One day insurance transfer for trial sail

[Tranona]

+ 1 Very well said.

The secondhand boat buying process seems to be designed to discourage buyers while making life as easy as possible for the broker and seller unless a 'dead cert' buyer comes along. As a buyer I am expected to drop 10 to 20K (in my case, for the next boat) into a broker's so called client account (which does not protect my money at all) before I can get a sea trial, which may be my first time underway on a particular design. The argument from the supporters of the current laughable 'norm' is that I should know enough about a particular boat design before deciding which particular example to buy. The flaw in this argument is obvious but the current way of doing things does nothing to encourage buyers into the market place, in fact I think it scares many away. Is it any wonder the used boat market is slow? I don't think it is all down to the economy.

Want to buy a house? No cost to the buyer to view as many as they like before they find the right one. Sellers often open their doors to many potential buyers before the right one comes along. It's a numbers game.

Want to buy a car? No cost to the buyer to view and test drive a secondhand car. Several people might have to be shown the car, and test drive it, before the right buyer comes along.

Want to buy a light aircraft or share in one? No cost to view and in my experience nothing other than a nominal contribution to the cost of the test flight may (note "may") be requested.

Want to buy a boat? Typically no test sail available, 10% deposit required in a non-protected broker's client account before lift out, survey, lift in and sea trial, by which time a buyer will be several hundred or several thousand out of pocket and has to hope the broker will return the deposit if it is decided not to proceed. What a great disincentive to buy a secondhand boat!

Just wonder if that is a true reflection of what happens why thousands of boats are bought and sold using exactly those methods every year. Given that people in the business only get to eat if they sell boats why don't they do it differently if it would mean more sales. They are not stupid and they do what is effective to secure a sale. Do you really think that sellers would not offer test sails if they were practical and effective in selling the boat? They are not offered (leaving aside the practicalities) as a matter of course because they have been shown not to be effective. Just like a house or a car, there is no limitation to the number of viewers, nor the number of times you can view and inspect. No reason why a seller should not agree to take a serious potential buyer out in his boat if he believes that is likely to turn the interest into a sale. What started this thread was an expectation of a test sail to check out whether the enquirer liked the performance before he had even seen the boat and before he had given any commitment. Difficult to see how he can be a serious buyer if he has not even seen the boat.

BTW money in a client account is protected provided the client account is set up correctly in accordance with the YDSA and BMF requirements of their members. You will find it very difficult to identify any specific cases where a client has lost money in a properly set up and operated client account with a broker.

 

[jonic]

+ 1 Very well said.

The secondhand boat buying process seems to be designed to discourage buyers while making life as easy as possible for the broker and seller unless a 'dead cert' buyer comes along. As a buyer I am expected to drop 10 to 20K (in my case, for the next boat) into a broker's so called client account (which does not protect my money at all) before I can get a sea trial, which may be my first time underway on a particular design. The argument from the supporters of the current laughable 'norm' is that I should know enough about a particular boat design before deciding which particular example to buy. The flaw in this argument is obvious but the current way of doing things does nothing to encourage buyers into the market place, in fact I think it scares many away. Is it any wonder the used boat market is slow? I don't think it is all down to the economy.

Want to buy a house? No cost to the buyer to view as many as they like before they find the right one. Sellers often open their doors to many potential buyers before the right one comes along. It's a numbers game.

Want to buy a car? No cost to the buyer to view and test drive a secondhand car. Several people might have to be shown the car, and test drive it, before the right buyer comes along.

Want to buy a light aircraft or share in one? No cost to view and in my experience nothing other than a nominal contribution to the cost of the test flight may (note "may") be requested.

Want to buy a boat? Typically no test sail available, 10% deposit required in a non-protected broker's client account before lift out, survey, lift in and sea trial, by which time a buyer will be several hundred or several thousand out of pocket and has to hope the broker will return the deposit if it is decided not to proceed. What a great disincentive to buy a secondhand boat!

Perhaps we could sell your house for you.

