One day insurance transfer for trial sail

[Tranona]

I think, John, you are wasting your breath with Sailorbill. There seems to be some deep seated issue there that does not respond to logic, reasoned argument or evidence. He seems to prefer to construct his own account of what goes on and reject any view that is based on what actually happens in the real world. Difficult to understand for someone like me who has spent a lifetime in an environment where those three things are highly valued. Thank goodness our law and regulators mostly value the same things.

 

[grumpy_o_g]

In the financial sector the practice of selling something you don't own is known as "shorting". Doing it when you don't have security to back up the sale is known as "naked shorting". Shorting, especially naked shorting, is reckoned to be one of the major causes of the recent financial crisis - in fact many countries, including the UK and US banned it in 2008. Naked shorting is still banned in many counties and it's very heavily regulated in just about all others. It's seems it's OK when yachtbrokers do it though.

Mind you, in the financial sector we call people like Sailorbill things like "potential customers", "missed revenue" and "lost business" so what do we know.

 

[Tempus]

In the financial sector the practice of selling something you don't own is known as "shorting". Doing it when you don't have security to back up the sale is known as "naked shorting". Shorting, especially naked shorting, is reckoned to be one of the major causes of the recent financial crisis - in fact many countries, including the UK and US banned it in 2008. Naked shorting is still banned in many counties and it's very heavily regulated in just about all others. It's seems it's OK when yachtbrokers do it though.

Mind you, in the financial sector we call people like Sailorbill things like "potential customers", "missed revenue" and "lost business" so what do we know.

As a long-standing forum-lurker, I've resisted responding to many things over the years, but such errant nonsense has driven me to respond.

In the financial sector, people who sell things on behalf of other people are called.... BROKERS!

Whilst I don't want to get into banker bashing, selling securities etc is a very different proposition from selling boats, and many in the financial service industry see customers as "marks", or indeed as "revenue opportunities", rather than people to be helped to the correct decision. (see recent Goldman Sachs trials)

I'd quote a visitor to New York in the early 20c. Admiring the yachts of the bankers and brokers he asked, "And where are the customers yachts?" Of course the customers, who'd followed their advice, could not afford yachts - not much has changed, and quoting the brilliance of the finance industry in the context both of this thread and the last 5 years seems over optimistic.


To return to the thread. We sold our Hallberg Rassy in April, she was with a well known broker, on hard standing at a major marina, deep cleaned, re-varnished where needed, anti-fouled and ready to go. Under no circumstances would I have craned her in and given a possible purchaser a test sail. However when she sold (within 2 weeks) the buyer asked for the sale to be conditional on an engine trial. We'd signed the contract and accepted a deposit subject to this. Such a request was very easy to accommodate, and the test went ahead, followed 2 days afterwards by the transfer of funds. I accept that HR's are easier to sell than many, but it seems that many of the posts here are not considering the real-life practicalities of what's being asked.

 

[Tranona]

In the financial sector the practice of selling something you don't own is known as "shorting". Doing it when you don't have security to back up the sale is known as "naked shorting". Shorting, especially naked shorting, is reckoned to be one of the major causes of the recent financial crisis - in fact many countries, including the UK and US banned it in 2008. Naked shorting is still banned in many counties and it's very heavily regulated in just about all others. It's seems it's OK when yachtbrokers do it though.

Mind you, in the financial sector we call people like Sailorbill things like "potential customers", "missed revenue" and "lost business" so what do we know.

Could you please explain how any of this is relevant to yacht brokers?

 

[jonic]

As a long-standing forum-lurker, I've resisted responding to many things over the years, but such errant nonsense has driven me to respond.

In the financial sector, people who sell things on behalf of other people are called.... BROKERS!

Whilst I don't want to get into banker bashing, selling securities etc is a very different proposition from selling boats, and many in the financial service industry see customers as "marks", or indeed as "revenue opportunities", rather than people to be helped to the correct decision. (see recent Goldman Sachs trials)

I'd quote a visitor to New York in the early 20c. Admiring the yachts of the bankers and brokers he asked, "And where are the customers yachts?" Of course the customers, who'd followed their advice, could not afford yachts - not much has changed, and quoting the brilliance of the finance industry in the context both of this thread and the last 5 years seems over optimistic.


