Boat Sales in trouble?

[syvictoria]

In Italy, it's normal for estate agent fees to be split 50/50 between the vendor and purchaser, and so I suspect this is where the broker's fee structure came from. Also, estate agenct fees in Italy are commonly 4% for each party - i.e.: 8% in total!

 

[Tranona]

In the UK, taking money from both sides would probably be against the principles of agency law where the broker is agent for the seller. The buyer's adviser is his surveyor whom he pays.

 

[Duffer]

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

I wish more brokers acted professionally as you suggest. When we bought our last boat the broker (who is still in business) lied about the VAT status and lied about the previous history. It turned out to be an ex-charter boat which had been very heavily used hence much larger than expected repair bills and VAT hadn't been paid. OK I shouldn't have taken his word for it but he seemed trustworthy. Buyer beware. Is there a professional association for yacht brokers which will crack down on this kind of thing?

 

[Tranona]

Yes, there is an Association - the YDSA and and the BMF

Not sure what you do about people who tell lies - although there is a psssibility of mis-representation. However buying from a private individual it is Caveat Emptor and your due dilligence should have been able to identified the problems before parting with your cash. Not really enough details to make any further comment.

 

[Ubergeekian]

In the UK, taking money from both sides would probably be against the principles of agency law where the broker is agent for the seller.

How do auction houses get away with charging both buyers and sellers?

 

[Twister_Ken]

How do auction houses get away with charging both buyers and sellers?

My guess - they are not agents, merely a selling process.

 

[Koeketiene]

Yes, there is an Association - the YDSA and and the BMF

Yes, but they are there in the first place to protect their members, not their clients' customers/victims.

 

[Jamesuk]

If I had £30k and was boatless I couldn't think of anything better than spending it on a boat. You will be getting next to nothing from it sitting in the bank. As long as you don't get put off by the asking prices there are plenty of deals to be done with boats that are presently for sale.

Have a chat with sunsail they have a 373 for 37 grand a rumour has it.

 

[andrewfollett]

Suspect that the boats that don't sell privately, wouldn't through a broker either for similar reasons - over-priced and poorly presented. When selling privately you can factor in the brokers saving and therefore make you boat competitive on pricing without losing anything.

Im not a big fan of brokers. (sorry) they charge a stupid amount of money for a simple service. They dont 'present' a boat. simply take some photographs. In my experience of selling 4 boats now (1 via a broker), they rely on the owner to produce the inventory, then simply use a secretary to produce a sheet of paper with an overview. Finding a buyer is not difficult. You can advertise to the whole world on apolloduck, boatshed24 FOR FREE its where i always look to find a boat and where i sell. (my last sale of an oceanlord was via a broker who canvassed me for the job having spotted it on apolloduck and dropped his commision to a very small percentage. The ultimate buyer bought through the broker because he hadnt seen the boat on apolloduck. If he had, he would have saved £1500 and the paperwork was the same either way. The brokers big selling point is that they do the legal work and investigate title. However they are doing a simple job. A bill of sale is a simple to write document that any owner can write. A valid vat certificate or invoice can easily be checked, and proof of ownership is almost impossible to prove beyond doubt so brokers wont guarantee title is accurate. I cant imagine theres a buyer out there that would ONLY buy a boat through a broker. Given the 5 to 6% plus vat commision that will be saved, a non brokerage boat will always be cheaper once the sellers final lowest price has been established. Each individual broker might only havey 10 or so yachts available at present for sale. They all advertise them on apolloduck,ybw, boatshed24 so by putting your own free ad there youll gain almost as much marketing as using a broker. Give it 5 or 10 years and i dont think there will be a broker in business!