I propose that anyone who claims to be interested in buying your house be allowed a four hour "test live in."
This can involve testing all the functions of living in your house such as cooking, sleeping in your beds, using the loo and bathroom, watching the TV and letting the kids play in the garden. If they have never lived in a three bed semi before they will need to do this to get the feel of it.

You will not have use of your house during these times and it will all be at your expense. There will be no agreement with your insurance company so if your TV gets broken or the drinks cabinet is pilfered it will be down to you. (We don't want to offer a disincentive you see)

These test "live ins" will happen mostly at the weekends so we will need to do one on Saturday morning followed by one on Saturday afternoon and the same again on Sunday, we should be able to fit in four "test live ins" each week-end. You will have to make sure the house is cleaned, the bedding washed and the fridge re-stocked between each live in, again this will be at your expense as we want to offer every incentive. The cost for you to stay elsewhere or use someones else's garden or house whilst yours is being tested is down to you.

Now the garage will also need to be tested but please understand if the tester misjudges the width and damages your garage or car because it is unfamiliar to him you will have no recourse (we don't take deposits - it would be a disincentive )

Similarly if the tester trips over your cat and falls down your stairs and is injured, or whilst testing the garage/car maneuver runs over the neighbor, you will have to sort all that out.

We also don't like to have any sort of agreement up front regarding the sale price so you may find that although you go to a lot of effort, time and expense (as well as exposing yourself and property to a fair degree of risk) it is highly likely that you may receive a totally unacceptable offer to you after the "test live in" has been completed. Never mind.

Bank holidays and sunny days will naturally increase demand for the test live ins so please make appropriate arrangements to have extra staff or yourself on hand ( we can't pay anyone though)

You may find that after the test live ins a very large number of the testers will, despite everything being perfect, simply leave with a cheery "I'll be in touch" and then cease all communication. The phone will not be answered and emails will not be returned. This is because they have tested your three bed semi and deemed it suitable and are now on a plane to buy a similar one (ex-rental) in Croatia.


You could of course do as those professional yacht brokers do and have deposits in written in trust client accounts to protect your £200k interest or legal agreements and/or pre-agreed and acceptable offers in place first. But really -what a bunch of nutters! They are more interested in not selling anything!! (The don't get paid until they do sell something and are paying out for all the marketing and staff costs so I have never quite worked that bit out but never mind, I read it on a forum somewhere so it must be true.) I have even heard some of them suggest a professional survey too. You couldn't make it up.

 

[Bru]

Perhaps we could sell your house for you. <snip> You couldn't make it up.

Brilliant! Made I chuckle mightily

 

[maby]

Brilliant! Made I chuckle mightily

Except that it ignores a very fundamental difference between a boat and a house. Houses are static things - they are not designed to move and you can get a pretty good idea of its suitability for you on the strength of a relatively short visit. We didn't have a "four hour test live-in" in the sense that John rather flippantly describes before buying our house, but we probably had spent more than four hours in the house before we finally made an irrevokable commitment to buy.

Boats are designed to move - and they have very different characteristics. They are also very expensive and often more difficult to sell than houses. If you look beyond the current range of mass produced AWBs, many of them are manufactured in very small numbers and a buyer's chances to try out the handling characteristics relying on friends or even charter companies are very limited. Of course you cannot tell everything about a boat on the strength of an hour or two in coastal waters, but you can gain a good impression of the ergonomics of the controls and cockpit layout - particularly important if you are going to be sailing single handed or short handed.

We've bought four boats over the last ten years. The first was bought on eBay for a few hundred pounds and was so cheap that I paid up before I had seen it at all. The second was bought through a broker, costing about £25k - we requested a trial sail which was granted without question and completed the sale within a couple of weeks.