To return to the thread. We sold our Hallberg Rassy in April, she was with a well known broker, on hard standing at a major marina, deep cleaned, re-varnished where needed, anti-fouled and ready to go. Under no circumstances would I have craned her in and given a possible purchaser a test sail. However when she sold (within 2 weeks) the buyer asked for the sale to be conditional on an engine trial. We'd signed the contract and accepted a deposit subject to this. Such a request was very easy to accommodate, and the test went ahead, followed 2 days afterwards by the transfer of funds. I accept that HR's are easier to sell than many, but it seems that many of the posts here are not considering the real-life practicalities of what's being asked.

You can't beat the real world.

 

[jonic]

Could you please explain how any of this is relevant to yacht brokers?

It isn't.

Probably the most ridiculous comparison I have ever heard.

Shorting stocks is:

"When you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money."

 

[Tranona]

Yes, know what shorting is, having taught finance for 25 years which is why I was asking what the connection was. Probably the product of a fertile imagination or maybe ignorance!

But maybe I have missed something.

 

[jonic]

But maybe I have missed something.

If you have it's well hidden

 

[grumpy_o_g]

It's certainly no more obscure than comparing someone living in a house and sleeping in the beds with a test sail. It was a reference to the fact that a broker takes the money for a yacht but he doesn't actually have the title of the yacht to transfer. I have no doubt you both have an outstanding knowledge of yachts and are are highly competent at what you do but the unwillingness to listen to your customer base is surprising. I can only assume you have a particular niche and are happy in it. The current market for sail and motor would suggest that that isn't applicable across the board.

 

[Tranona]

It's certainly no more obscure than comparing someone living in a house and sleeping in the beds with a test sail. It was a reference to the fact that a broker takes the money for a yacht but he doesn't actually have the title of the yacht to transfer. I have no doubt you both have an outstanding knowledge of yachts and are are highly competent at what you do but the unwillingness to listen to your customer base is surprising. I can only assume you have a particular niche and are happy in it. The current market for sail and motor would suggest that that isn't applicable across the board.

But a broker does not take any money for the boat. The transaction is between the buyer and the seller. When he is holding funds he is acting as a trustee. When he is finding the buyer and doing the paperwork is is an agent - that is a personal representative of the seller, who pays for the service. He never has any financial interest in the boat. So that is why I had (and still have) difficult in understanding the point you are trying to make. He is not speculating in something that does not exist, he is facilitating two individuals in a commercial transaction.

Not sure either what it is that is "not applicable". The same choices are open to buyers and sellers as there have always been. sell your boat yourself, engage a broker to handle the sale for you or sell it to a dealer who buys it on his own account or takes it in part payment for a boat he owns. So don't see where "not listening to the customer" comes from. There are always people who wish there was something different to what is on offer, just as there are always sellers who might want to try something different - sometimes they work and sometimes they don't. Those that endure tend to be those that work and brokerages in general seem pretty enduring.

 

[jonic]

I have no doubt you both have an outstanding knowledge of yachts and are are highly competent at what you do but the unwillingness to listen to your customer base is surprising.

You are completely wrong and have no idea about my customer base.

I listen to them very carefully.

Here is what they say:

http://www.jryachts.com/category/testimonials

I have been brokering high quality yachts for a long time and listen very carefully to their owners and buyers.

I know what really works and I know what flat out doesn't which is why sales are up 57% on last year.

The client account is 100% bonafide and written in trust at a major bank.

Virtually no one asks for or requires a "test sail" as described on here.

If they do it is nearly always part of a contractual sea trial in conjunction with a professional survey.

If an owner wanted to give a no commitment, or no agreed offer, test sail they are completely at liberty to do so.

I can think of two in the last three years, both were a total waste of time and money.

Those that genuinely do want a sea trial have no problem having an agreed offer, a contract and a deposit in place first and fully understand why an owner will want that with his £250k yacht. Usually their surveyor is on board too but even then I would say it happens less than 20 % of the time.

 

[JumbleDuck]

But a broker does not take any money for the boat. The transaction is between the buyer and the seller.

Why doesn't the buyer pay the seller direct? I can see advantages in using a client account in Ye Olde Days, but with modern electronic banking systems it all seems a bit round the houses.

 

[jonic]

Why doesn't the buyer pay the seller direct? I can see advantages in using a client account in Ye Olde Days, but with modern electronic banking systems it all seems a bit round the houses.

But that's the point.

The broker is a third party who has drawn up the legal sale and purchase agreement of the yacht and who will administer and record the exchange.

