Buying through a Broker.

[Poecheng]

Didn't Daewoo enter the UK market by selling through directly-owned shops? Morgan still list themselves as a dealer, but perhaps that's only for second-hand cars these days.

One used to purchase one's Bristol from the manufacturer ( who had no agents)?

 

[ip485]

One still can buy one's Caterham direct from the factory.

 

[dom]

One used to purchase one's Bristol from the manufacturer ( who had no agents)邏

Curiously enough this is how the vast majority of cars are sold today: for example much of the Daimler Benz UK network is now owned directly by the mother company: Mercedes-Benz-World, etc.

Then there is car financing, leasing, service & repair packages, etc: here a local dealer is effectively tied to offering products provided by the manufacturer, as opposed to sourcing outside deals. In fact almost all of the big car companies have hefty financial arms at their heart, not hugely visible, but they're there!

 

[dunedin]

One still can buy one's Caterham direct from the factory.

One buys a Bristol - only cads buy a Caterham. Or at least so I am told

 

[davidej]

- used car dealers and used boat brokers have a lot in common.

can you point these out to us as most think the differences are greater than the similarities

 

[Malo37]

can you point these out to us as most think the differences are greater than the similarities

No professional qualifications required. In fact no qualifications required. No compulsory membership of a professional body. Both are able to insert themselves into the deal between seller and buyer and to skim of a £%. with no value added to the physical goods. First priority is always to earn commission.
In the case of yacht brokers, a sizeable proportion of the sale and purchase agreement and indeed the initial contract between seller and broker is typically concerned with indemnifying the broker. The second hand car dealer usually owns the cars he's selling so there are at least remedies available under consumer protection legislation. No doubt brokers consider themselves to be 'posher' than used car salesmen due to the people they often deal with but are very similar creatures as far as I am concerned.
Anyway enough. I have never used a broker and don't need them.

 

[ip485]

To be fair they can be good at knowing where to advertise, having a portfolio of potential clients, doing the running around between, boat, customer and client, and looking after their clients interests.

 

[dom]

Ahh, proof by Statler and Waldorf .....just choose any "they" you like.

Waldorf: They aren't half bad.
Statler: Nope. They're all bad.​

 

[Tranona]

A few observations: as has been previously stated the broker is not employed by or providing services to the purchaser. To do so would no doubt be considered a conflict of interests. Car factories don't sell used cars. In fact this is a good point - used car dealers and used boat brokers have a lot in common.

You seem remarkably ignorant of what brokers actually do. Of course he is providing a service to buyers at no cost, the cost being borne by the seller. There is no conflict of interest. A broker is just as interested in keeping buyers satisfied. If they did not have satisfied buyers how would they earn a living?

It is clear that those willing to buy privately (either cars or boats) value the transaction less as they are normally expecting to pay a lower price for the same product.

Perhaps you should try using a good broker to sell your boat for you as you don't seem to be having much luck on your own.

 

[PeterC]

Tranona - i like your posts, but forgive me in disagreeing a little. While i think i know what you mean the professions have very strict ethics on conflicts because from experience it is impossible to look after both people on different sides of the same transaction, how ever well intentioned. I do feel this is an important point applicable to any broker that is often misunderstood. A good broker will often be very helpful to the buyer, but i have heard brokers say the like of "dont worry about that, its a minor issue" which may or may not be true, but if it isnt an for example it turns into a major repair you have only yourself to blame whether the broker didnt know what he was talking about and made a genuine mistake or was more concerned in not losing the sale.

My humble point of view.

 

[grumpy_o_g]

Any advantage in my using a solicitor to handle the deal when buying through a broker.

The broker is acting for the seller but it is normally in both the broker's and the vendor's interest for things to go smoothly as they don't want to get a reputation for being unreliable or worse, nor do most people want to make life difficult for themselves.

That doesn't mean that the broker is either competent or reliable though so it's a judgement call. The one point I would make is that the law and details regarding boats sales are somewhat diferent to other areas so, if you are after legal advice, I'd go to a specialist law firm. If you are simply concerned about handing over a large sum of money to someone that doesn't have title to the thing that you are buying then maybe just be upfront with the owner and their broker and see if you can work out something that doesn't leave you exposed nor them out of pocket.