We then started the process of buying a relatively new AWB that had an asking price of about £60k. We visited it, were shown around by the broker, liked it and put down a deposit conditional on sea trial and survey. The owner organised the sea trial without question and we liked the boat but became suspicious of some aspects of its condition. The survey confirmed that there were potential issues and we were unable to arrive at a mutually acceptable resolution with the owner, so we pulled out. That boat was still on the market more than a year later, so we were not alone in our concerns. (Before anyone asks, we didn't try to negotiate a price reduction, we asked the owner to get the defects professionally repaired before completing the sale)

Between surveys, lifts and travelling, that failed attempt cost us over a thousand and we became worried about second hand purchases, so numbers three and four have been purchased new from main dealers. In each case, we requested a sea trial following payment of a deposit and it was granted without question. In one case it was the dealer's stock boat and in the other, he organised something with the owner of an identical boat that he had recently sold. We have subsequently helped out the supplier of our current boat by allowing prospective purchasers to visit - not yet been asked to actually take anyone out, but I would have no hesitation in doing so provided they fitted in with our plans.

 

[Tranona]

All you are doing is describing what works for you - and actually no different from the "normal" process that most people go through. The sticking point is the expectation of trying out somebody else's private property without giving a strong indication that you would buy it if it is satisfactory. Your experience of pulling out after the survey and seatrial illustrates that exactly how the process should work.

Comparing with buying from a dealer is just not valid. The dealer is working on a gross profit margin of between 15 and 25%, which is necessary because he has to finance the boat, pay to keep it stored and most importantly has to provide consumer protection. However he will still be looking for some strong indication of intention to buy before going to the expense of organising a test sail - just as you described. If that is the sort of deal you want, and you can afford it, then buy from a dealer, which usually means buying new, and then carrying the drop in value of your boat that usually occurs as soon as you buy it.

Buying a used boat direct from the owner avoids all those additional costs and in return you get a lower price, but a loss of some of the benefits, particularly consumer protection. The "market" has clearly decided that the private sale/purchase model is the most appropriate one - with or without an intermediary. The intermediary exists because he performs a useful economic function for the seller in agreeing to do all the promotion, selling and transfer on his behalf. If he is successful at that he gets paid, but gets nothing if he is not. Seems buyers and sellers prefer to have overall transaction costs in a deal of 5-7% (shared between buyer and seller) rather than a middleman dealer taking 2 or three times that amount out of the transaction.

 

[maby]

I don't think we are disagreeing significantly, Tranona. I've never asked for a test sail on any boat, second hand or new, without being willing to make a significant commitment. I've never sold a boat worth more than £500 on the private market - always traded in against the new boat. If I were selling on the private market, I would be sympathetic to requests for a test sail - even if I were not particularly optimistic about the sale completing successfully. We sail our boat almost every week all year round and often invite virtual strangers along, so there's no particular downside to having a potential (albeit improbable) purchaser along!

 

[prv]

We sail our boat almost every week all year round and often invite virtual strangers along, so there's no particular downside to having a potential (albeit improbable) purchaser along!

But do you understand that that doesn't apply to everyone?

Pete

 

[maby]

But do you understand that that doesn't apply to everyone?

Pete

Well indeed - and there is no law that requires sellers to offer a test sail (or whatever other name you choose to give it) but I don't think it is unreasonable for a prospective purchaser to insist on one and there are so many boats on the market that they can afford to walk away and look for someone that is prepared to go along with it. Ultimately, the seller has more to lose than the buyer by not cooperating - storing a boat that you no longer want is expensive - at least hundreds of pounds a year even if you just have it on a buoy and potentially many thousands if you have it in a south coast marina.

 

[jonic]

Well indeed - and there is no law that requires sellers to offer a test sail (or whatever other name you choose to give it) but I don't think it is unreasonable for a prospective purchaser to insist on one .

Not at all, but not unreasonable for the seller to have some form of agreement for the selling price and a deposit beforehand.

The system does work and works well.

The primary function is to protect the owner and to weed out the timewasters (who have no intention whatsoever of buying that boat - and they are legion)

The owner can also agree to a test sail with no agreement or commitment if he so wishes, but they get pretty bored after the third fruitless one and a 200 mile round trip each time in the car to get there

 

[Tranona]

But do you understand that that doesn't apply to everyone?