The trust account's purpose is to operate in a similar way to an escrow account. Both parties (seller and purchaser) have signed the legal sale and purchase agreement and the funds are only released once both parties have completed their contractual obligations. The seller must provide the broker with the correct (and original) legal title and VAT papers before the Bill of Sale is witnessed and dated, and the purchaser must provide the funds in full and as cleared funds - either his own or from his finance house. From there the broker makes disbursements to the yard or marina, and settles any outstanding finance or marine mortgage with the finance house. The balance funds are then released to the seller as the title documents are dated and witnessed and simultaneously released to the purchaser.

Its is a similar process as when a conveyancing solicitor completes on a house purchase.

And it is all usually completed via electronic funds transfer with a full audit/paper trail.

 

[Tranona]

Why doesn't the buyer pay the seller direct? I can see advantages in using a client account in Ye Olde Days, but with modern electronic banking systems it all seems a bit round the houses.

No reason at all why that can't be done, and often is. However, as with a house purchase it has to be simultaneous with the transfer of title so you need a mechanism that ensures the title and possession is clear as the funds are transferred. Much easier for the broker as a third party to do this, but could just as easily be done through a solicitor (at extra cost). He should then transfer the funds quickly from the trust account to the vendor. The concern is usually about the deposit which is held in trust on behalf of the buyer who might be concerned that this money is at risk for the period before all the conditions of the contract are met, which could be weeks. Also concerns about getting the money back if either party withdraws. However, no different from the way deposits in house purchases are dealt with.

 

[Tranona]

Glad I got that bit right! Maybe restores my credibility with SailorBill.... but maybe not!

 

[JumbleDuck]

The trust account's purpose is to operate in a similar way to an escrow account.

Sure, but I'm not convinced that that is necessary any more. It was a good idea in Ye Olde Days when it took ages to move money around, but not any more. Once the documents are verified whoever does the verification could say to the buyer "OK, go ahead", the buyer would ring his bank and say "Go ahead", the seller would ring her bank and be told "The money's here" and hand over the keys.

 

[maby]

No reason at all why that can't be done, and often is. However, as ...

Also concerns about getting the money back if either party withdraws. However, no different from the way deposits in house purchases are dealt with.

On the occasion of our failed attempt to buy a second hand boat, I was very pleased that the deposit was in the broker's escrow account - the seller got quite rude about it and I think I might have had some difficulty in getting the deposit back. As it was, I let the broker see the evidence of the problem and my email trail with the seller trying to agree a resolution and he (the broker) agreed that we had grounds for pulling out. We got the refund a few days later.

 

[jonic]

On the occasion of our failed attempt to buy a second hand boat, I was very pleased that the deposit was in the broker's escrow account - the seller got quite rude about it and I think I might have had some difficulty in getting the deposit back. As it was, I let the broker see the evidence of the problem and my email trail with the seller trying to agree a resolution and he (the broker) agreed that we had grounds for pulling out. We got the refund a few days later.

That is precisely why the system exists.

Dealing with total strangers all sounds fine until it goes wrong.

I have seen some horrible, horrible behavior from people when large sums of money and boats are involved. Having a clear written legal framework administered by a third party (who is also contractually bound, professionally qualified and properly insured) keeps that all out the picture.

 

[maby]

That is precisely why the system exists.

Dealing with total strangers all sounds fine until it goes wrong.

I have seen some horrible, horrible behavior from people when large sums of money and boats are involved. Having a clear written legal framework administered by a third party (who is also contractually bound, professionally qualified and properly insured) keeps that all out the picture.

You can be vulnerable to fraud no matter who you deal with and the broker can access the escrow account without the buyer's or seller's explicit permission but I'm more scared of the seller playing dirty tricks than the broker. I think the situation is substantially different when buying a new boat when the transaction takes so much longer to complete and very large sums of money are requested very early on. Under those circumstances there is a lot more scope for one of the parties going bankrupt before completion with all sorts of potential nasty impacts on the buyer - as has been seen in several cases recently. We refuse to pay anything more than a 10% deposit until delivery.

 

[JumbleDuck]

I have seen some horrible, horrible behavior from people when large sums of money and boats are involved. Having a clear written legal framework administered by a third party (who is also contractually bound, professionally qualified and properly insured) keeps that all out the picture.

As a matter of interest, what professional qualifications are required to be a yacht broker?