If you’ve ever purchased a home you know it can be a complex process, one that most of us wouldn’t attempt without the help of a qualified realtor to represent our interests. Buying a yacht is a similar process and best done with the help of a professional yacht broker.
It’s easier to negotiate the multistep procedure with the counsel of a professional, someone who’s trained to help you with everything from finding the right model, to financing the deal, to managing escrow accounts and taxes. The difference, however, is that many buyers don’t know they can hire a professional yacht broker at no cost to them.
Too often, buyers make the mistake of finding a boat they’re interested in and then simply calling the listing broker. When this happens the buyer may be venturing into shark-infested waters. Fortunately, you don’t have to go swimming out there alone. Here are a few tips for the boat buyer on how to save time, headaches and money by working with a broker.
The process begins when the boat seller lists the yacht with a broker. Generally, the seller agrees to pay a commission (usually 10 percent of the purchase price) to the selling broker at the closing. So even at this early stage the seller has professional representation in the transaction.
Now what about you, the potential buyer? If you pick up the phone and call the listing broker, you’re beginning the transaction on your own, which is not usually the best route to take. A better approach would be to select your own broker, a buyer’s broker, to help guide you through the sales process.
How do you find the right broker for the job? Vin Petrella, the executive director of the Association of Yacht Sales Professionals (YBAA), suggests you start by looking for a Certified Professional Yacht Broker (CPYB), or at least a member of one of their seven sponsoring associations. These professionals are experts at all phases of the buying/selling process and are required to submit proof of experience, pass an exam, and complete ongoing training as part of the recertification process. In short, a broker who has the CPYB credentials after his/her name is a certified professional who is also bound by a strict code of ethics. These brokers should give you the highest level of customer satisfaction throughout the process. Petrella also recommends interviewing several brokers to ensure you’re compatible with the one you choose.
Once you’ve settled on your broker, you can begin the buying process. Your broker will provide a host of services, and s/he does this for free because the fees are paid through a co-broker arrangement that is set up with the listing broker.
The first service your broker will provide is a yacht search and recommendations based on the size and type of yacht you’re looking for, along with a value analysis of the asking prices. If you’re interested in one of these recommendations, the broker will prepare a written offer called a Purchase and Sale Agreement, which must be submitted to the listing broker along with your 10 percent deposit. That deposit will be held in your broker’s dedicated escrow account.
Tip: If your broker doesn’t have a dedicated escrow account for this purpose, that should be a red flag. You might want to find another broker.
Your broker will submit the offer and negotiate with the listing broker on your behalf. The seller can reject it, accept it, or make a counter offer.
Once the buyer and seller have agreed on the price and terms of the sale, the buyer’s broker will assist in setting up a sea trial. Your broker might also refer you to a professional yacht surveyor (Marine Surveyors Earn Their Fee) who will inspect the boat for you. Petrella recommends using a surveyor who is a member of the Society of American Marine Surveyors (SAMS) or National Association of Marine Surveyors (NAMS).
In the event the survey or sea trial turns up a defect in the boat, several options are open to the buyer. According to Collin Heimensen, sales manager at MarineMax Clearwater, the buyer can
- Reject the vessel outright and get a full refund
- Ask the seller to fix the defect before accepting the boat,
- Renegotiate the price down and fix the boat after the sale.
Petrella warns that in some agreements there is no provision for price negotiation. As the buyer, you should ensure that a negotiation provision is in the offer agreement before your broker submits it to the listing broker.
Once you and the seller agree on the final selling price after the survey, the buyer’s broker will continue to assist you by offering financing options, determining taxes, and by making sure the yacht has clear title with no outstanding liens or encumbrances, so the ownership will pass smoothly to you at the closing.
Because a buyer’s broker offers so many valuable services, you can see why it makes sense to have a dedicated representative looking out for your interests throughout the process. And what’s not to like about free?
For more information, see Why Use a Broker to Help You Buy a Boat.