Pete

That's the whole point, is it not? Peoples' circumstances (and requirements) are different. Many people who use brokers do so because they are not close to their boat - in the case that started this thread the owner lives abroad and organising a test sail (leaving aside the problems John writes about) is often difficult or expensive (lifting in, arranging a skipper etc etc). So not unreasonable to only do it if it really is the only thing holding back a sale. If people like John are to be believed this seems to rarely be the case.

l

 

[SailorBill]

Do you really think that sellers would not offer test sails if they were practical and effective in selling the boat? They are not offered (leaving aside the practicalities) as a matter of course because they have been shown not to be effective.

Really? How and when were test sails shown not to be effective? How do you define "not effective"?

BTW money in a client account is protected provided the client account is set up correctly in accordance with the YDSA and BMF requirements of their members.

Please explain how this client account protection works?

If a broker uses money in the correctly-set-up-in-accordance-with-YDSA-and-BMF-requirements client account for any reason other than the purpose intended by the buyer of a boat, and the broker goes bust, is there a mechanism in place to ensure the buyer gets his/her money back? If so, please explain this mechanism in practical terms in order for me to understand how effective it is.

 

[SailorBill]

Perhaps we could sell your house for you.

If I instructed you as a broker to sell my house on my behalf, how would the money from the sale of my house be protected? Do you have any kind of financial compensation scheme in operation, such as the one used by solicitors?

I propose that anyone who claims to be interested in buying your house be allowed a four hour "test live in."...

I have bought and sold several houses. I once sold a house in quite a slow market. I approached the estate agent and arranged for an open viewing weekend, which was promoted in the property sections of the local newspapers. One of the viewings that weekend lead to a second viewing and they subsequently bought the house. I have never heard of anyone doing a "test live in" in a house and no one as far as I am aware has suggested doing that on a boat. The difference is, boats move, and one boat may handle very differently to another. It is often not possible to know exactly how a boat will feel under way, especially for the inexperienced. It is easy to see that insisting on a 10% deposit before a test sail/sea trial (call it what you will) will frighten some people away, especially the inexperienced. But the inexperienced may have just as big a boat budget as the experienced. It's just that the inexperienced may need a little extra help and hand-holding before they can be coaxed into opening their wallet. Dealers selling new boats with the option of a test sail may well seem like a better and safer option to some, as noted in post #24 by maby. With a little extra coaxing and a test sail those same buyers may have bought a secondhand boat through a broker. Food for thought, maybe?

If they have never lived in a three bed semi before they will need to do this to get the feel of it.

If the market you're in is three bed semis then you won't be able to help me

We also don't like to have any sort of agreement up front regarding the sale price so you may find that although you go to a lot of effort, time and expense (as well as exposing yourself and property to a fair degree of risk) it is highly likely that you may receive a totally unacceptable offer to you after the "test live in" has been completed. Never mind.

Ignoring the daft "test live in" suggestion, when you're selling something you're always taking a risk that a potential buyer is a time waster. That's sales for ya. If you want guaranteed sales then become a drug dealer, not a high end optional purchase boat broker. You're trying to make an uncertain world a dead cert, and IMHO it frightens some people off. There have been many threads here and on other forums all in a similar vain. You and Tranona don't seem to want to listen and keep beating the same old drum. I think you are doing yourselves a disservice.

Bank holidays and sunny days will naturally increase demand...

Naturally. So you should be available to meet that demand. If you're not prepared to then you're in the wrong game.

You may find that after the test live ins a very large number of the testers will, despite everything being perfect, simply leave with a cheery "I'll be in touch" and then cease all communication. The phone will not be answered and emails will not be returned. This is because they have tested your three bed semi and deemed it suitable and are now on a plane to buy a similar one (ex-rental) in Croatia.

So make sure the one you're selling is the better option.

You could of course do as those professional yacht brokers do and have deposits in written in trust client accounts to protect your £200k interest

See my questions to Tranona and the first part of this post with regard to what level of protection and compensation these client accounts of yours have.

 

[Tranona]

Really? How and when were test sails shown not to be effective? How do you define "not effective"?


Please explain how this client account protection works?

If a broker uses money in the correctly-set-up-in-accordance-with-YDSA-and-BMF-requirements client account for any reason other than the purpose intended by the buyer of a boat, and the broker goes bust, is there a mechanism in place to ensure the buyer gets his/her money back? If so, please explain this mechanism in practical terms in order for me to understand how effective it is.

