How to buy a used boat, part 2: Yacht Brokers
In part one, you set the parameters of your boat search. It’s almost time for you to start touring boats, but first you might want to engage some professional help: a yacht broker. I’ll tell you what a yacht broker does, help you decide if you want to (or can) use one, and offer some advice on how to choose one that’s right for you.
What do yacht brokers do? 🔗
A yacht broker is the boat equivalent of a real estate agent. Just as in real estate transactions, there are often two brokers involved: one for the seller and one for the buyer. A buyer’s broker helps you find the right boat, accompanies you to showings, and makes sure the transaction goes smoothly – the correct paperwork, escrow, etc. They do not guarantee anything about the boat. A seller’s broker does not own the boat; they just show it on behalf of the owner. (In contrast, a dealer often has ownership of the boat and can make guarantees, but dealers are usually only involved in the sale of new boats, not used.)
In the industry parlance, the seller’s broker is referred to as the listing broker, because they’re the one who lists the boat for sale. The buyer’s broker is referred to as the selling broker because they’re the one who shows (sells) the boat to the buyer. In my opinion, this is too confusing, but it’s good to know when it comes time to sign contracts. I won’t be using this terminology in this article or generally on the SailsGoal website.
It’s not required that both parties be represented by a broker. Here are some situations you might encounter:
- Both buyer and seller have their own brokers
- Neither buyer nor seller is represented by a broker (i.e. for sale by owner)
- Seller is represented by a broker, but buyer is not – the seller’s broker ends up serving both roles on the transaction as a sort of quasi-buyers-broker
Broker(s) are paid by the seller, and a private seller is vanishingly unlikely to agree to pay a buyer’s broker, so the “buyer has a broker, seller does not” situation is effectively impossible.
Yacht broker John Procter says, “Most anybody can benefit from a good broker. Where a broker can come in handy is knowing if you’re getting the right paperwork so you can register the boat. Understanding how titles work. Some of the nuts and bolts of the business. There’s an awful lot that can go wrong even on a relatively minor, small transaction. So having somebody that really understands how the government end of things works: registration process, documentation process, there’s a lot to know.”
Beyond knowing the paperwork pitfalls, an experienced broker can also point out key differences between boats you’re considering, and help you hone your search criteria. They can do some of the legwork for you to find boats that match your criteria. They might even know something of the history of individual boats if they’ve been in the market a long time – it’s common for the same broker to facilitate buying and selling the same boat many times over their career! They can also advise you on how much to offer for a boat.
I’ve used John as my broker three times (two purchases and one sale), and I can attest from experience that a broker has a lot to offer. When I started my search for my first boat, I was very inexperienced. I had taken two American Sailing Association classes and done a few daysails on small, rented boats. I knew I wanted a sailboat I could live aboard, and I’d read everything I could find on the subject. However, there are so many different boats on the market that I couldn’t form much of an idea of what I wanted. John helped me figure it out.
We looked at a lot of boats. In the beginning, I was worried too much about ugly upholstery or whether there was a refrigerator. John very correctly pointed out that those things can be easily corrected later, and I really needed to focus on the things that couldn’t change, or are very expensive to change – interior layouts, quality of the engine, sailing performance, soft spots in the deck. And he could often counsel on the specifics of how one boat compared to another. Especially for things like sailing performance or needed maintenance costs, I had no idea, so his advice was invaluable. When it came time to make an offer, John advised me on possible negotiating strategies and what he considered fair value. I think it’s especially important for a first-time boat buyer to have a broker on their side, but I also don’t think I’ll ever buy or sell a boat without one even though I’ve now been through the process before.
A buyer’s broker basically offers free advice and assistance, so it’s difficult to spot a disadvantage. But somebody has to pay them, right? Both of the brokers in a sale are paid by the seller, usually splitting a 10% commission. This can create a conflict of interest – your broker gets paid more if the sale price is higher, and they benefit more from making a sale than not making a sale. Some buyers think this makes brokers untrustworthy. That’s why it is very important to choose the right broker: one who will put your needs first.
