and the boats original builders.

He then negotiates the offer price and draws up and administers the sale and purchase contract. Then oversees and helps organise the survey, perhaps making an extra visit to the yard on survey day and liasing with the lift and marina operators. He then re-negotiates the price if required after survey. Often this is the most delicate part of the process and a good broker will have enough knowledge of the survey process to negotiate effectively and fairly. If repairs are required he will help with obtaining quotes and organising the work then will make another visit to the yard to inspect the work, and re-organise the follow up survey. With perhaps another visit to the yard to discuss the work with the surveyor.

He then completes the transaction, drawing up the bill of sale, helping with registration, radio licenses and insurance questions if required and finally transfers the funds through a dedicated client account that is backed by written confirmation from his bank.

Well thats what I do any way

 

[capsco]

jonic you have just described the ideal world situation, sadly there are some very different brokers out there.

 

[jonic]

jonic you have just described the ideal world situation, sadly there are some very different brokers out there.

I know. To be fair it was dealing with one or two like that when I was looking for my boat that gave me the drive to make sure I operate the way I do. It is a hard job at times and you need to be a passionate sailor your-self to keep up the enthusiasm in the face of some of the more "interesting" clients.

Generally though, I know some very very good and knowledgeable brokers and I have had some excellent clients. (You know who you are)

I think it is important to remember that the broker-estate agent comparison is not a good one.

Last month I sold an extremely nice yacht to an estate agent. It was a very, very interesting experience for both of us. (nearly gave me a nervous breakdown!). It was his first big purchase and he approached the negotiation process as if it was a war and would be full of smoke and mirrors. I explained that once he made his offer I would then be with him all the way to the end, so it would not be in my interest to be anything but totally honest and open.

After a bumpy start of offer documents being delayed, offer confirmation calls not coming when due and various ploys involving sudden lack of funding he finally came around and relaxed. We had many a coffee in the Ketch Rigger while I helped him with the survey, his berthing, getting a delivery skipper for him and just general advice AFTER the transaction and have become firm friends. He explained that he just assumed everyone would be like in his business and would be out to get him. He hadn't appreciated that after the offer process I would be very much involved and working for both parties.

 

[Koeketiene]

I dont think the brokers are doing that badly at the moment with used craft, maybe due to the weak pound and all the foreigners coming over to grab a bargain

Pound's been 'low' for nearly 2 years now.
Cash-rich Euro buyers have bought the best on offer - what's left now (the odd exception notwithstanding) is the bottom of the barrel.

 

[jonic]

Pound's been 'low' for nearly 2 years now.
Cash-rich Euro buyers have bought the best on offer - what's left now (the odd exception notwithstanding) is the bottom of the barrel.

Well not quite the bottom of the barrel but good stock is selling fast and I AM short of quality stock at the moment. I suspect more will come on in Jan and Feb though.

 

[Koeketiene]

Well not quite the bottom of the barrel but good stock is selling fast and I AM short of quality stock at the moment. I suspect more will come on in Jan and Feb though.

Best of luck

 

[sighmoon]

Message so far as I am concerned is the market is awash with high-priced tat.

I'd agree with that, It took me nearly two years to find the boat we've very nearly bought.

Along the way, we had two boats surveyed by a much respected surveyor, and in both cases he found a lot of essential work, which the seller did not discount enough for. Both boats subsequently sold, but I wonder if the eventual buyers knew what I knew.

 

[BrianH]

Its not an "argument" - just when in Rome ... or Greece, then recognise there are similarities and differences!

"When in Rome" or at least in northern Italy, the curious custom is to charge both seller and buyer 4%.

When I once was interested in making an offer and demurred at this extra cost, I was immediately offered a reduction to 2% by the broker. I still declined and went elsewhere as the seller had an inflexible and inflated idea of his yacht's worth (it is still for sale five years later) - and was probably intent on covering his 4% (or perhaps also 2%). So, as has been postulated in these fora before, the buyer usually ends up covering the broker's cost anyway because the seller may have sold cheaper without it. But as the seller largely benefits from a broker he should be prepared to pay for that; for the buyer only an advertisement and a cursory introduction can in no way be value for money. Then again, my offer would certainly have been reduced by the broker's commission so I suppose market forces balance out price in the final analysis.

The emergence of northern European brokers on the scene (e.g. Schmidt & Partners) with their standard 8% (non-exclusive) and the influence of free and effective internet advertising in Italy, has begun changing this weird policy. It also probably had an influence on the broker I was dealing with; he is no longer in business.