Please read what the professionals say. Effectiveness for the seller is making a difference between selling his boat and not selling it. Few people ask for test sails on secondhand boats, and their experience suggests it makes little difference to whether a person buys a particular boat or not. They also say that when they do give test sails, it rarely results in a sale. However there is nothing to stop an owner offering to take somebody out in their boat if they believe it will make the difference - that is the negotiations have got to the stage where the buyer seems to want the boat but would like a sail to clinch the deal. The objection to test sails is towards those (as in the original post) who have not even seen the boat and want a promise of a test sail before they even go to look at it. That is a long way from a deal nearly made - as I suggested at that point he is no different from any other interested enquirer at that point.

Suggest you go onto the YDSA website and read the detailed explanation about how client accounts work. They are set up as trusts where the money always belongs to the person placing it in the trust and is not available to the broker except for use within the terms of the trust which might, for example include paying for the liftout for survey which is at the buyer's expense and therefore would come from the deposit. It is illegal for the broker to use the money for his own or business purposes or to pledge it to others, for example as security for a loan. It is never his money so if he goes bust his creditors do not have any right to the money in the trust account. So, it is as secure legally as possible and as long as the bank holding the funds is secure.

Since this type of client account has been in operation there does not seem to have been any cases of brokers stealing from clients accounts, so there does not seem a need for any form of third party compensation scheme - unlike other so called professions where stealing from client accounts is a common occurrence such that a compensation scheme is necessary - and frequently used. Since there does not seem to be any reported cases of brokers stealing from client accounts one can only assume that the mechanism is effective. Just to put things into perspective compare the broker's client account method with a deposit that you place with a car dealer. You have no security as you are then an unsecured creditor until the contract is complete and you have your car. So if he goes bust before that you will probably lose your money - and not get your car.

If you don't like using a broker's client account there is nothing to stop you using a third party such as a solicitor to hold your deposit and manage the financial transaction. However as suggested above that might increase the chances of your money being stolen (based on the record of that profession in general) and will incur additional transaction costs. Sounds like a bad deal - lower level of security, although with a fallback compensation scheme, and higher costs. Your choice.

As has been said many times, how can the system be fundamentally flawed when large numbers of transactions take place successfully every year without any problems. If only buying and selling houses, having building work done, buying furniture and household goods, or even Christmas hampers were so trouble free! All of those activities have a steady stream of disputes, lost deposits and unfulfilled commitments that affect thousands of consumers every year. There are undoubtedly problems in buying and selling boats, and disputes between buyers and sellers, but they rarely involve the use of client accounts. Where there have been failures (well, actually one failure but not involving brokerage boats) in the past changes have been made to the way client accounts are structured and managed to avoid those problems. Where buyers have lost money it is usually because client accounts have NOT been used so the buyer ends up as an unsecured creditor in a failed company.

 

[SailorBill]

Please read what the professionals say. Effectiveness for the seller is making a difference between selling his boat and not selling it. Few people ask for test sails on secondhand boats, and their experience suggests it makes little difference to whether a person buys a particular boat or not. They also say that when they do give test sails, it rarely results in a sale. However there is nothing to stop an owner offering to take somebody out in their boat if they believe it will make the difference - that is the negotiations have got to the stage where the buyer seems to want the boat but would like a sail to clinch the deal. The objection to test sails is towards those (as in the original post) who have not even seen the boat and want a promise of a test sail before they even go to look at it. That is a long way from a deal nearly made - as I suggested at that point he is no different from any other interested enquirer at that point.

So that is your response to my question: "How and when were test sails shown not to be effective? How do you define "not effective"?"

Your 'evidence' in a nutshell, is nothing more than anecdotal, at best. Thought as much. Thanks for clarifying

Suggest you go onto the YDSA website and read the detailed explanation about how client accounts work. They are set up as trusts where the money always belongs to the person placing it in the trust and is not available to the broker except for use within the terms of the trust which might, for example include paying for the liftout for survey which is at the buyer's expense and therefore would come from the deposit. It is illegal for the broker to use the money for his own or business purposes or to pledge it to others, for example as security for a loan. It is never his money so if he goes bust his creditors do not have any right to the money in the trust account. So, it is as secure legally as possible and as long as the bank holding the funds is secure.