John’s philosophy is clear: “In this business, if you’re doing a good job, you’re trying to help buyers make good matches, and that’s how you evaluate things. Was it a good match? Are they happy? Make people feel like you’ve addressed needs. Put them out of pain, not put them in pain.”
Your defense against the conflict of interest is that your broker needs you to be happy with the transaction. “Most [of my customers] are returning”, John says. “It’s what keeps [my business] going on a year to year basis.” If you’re not happy, you’re not going to use them again, and you’re not going to recommend them to your friends. Your goodwill is worth more to them than the small amount of extra cash they’d get from a bad sale.
There’s another Achilles’ heel of brokers when shopping for (or selling) less expensive boats: it isn’t feasible for them. Brokers sink a lot of time into each sale, and in many areas, it’s a seasonal business. 5% of the sale price, for lower-valued boats, is just not enough to sustain brokers’ businesses. As John says, “Sometimes, the economics of it rule the broker out. For example, there are a lot of brokers that don’t get involved in selling boats that are priced under $20k. And there are probably plenty that don’t do boats that are under $30k. They can’t afford to. So for those [buyers], it’s not that they don’t need a broker, there just often aren’t brokers interested in that business.” If you fall into this category, you might have to go brokerless.
How to choose the right yacht broker 🔗
“Word of mouth, I think, is a great way to do it. Having a friend or somebody you know who’s had a good experience is a great way to at least get started in selecting somebody,” John says. Ask your friends what they liked and didn’t like about their past brokers. But then you need to think about what is important to you, and how you’re different from your friends – what worked for them might not work for you, but it’s a great starting point.
Whether you’re moving to the next phase of selection with a friend’s recommendation or starting from scratch, the next step is to ensure the candidate broker is professionally certified. The most common certification is the Certified Professional Yacht Broker (CPYB). You can use the search tools on their website to find certified brokers in your area, or to check that one you have in mind is in fact certified. You may also want to check to see that the candidate broker is a member of a professional association such as Yacht Brokers Association of America (YBAA). This demonstrates a commitment to professionalism, but this isn’t a substitute for certification. In some locations, yacht brokers are required to be licensed by the government. If that’s the case in your area, you should check that your candidate broker is licensed.
Now you should interview the broker yourself. “Just call the broker and interview them. See if you get a good feel,” John says. “You can figure out during an interview that [he or she] has a sense for what it is you’re trying to buy and has his handle on the market a little bit and could be a knowledgeable asset; somebody who adds value to the whole situation.” You should talk about what type and size of boats you’re interested in. Some brokers specialize, and you want to make sure that you get one with knowledge of the right things. Additionally, during these conversations, you should try to get a sense of how you interact with the broker. Do you have compatible personalities? Is it a comfortable and easy conversation (or at least as comfortable as it can be with a stranger)?
If that all checks out, you’ve probably found yourself a good broker. Remember that this isn’t permanent. “You can make mistakes, with a broker. But you can always change brokers mid-stream if you’re not getting what you think you need to get. If he or she is not spending the time with you, or you just feel they’re not qualified to do what you’re asking them to,” John adds.
Now, with your broker’s help, it’s time to start the search for your boat in earnest. Eventually you’ll put in an offer on a boat. That process will be the subject of the next part in this series!
My thanks to John Procter for his contributions to this article. John is a certified professional yacht broker with over 35 years of experience based out of Hingham, Massachusetts. I’ve used him as my broker for my last two boat purchases (and one sale), and I consider him the best in the business. If you’d like to contact him regarding his services, he can be reached at Lawson Yachts.
Photo credit: Kelly Ran
In the USA, only California and Florida require licensing. (source) ↩︎
Generally, a buyer has no obligation to their broker. The seller’s broker may have a professional obligation to pay the buyer’s broker who showed the boat. If you’re selling a boat, on the other hand, you’ll likely be required to sign some kind of exclusivity contract. Bring this up during your broker interview to learn what your broker expects. ↩︎