Yacht Sales - Buying a Yacht
What should the buyer expect from a broker? Whether you are dealing with the broker who listed a boat or have engaged a broker to help you search, you can expect first to be questioned about your wants and needs. Even if you think you know precisely what boat you want, the broker will do you a service by showing you a range of similar vessels. There may be boats you were unaware of that would come closer to your ideal. In a perfect world, the broker also will make sure the boats he or she presents to you are within your means, both financially and in terms of your ability to safely operate them.
One of the key things a broker can do for you, the buyer, is ensure that the seller lives up to the contract. Good brokers use a standard contract that provides, among other things, for an escrow account to hold your deposit. Under that contract, you should be afforded sufficient time to locate a surveyor to inspect the boat and arrange financing. During that time, your deposit is held by the broker in the escrow account and not mingled with his or her other funds.
Brokers, to the best of their ability, have a duty to protect the public against fraud, misrepresentation and unethical practices. That’s part of the Certified Professional Yacht Broker code of ethics. The study guide for the certification exam suggests that this duty includes full disclosure about the boat:
“A listing broker has the responsibility and an obligation to both a fellow broker and potential buyer to provide the most complete and accurate information on the listed vessel as possible, even if the information contains negatives,” the guide reads.
Smith, from the Florida brokers group, says the CPYB program’s rules about disclosure – as well as other issues – were written to be clearer and more defined. It is very clear to Smith that it is a responsibility to disclose anything a broker knows about a boat – anything “material,” major or minor – that a prospective buyer would want to know about, he says. “We’re trying to bring this industry into the 21st century. It’s ridiculous that someone would sell a boat that has sunk before and not tell a buyer that it sank,” he says. “We would never do that – and no reputable broker I know would. The new rules would mandate this disclosure.”
Pugsley agrees. “Absolutely. If there’s something we know, we will disclose that information,” he says. “We have to disclose it.”
A judge ruled in 2005 that MarineMax of Ohio had to pay a boat owner $1.9 million for failing to tell him the 51-foot Sea Ray he bought from the dealership had been badly damaged in a grounding, then inadequately repaired. The judge characterized the fraud – the withholding of material information – as “particularly gross and egregious” and said it “constituted a pattern of conduct that was designed to sell a vessel to an unsuspecting buyer, regardless of its defects.”
Pugsley, however, notes that a broker can’t tell a buyer what he doesn’t know. It is the responsibility of the seller to disclose to the broker any known problems with the boat. The long and short of it is you should expect an honest answer when you ask if there are any problems with the boat, but be sure to ask.
The sales contract should reference surveys, financing, sea trials and inventory exclusions. That way, if the surveyor should find grounds for backing out of the deal or if you cannot find financing in time, your deposit will be returned. It is the broker’s job to see that it is. And be sure to put a big enough deposit in escrow when you sign the purchase agreement so you can tap it – and reduce the purchase price – to correct any problems found in the survey or sea trial.
At the same time, it is the broker’s job to determine whether the boat is free of liens – another potential deal breaker. There are two dates the broker should make the buyer aware of: the acceptance date and the closing date. The acceptance date is the day specified in the contract by which the survey and financing must be completed and the buyer has to accept the contract. The closing date is the day the money is paid, and the deal is completed.
Originally written by Soundings Online
Selling a Yacht - High Owner Returns
What should a seller expect from the broker? Perhaps the most critical decision a broker can help a seller with is setting a reasonable asking price for the boat. In this market especially, your pride and joy probably isn’t worth the platinum price tag you’d like to tie to her bow pulpit. Brokers have access to a multiple listing service and know the range of asking prices for the make, model and year of your boat. Indeed, anyone can do an Internet search and come up with a range, and your potential buyers probably have. Brokers also have access to information on the selling prices for boats like yours. A good broker will steer you toward an asking price that will attract buyers while giving you full value.
In today’s market, the large volume of repossessed boats for sale has driven down prices and made pricing brokerage boats difficult. Production boat prices are down “25 to 30 percent, even more,” says Pugsley. “With high-quality, well-built boats – really good stuff – this is not as much of an issue,” he says.
These boats have held their value better. Pricing becomes particularly thorny for a seller who bought his boat with 100 percent financing – or even 80 to 90 percent financing – has to sell now for whatever reason, and finds that the boat’s value in the current market is less than what he or she owes on it. “Sellers wind up coming to the closing table writing checks instead of receiving checks,” Pugsley says, although sometimes a mortgage holder will agree to forgive all or part of the difference between the selling price and the outstanding debt on the boat – what’s called a “short sale.”
The listing broker should inspect a seller’s boat and create a full specification sheet listing all of its features. He or she should also obtain a complete history of the boat from the seller, including where and how it was used, the number of previous owners, major repairs, sinkings, groundings, collisions and so on. The broker also should get quality photos of the boat. If the broker finds obvious problems, the seller can expect to be told of them. A good broker will advise you to let your asking price reflect the cost of repairing problems.
Armed with the specifications, the broker should advertise your boat in the appropriate marine publications and on the Internet. Hedges, who deals in high-end yachts, says he uses social media – Facebook and Twitter – to get the word out about his brokerage yachts, and he advertises globally. It’s a global marketplace.
On a practical level, a broker is there to show your boat so you don’t have to deal with the hassles. And the broker is in a position to screen prospective buyers so that only those who can realistically expect to buy your boat are given a walkthrough. The broker can provide you with a standard contract that covers all eventualities.