Since this type of client account has been in operation there does not seem to have been any cases of brokers stealing from clients accounts, so there does not seem a need for any form of third party compensation scheme - unlike other so called professions where stealing from client accounts is a common occurrence such that a compensation scheme is necessary - and frequently used. Since there does not seem to be any reported cases of brokers stealing from client accounts one can only assume that the mechanism is effective. Just to put things into perspective compare the broker's client account method with a deposit that you place with a car dealer. You have no security as you are then an unsecured creditor until the contract is complete and you have your car. So if he goes bust before that you will probably lose your money - and not get your car.

If you don't like using a broker's client account there is nothing to stop you using a third party such as a solicitor to hold your deposit and manage the financial transaction. However as suggested above that might increase the chances of your money being stolen (based on the record of that profession in general) and will incur additional transaction costs. Sounds like a bad deal - lower level of security, although with a fallback compensation scheme, and higher costs. Your choice.

As has been said many times, how can the system be fundamentally flawed when large numbers of transactions take place successfully every year without any problems. If only buying and selling houses, having building work done, buying furniture and household goods, or even Christmas hampers were so trouble free! All of those activities have a steady stream of disputes, lost deposits and unfulfilled commitments that affect thousands of consumers every year. There are undoubtedly problems in buying and selling boats, and disputes between buyers and sellers, but they rarely involve the use of client accounts. Where there have been failures (well, actually one failure but not involving brokerage boats) in the past changes have been made to the way client accounts are structured and managed to avoid those problems. Where buyers have lost money it is usually because client accounts have NOT been used so the buyer ends up as an unsecured creditor in a failed company.

I'm sorry Tranona but your stance on this is laughable.

Firstly, you are suggesting that a broker's client account written in trust is actually worth something. The reality is it ain't worth diddly squat! It offers no protection whatsoever against a dodgy broker misappropriating a client's money. The client would be faced with a long and expensive legal battle to try to recover his/her money with absolutely no guarantee of recovering a single penny. You know that as well as I do and you are being disingenuous at best to suggest otherwise.

You go on to say that because it hasn't happened yet* there is no need for a compensation scheme! You really cannot be serious! You even suggest that boat brokers are more trustworthy than solicitors. You really are on a different planet. Absolutely anyone can set up as a boat broker. It is an unregulated industry. If a dodgy solicitor misappropriates a client's money held in a client account then the client will get their money back via their compensation scheme. There is no such level of protection with a broker's client account.

* Actually I think it has happened. There was a thread on this forum a while ago but you were completely dismissive and would not accept the examples of wrongdoing presented. And no, I'm not getting dealers and brokers mixed up.

I am deeply suspicious of your continued hard line stance on this issue. I have challenged you before to reveal your connections past or present with the marine industry but you claim to have none. Why then do you argue ferociously to support the status quo with broker's client accounts? I am not convinced it is out of some warped sense of knowing what's best for us, the clients. I'm very sorry to say this but I attach no credibility to your posts on this issue.

 

[Tranona]

The difference is, boats move, and one boat may handle very differently to another. It is often not possible to know exactly how a boat will feel under way, especially for the inexperienced. It is easy to see that insisting on a 10% deposit before a test sail/sea trial (call it what you will) will frighten some people away, especially the inexperienced. But the inexperienced may have just as big a boat budget as the experienced. It's just that the inexperienced may need a little extra help and hand-holding before they can be coaxed into opening their wallet. Dealers selling new boats with the option of a test sail may well seem like a better and safer option to some, as noted in post #24 by maby. With a little extra coaxing and a test sail those same buyers may have bought a secondhand boat through a broker. Food for thought, maybe?