 

[Tranona]

Tranona - i like your posts, but forgive me in disagreeing a little. While i think i know what you mean the professions have very strict ethics on conflicts because from experience it is impossible to look after both people on different sides of the same transaction, how ever well intentioned. I do feel this is an important point applicable to any broker that is often misunderstood. A good broker will often be very helpful to the buyer, but i have heard brokers say the like of "dont worry about that, its a minor issue" which may or may not be true, but if it isnt an for example it turns into a major repair you have only yourself to blame whether the broker didnt know what he was talking about and made a genuine mistake or was more concerned in not losing the sale.

My humble point of view.

The broker is not the person to give any opinion on condition. That is for the buyer to decide as he is buying from a private person, not the broker. The broker, of course owes him a duty of care not to misrepresent but it is clear from the broker's terms that the seller is responsible for any claims made about the boat. It is up to the buyer to satisfy himself that the boat is satisfactory for his purposes, probably using a surveyor who is offering an opinion and does owe a duty of care to the buyer who employed him.

Don't see any conflict of interest in principle here, but of course buying a boat is often a complex process involving much discussion among the parties and sometimes the roles of each party can get blurred. So important for buyers to be clear about these roles.

Interesting you raise the subject of ethics as it was the potential role of a solicitor that started this thread and a number of posts have supported the use of such people because they are "Professional" and money is more secure. Others have criticised brokers for not being members of a professional body. Perhaps they should read yesterday's Telegraph with a report of a solicitor (specialising in conveyancing) jailed for stealing nearly £1m from her client accounts over a long period of time. Latest in a long line of crooked lawyers hiding behind the cloak of a "professional" body that needs to extract large insurance premiums from its members to compensate clients from members' dishonesty.

 

[PeterC]

Yes, i agree.

And we come full circle; at least with a solicitor the funds are underwritten and you get your deposit back. Has a broker ever disappeared with the deposits?

 

[JumbleDuck]

Tranona - i like your posts, but forgive me in disagreeing a little. While i think i know what you mean the professions have very strict ethics on conflicts because from experience it is impossible to look after both people on different sides of the same transaction, how ever well intentioned.

I agree. The broker may want to keep the buyer happy, but s/he has no obligation to do so and indeed if there is any conflict between the seller's interests and the buyer's interests /she must act for the seller, who is paying the bill and towards whom s/he has a duty of care.

When we buy houses in Scotland, solicitors almost always have to be involved, and the same solicitor can only act for buyer and seller if s/he has acted in a house purchase for both of them before. Even then I gather they don't like doing it much.

 

[JumbleDuck]

The broker is not the person to give any opinion on condition. That is for the buyer to decide as he is buying from a private person, not the broker. The broker, of course owes him a duty of care not to misrepresent but it is clear from the broker's terms that the seller is responsible for any claims made about the boat. It is up to the buyer to satisfy himself that the boat is satisfactory for his purposes, probably using a surveyor who is offering an opinion and does owe a duty of care to the buyer who employed him.

And yet we are often told that the seller should rely on the broker to check such things as VAT status, RCD compliance, outstanding mortgages and liens and so on.

 

[Tranona]

And yet we are often told that the seller should rely on the broker to check such things as VAT status, RCD compliance, outstanding mortgages and liens and so on.

For that he does indeed owe a duty of care to the buyer, which is why good brokers are very particular about ensuring the correct documents are in place and will warn the buyer of the possible consequences of buying a boat if it does not have the correct documentation. The buyer should not part with his money until he is in possession of clear documentation.

A buyer could not, however, rely on what the broker says about the condition of the boat. His terms will make it very clear that the boat is being offered as is and based on information provided by the owner. If the buyer wants an opinion he engages a surveyor who will then owe him a duty of care.

 

[Tranona]

Yes, i agree.

And we come full circle; at least with a solicitor the funds are underwritten and you get your deposit back. Has a broker ever disappeared with the deposits?