 

[Garold]

Im not a big fan of brokers. (sorry) they charge a stupid amount of money for a simple service. They dont 'present' a boat. simply take some photographs. In my experience of selling 4 boats now (1 via a broker), they rely on the owner to produce the inventory, then simply use a secretary to produce a sheet of paper with an overview. Finding a buyer is not difficult. You can advertise to the whole world on apolloduck, boatshed24 FOR FREE its where i always look to find a boat and where i sell. (my last sale of an oceanlord was via a broker who canvassed me for the job having spotted it on apolloduck and dropped his commision to a very small percentage. The ultimate buyer bought through the broker because he hadnt seen the boat on apolloduck. If he had, he would have saved £1500 and the paperwork was the same either way. The brokers big selling point is that they do the legal work and investigate title. However they are doing a simple job. A bill of sale is a simple to write document that any owner can write. A valid vat certificate or invoice can easily be checked, and proof of ownership is almost impossible to prove beyond doubt so brokers wont guarantee title is accurate. I cant imagine theres a buyer out there that would ONLY buy a boat through a broker. Given the 5 to 6% plus vat commision that will be saved, a non brokerage boat will always be cheaper once the sellers final lowest price has been established. Each individual broker might only havey 10 or so yachts available at present for sale. They all advertise them on apolloduck,ybw, boatshed24 so by putting your own free ad there youll gain almost as much marketing as using a broker. Give it 5 or 10 years and i dont think there will be a broker in business!

Like everyone else, I object to sharing the proceeds of any boat sale with a broker.

However, it just seems that like estate agents, brokers have a firm position in the buying/selling process. Generally people feel more comfortable buying through a broker because the sale seems somehow to have a veneer of transparency and lawfullness. And maybe if a third party is involved, everyone feels that there would be a witness to any wrongdoing.

But surely the main function of a broker for the seller is that they are supposed to market the boat well and achieve a better response from the boat buying masses than you would if you did it yourself. If this is important, then one of the bigger brokers who advertises widely and gets to the top of every search engine, would seem better value.

I think that a good broker does a bit of everything including marketing, legals, communicating with buyers, enabling the sale, and helping with random items such as negotiations after a survey etc. Importantly, they should get the boat sold quicker than you would have done without them.

Given the cost of upkeep, I would count the cost-saving of a quick sale as opposed to keeping the boat for a much longer period ot time. Especially since some boats do substantially depreciate from one season to the next and so there could be significant losses there too.

As for boat sales in trouble? Not really noticed too many brokers going out of business over the last year or two, so they must be scratching a living from something. And as for brokers disappearing, I thought that about estate agents, but the internet seems to have just given them extra opportunities to ply their marketing skills.

Cheers

Garold

 

[rwoofer]

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.

Unfortunately from my perspective, this additional work that a broker does, does not add any value because they have no legal obligation for the checks. Solicitors do and you can sue them if they misrepresent, not the same with brokers. As far as the other stuff, HMRC as far as I can tell don't help anyone, many original builders are no longer in business and previous owners will have handed everything over anyway. My experience of brokers as a buyer is that you are far better doing the checks yourself.

The only broker I did use successfully to sell was one who was always amongst his clients (both sides) and when I mentioned I wanted to sell already had someone lined up. It is this connecting of people together where brokers can really add value and this unfortunately is where most fall flat - mainly those ones who just use the internet to market.

 

[Resolution]

In the UK, taking money from both sides would probably be against the principles of agency law where the broker is agent for the seller.

Agreed. But how do auction houses manage to justify charging both buyers and sellers?

(Edit: Uber, sorry to repeat your question. I should have read to the end of the thread before posting.)

 

[banger]

How do Auction House do it, simple, they give people a load of ******* about how they are experts and give an estimate of the value, WITH NO COMEBACK, so you get the situation were you take your Ming Vase to an auction and they say it is worth £200 and if you are lucky it makes £3m, but if it is sold for £200 and then £3m afterwards its hard luck.
Having been involved in this business as a buyer, my advice is treat them with a very long barge pole

 

[jonic]

Unfortunately from my perspective, this additional work that a broker does, does not add any value because they have no legal obligation for the checks. Solicitors do and you can sue them if they misrepresent, not the same with brokers. As far as the other stuff, HMRC as far as I can tell don't help anyone, many original builders are no longer in business and previous owners will have handed everything over anyway. My experience of brokers as a buyer is that you are far better doing the checks yourself.

A yacht broker can indeed be sued for misrepresentation and as a member of ABYA I am required to carry professional indemnity insurance. This insurance is so that if a broker were to be sued and found to have misrepresented there would be money to pay out.

Regarding HMRC and builder, here are two real world examples from boats I currently have involvement with.

One was built over 20 years ago and the builder has indeed gone bust, however we were able to track down the original selling agent from 20 years ago and find a certifiable copy of the original VAT document.