That is your opinion - but you seem intent on implying that sellers are not responsive to the needs of potential buyers. Nobody has ever said that there is not a place for test sails, just that the experience of people that do this for a living suggests that it is not a big factor in getting a sale. What you are describing in that paragraph is hopefully what any decent broker does anyway - finding out what the potential purchaser is looking for and seeing how he can meet his needs. However you also seem to be saying that trying a boat comes early in the process when others are saying it does not, based on their experience. You don't seem clear about how a test sail will help the decision. Difficult to see what you can find out about a boat in the equivalent of spin round the block. How can you possibly tell whether it is good, bad, better or worse than other boats? All you can find out is what it does in the particular conditions you go out in. So pretty hopeless if you are looking for a bluewater boat and you get a calm day with little wind and no sea or looking for a floating holiday home for the Med and your test day its blowing a force 6 and peeing with rain.

People get into sailing, get their experience, make decisions about what sort of boat they want to buy etc in many different ways. A private seller is not really interested in that and it is unreasonable to expect him to offer his property to somebody to try out to see if he likes it unless that person has shown that he is a serious potential buyer. Difficult for the inexperienced and those who don't know what they want but an individual seller has only one boat to sell and making his boat available to somebody who does not know whether he wants it or not is of little interest to him. If a person is genuinely inexperienced but clearly has the money and the intention to buy, any decent broker would spend time with him and try to help him. Of course he only has the boats that are on his books, but it is quite possible to engage a broker (or other professional) to help in the search. This is very common in the US and perhaps ought to be more common here in just the same way as house finders are. However most buyers seem to be happy to do their searching themselves.

If you moved to a dealer model where all boats were available for anybody to try, transaction costs would rise substantially - as I indicated in an earlier post. This is a very different model from our low cost method of direct transfers between private individuals which most buyers and sellers seem to prefer - along with its constraints. However, even this would not meet what you seem to want. Dealers would still seek to qualify prospects so they don't waste their time on people who don't know what they want.

Don't suppose we will agree. You see current practices as a possible constraint on sales. Others don't believe that they are based on their experience and don't see the value in the additional costs (in the widest sense) in changing the current process - which in many ways has not changed but evolved, particularly reflecting the opening up of markets through improved communications. The basic structure does, however, seem pretty robust

 

[maby]

I certainly would like to see the option of a dealership model - but I do appreciate that this is very problematic due to the significant investment it would represent.

 

[Tranona]

So that is your response to my question: "How and when were test sails shown not to be effective? How do you define "not effective"?"

Your 'evidence' in a nutshell, is nothing more than anecdotal, at best. Thought as much. Thanks for clarifying



I'm sorry Tranona but your stance on this is laughable.

Firstly, you are suggesting that a broker's client account written in trust is actually worth something. The reality is it ain't worth diddly squat! It offers no protection whatsoever against a dodgy broker misappropriating a client's money. The client would be faced with a long and expensive legal battle to try to recover his/her money with absolutely no guarantee of recovering a single penny. You know that as well as I do and you are being disingenuous at best to suggest otherwise.

You go on to say that because it hasn't happened yet* there is no need for a compensation scheme! You really cannot be serious! You even suggest that boat brokers are more trustworthy than solicitors. You really are on a different planet. Absolutely anyone can set up as a boat broker. It is an unregulated industry. If a dodgy solicitor misappropriates a client's money held in a client account then the client will get their money back via their compensation scheme. There is no such level of protection with a broker's client account.

* Actually I think it has happened. There was a thread on this forum a while ago but you were completely dismissive and would not accept the examples of wrongdoing presented. And no, I'm not getting dealers and brokers mixed up.

I am deeply suspicious of your continued hard line stance on this issue. I have challenged you before to reveal your connections past or present with the marine industry but you claim to have none. Why then do you argue ferociously to support the status quo with broker's client accounts? I am not convinced it is out of some warped sense of knowing what's best for us, the clients. I'm very sorry to say this but I attach no credibility to your posts on this issue.

No more anecdotal than your personal opinion that giving people free reign to try other peoples' private property will help that private person sell his boat.