That is not quite true. Just like with a broker funds involved in the transaction should be in a trust account so is always the property of either the buyer or the seller, never the broker or solicitor, even though he has control over the account. He can only apply the funds in connection with the purpose of the trust and if he does not it is fraud - that is he has stolen money that is not his.

The solicitors fund does not automatically refund such moneys. The first claim is against the fraudster and also in the case of many solicitors against his partners. That is the primary purpose of the fund - to insure partners against the fraudulent activities of any individual members of a partnership, not to underwrite money held in client trust accounts.

The case I quoted is an excellent example of why this fund is essential. Equally it is the absence of such a fund for brokers which is confirmation that fraud by such people is not an issue. When did anybody last hear of fraud related to client accounts run by brokers?

 

[JumbleDuck]

For that he does indeed owe a duty of care to the buyer, which is why good brokers are very particular about ensuring the correct documents are in place and will warn the buyer of the possible consequences of buying a boat if it does not have the correct documentation. The buyer should not part with his money until he is in possession of clear documentation.

How can brokers owe a duty of care to someone other than their client?

A buyer could not, however, rely on what the broker says about the condition of the boat. His terms will make it very clear that the boat is being offered as is and based on information provided by the owner. If the buyer wants an opinion he engages a surveyor who will then owe him a duty of care.

If a buyer can rely on what a broker says about the condition of the paperwork, why can /she not rely on what the broker says about the condition of the hull?

 

[ip485]

I think there is a difference. A broker can do as he will with funds on deposit - trust account or not, in the same way as a solicitor can do as he will with his client account. If either signs the cheque or authorises the online transfer the bank will honour the payment as long as it is in line with the mandate. If the solicitor steals the money then you are correct the first recourse is to the solicitor and then to his partners (if he has any), BUT if all else fails the Law Society will pay out. If the solicitor or broker spends the money and declares bankcruptcy or absconds to Spain you may as well whistle in the wind to recover your funds from him or his Receiver.

A bank can agree to ring fence funds but this only protects the depositor from bankcruptcy, not fraud.

A solicitor must be "audited" annually by a qualified accountant who especially "examines" conduct of client account funds. This can serve to identify earlier the solicitor that has already been tempted to teem and laddle funds whereas no such audit takes place on other businesses these days so there is very little regulation.

I suspect we are getting beyond the scope of the original question and how real the risk is I have no idea. I doubt anyone will come unstuck using a reputable broker any more or less than any reputable business person.

Personally if it was a sum of money I really couldnt afford to put at risk, and especially if I didnt know the broker well, I would use a solicitor's escrow account, but that is jsut me. Failing that I would prefer a broker with a few directors or partners - it is more oftent he case where others are involved fraud is much less likely.

It has been an interesting discussion and hopefully between us has identified some of the risks and some of the advantages of using a broker and or a solicitor.

 

[Tranona]

How can brokers owe a duty of care to someone other than their client?



If a buyer can rely on what a broker says about the condition of the paperwork, why can /she not rely on what the broker says about the condition of the hull?

Because the broker is performing a service of checking the paperwork on behalf of the buyer. This is very different from the condition of the boat where his terms and conditions will specifically state that he is not offering an opinion.

The risk on paperwork is very small as it is all provided by others - mainly the seller (VAT receipt, Builders certificate and document of title). The processes for checking for any charges are well established and mostly rely on the registrar of shipping or third party such as bank holding documents as security or a marina for outstanding charges. It is the seller that signs that the boat is free of charges and he has the power to pass title.

So, provided the broker uses the standard contract and follows the established procedure (as described in an earlier post detailing how Schmidt handles brokerage sales) the chances of any claims against the broker are extremely small. If it were otherwise, an uninsured broker would not take on such a risky business!

Just to reiterate a point I was making earlier. The parties in a brokered transaction between private citizens each have clearly defined roles and much of the misunderstanding arises because some are either not aware of these roles or choose to ignore the differences.

Perhaps you should sit down with somebody like jonic and observe how they go through the process of completing a brokered sale. If everybody thinking of buying or selling a boat did this then we would not have very many threads such as this!