I had another boat, of high value that had been exported on a cross boarder leasing scheme. The scheme had been disbanded during the boats cruise of the Caribbean, the boat was then re-imported by transport ship to the eu for sale in the UK. When the scheme was abandoned VAT was paid by the finance company.We traced all the original documents and letters regarding the transaction from companies in two eu territories and HMRC were very helpful in checking them over and advising on the re-importation documents.

The client was extremely pleased and you can read their view on the transaction here

 

[AdeOlly]

Was browsing on Boatshed (other internet sales sites are available) and was struck but what seemed to be a lot of boats on there with price reductions. Given that the cuts haven't really fed through yet just wondering what will happen to boat sales over the coming months / year or two.

Personally - too risky to spend £30k in the current environment and I'm sure that I'm not the only person in that situation but it does make you wonder how long any slump in sales might last. I can;t see 2011 being a bumper year by any stretch of the imagination.

It also makes me wonder about the longer term health of the industry. It's been said before that boat owning is more prevalent amongst older people - but as baby boomers move into retirement with fewer and fewer getting the generous pensions that people used to have, how many pensioners will be able to retain their boats as long as they once would? Add that to a younger generation saddled with large mortgages to buy a house, needing to invest more into their pension or save to prevent their kids getting huge debts via university fees and flat or falling house prices then it doesn't make for the healthiest of backgrounds for marine businesses.

My mobo is currently on brokerage with Boatshed (though negotiated somewhat less than 8%). There are lots of boats showing reduced as they encourge that. Essentially, if after the first month the boat has been listed there have been no offers they encourage the vendor to reduce the price, even if only modestly, so it shows as reduced. They claim it has a positive psychlogical impact on potential buyers in that there is a bargain to be had.... I'm not remotely convinced boat buyers are that guillable myself.

 

[rwoofer]

A yacht broker can indeed be sued for misrepresentation and as a member of ABYA I am required to carry professional indemnity insurance. This insurance is so that if a broker were to be sued and found to have misrepresented there would be money to pay out.

Regarding HMRC and builder, here are two real world examples from boats I currently have involvement with.

One was built over 20 years ago and the builder has indeed gone bust, however we were able to track down the original selling agent from 20 years ago and find a certifiable copy of the original VAT document.

I had another boat, of high value that had been exported on a cross boarder leasing scheme. The scheme had been disbanded during the boats cruise of the Caribbean, the boat was then re-imported by transport ship to the eu for sale in the UK. When the scheme was abandoned VAT was paid by the finance company.We traced all the original documents and letters regarding the transaction from companies in two eu territories and HMRC were very helpful in checking them over and advising on the re-importation documents.

The client was extremely pleased and you can read their view on the transaction here

Sounds like you offer a very good service indeed and yes I would consider your examples as value adding.

The challenge is that this approach is not shared by many brokers, some of whom can't even get the particulars like loa right. Their get out clause is "that's what the owner told us", which is why I think they can get away with misrepresentation. Just see the amount of posts written about brokers who describe boats in excellent condition when they are far from it. If they could be sued, this practice would stop very quickly.

I once flew to a boat in Scotland, where the broker (a large supposedly reputable one) omitted to mention the boat had an accident with major structural damage (hit rocks). Even the owner was surprised this wasn't mentioned before I flew out. £400 down the drain and nothing I could do about it.

 

[jonic]

Sounds like you offer a very good service indeed and yes I would consider your examples as value adding.

The challenge is that this approach is not shared by many brokers, some of whom can't even get the particulars like loa right. Their get out clause is "that's what the owner told us", which is why I think they can get away with misrepresentation. Just see the amount of posts written about brokers who describe boats in excellent condition when they are far from it. If they could be sued, this practice would stop very quickly.

I once flew to a boat in Scotland, where the broker (a large supposedly reputable one) omitted to mention the boat had an accident with major structural damage (hit rocks). Even the owner was surprised this wasn't mentioned before I flew out. £400 down the drain and nothing I could do about it.

Thanks. I do appreciate your view too, as I also had some shody treatment in my boat hunting days, prior to becoming a broker.

Well it's Christmas eve and the kids are bursting with excitement so happy Christmas all on YBW!