I have no connection with the "trade" - no personal or financial interest in any business involved in buying or selling boats. Just an aversion to people who see problems where they do not exist. Please show me ONE example of a broker who has stolen clients' money. And, yes, on the evidence solicitors are less trustworthy as there are regular cases of them stealing clients' money. So regular that they need to have insurance to offload their responsibility onto a third party. It is simply not true that brokers are "unregulated". They are subject to the law of the land which makes it illegal for them to steal other peoples' money. What they don't have is specific regulation such as that found necessary for other activities. "Regulation" is only required when the general law is insufficient to deal with wrongdoing.

If you look at the case that did involve client accounts you will find that it was not brokerage clients that lost money but involved transactions being carried out by a DEALER who did not place the money correctly into the client account. Where the funds were handled correctly there was not a problem. There are simple checks you can make to ensure that your money is correctly handled.

I wonder what your motive is for constantly suggesting that brokers are crooks when you have absolutely no evidence that this is so. What is your interest and motivation? If you don't like the way business is done, then don't get involved.

Fail to see why you should consider my stance "hard line" when it is no different from that of others and is supported by the law and the courts. Just because you don't seem to like it does not make it wrong. Very happy to reconsider IF there is evidence that what you suggest might happen does actually happen. However every time I ask people like you for your evidence there is a deafening silence. So I am afraid I find what you say unconvincing.

 

[jonic]

Tranona really is spelling this out well and there is little I can add.

However here is the real world reality of client accounts, not the imagined one that so many posts on here stem from.

A correctly administered written in trust BROKER account entirely protects the money in the event of the brokerage going bust.

It does not form part of the business. It is exactly the same as a solicitor or accountants client account.

I repeat, if the business goes bust the money is the owners without question. It is written in trust, the broker can't have it, the bank can't have it, the administrator can't have it, the lawyers can't have it and the tax man can't have it


If the bank employee steals it or if the broker steals it that is illegal and they will be prosecuted.


Google "solicitor stealing client money" and "yacht broker stealing client money" and compare. (Really do it)

Solicitors have had to have a third party insurance/compensation scheme because of all those pages.


Yacht broker's banks hold small 10% deposits for short periods of time followed by the balance payment for literally 24 or 48 hours.

They do not have accounts awash with large sums of money for long periods.

That is why you rarely, if ever at all, hear of them attempting to steal client money.

It's the clients money, it would mean jail if they stole it. It's entirely regulated by the laws of fraud and theft.


1000's and 1000's of transactions happen every year without any issue.

Unless you read this forum of course.

Ihey only way the money is at risk is from outright theft just as it would be from your lawyer, accountant, bank, stockbroker or anyone else you pay money to.

Some professions have such an awful record of theft they have to insure against it.

That has not happened in the yacht broking world because instances of theft have been virtually non-existent.



Millions and Millions go through my client account with 100% safety. It''s written in trust at Lloyds Bank and I don't receive the money. It is paid directly into the account by the client. It is only released to the vendor once the purchaser has good title. That is it's purpose. It protects the purchaser from not receiving good title. His money is safe until that moment.

I would suspect there would be far more risk in a private sale. You pay your money over to a stranger only to find - sometimes years later there is a loan still recorded against the boat or the VAT papers are not the VAT papers or the title documents HAD THE CLAUSE PASSING TITLE CROSSED OUT! That I have seen, many times.


You have to look at this question the right way and there are really two questions.


If the broker steals my money is it safe?

No. He has stolen it and you would have to sue.

(But due to the circumstances of how and why the money is handled, this is virtually non-existent.)

Avoid brokers who are not accredited to an association, do not have proper legal contracts and do not have written in trust client accounts. Or any you feel may be thieves.


If the brokerage goes bust is my money safe?

Yes. If there is a written in trust client account.

Always use an accredited broker, always ask to the see the trust agreement from the bank, always only pay money into that account yourself - preferably by electronic transfer - and always have a proper written legal listing agreement and/or sale and purchase contract.

 

[maby]

Can't speak for others, but I've never been particularly concerned about money in a broker's client account - can't say the same about a dealer or builder.

 

[jonic]

Update

Just checked my professional indemnity insurance and it covers legal liability by fraud by an employee provided the insured has received no benefit from the fraud.