Meeting a buyer’s (yacht) broker, questions to ask

{Whoa – I got such great constructive feedback that this post needed to be re-worked a bit! I am also going to post notes from my meeting with the broker.}

We recently got a recommendation for a yacht broker from a local liveaboard, so I set up an appointment to meet with him. After confirming the meeting, we sent the broker:

  • A quick description of our situation, our sailing experience and intended use of our boat
  • A list of our desired characteristics broken down by: non-negotiable, important, nice to have, and icing on the cake.
  • A few names/makes of boats we are looking at

Not knowing what to expect, I did a quick Google search on how to choose a yacht broker and questions to ask. Yachtworld had an excellent article on the subject and there was another short article on Wisegeek.

Below are some notes from my reading and also from the Living Aboard forum (for ease of reading, I’m going to refer to the broker as a “he”):

  • Start with referrals. i.e. someone who  has used his services.
  • If there is a boat show in your area, most of the banks/finance/insurance/surveyors will be there; you can get a sense of who’s who.
  • A buyer’s broker should be able to present a variety of boats that match your interest in your price range. The broker can also help narrow your search so that you are not paying for many surveys.
  • He should not be the primary decision maker about the value of a boat or the quality of a boat; this should be the function of your surveyor. The broker’s role is not inspect the boats for you and tell you to stay away from a particular boat although in some cases he might smell a rat and let you know. He may also be the voice of reason if you are getting too emotionally carried away.
  • A buyers broker can advise you especially in regard to the proper paperwork (contracts) and procedure. He should make sure you are protected and that you get a clean title (no liens), the equipment agreed upon, etc.
  • Another plus is that the buyer’s broker will usually be the one holding your deposit in escrow, not the other side. If this is the case and the boat in question fails sea trial or survey, you won’t have to jump through hoops to get your deposit back.
  • It doesn’t cost you a dime since your broker is splitting the commission with the seller’s broker.
  • Some people feel very strongly that brokers should not be recommending anyone – surveyors, insurance companies, etc. The surveyor may not do a good job of inspecting the boat and gloss over potential problems so that the deal closes. This is interesting because we didn’t interview home inspectors when we bought our home, we just used the one recommended by our exclusive buyer’s agent. My feeling is that I wouldn’t use a broker-recommended surveyor without vetting it through other people, but I wouldn’t automatically rule the person out either.
  • Some people discouraged broker recommended insurance. I feel that brokers have probably seen their clients (especially first time buyers) go through the process of getting insurance and can warn us if it will be a problem.

Here are some questions we plan on asking the broker {note: heavily modified based on the feedback I received}.  Some of the questions below are beyond the scope of the broker, but that is because we don’t know what we are doing:

  • What is your experience with helping liveaboard buyers? Obviously, we want to work with a broker who is very experienced and knowledgeable about the industry. One forum poster said whether the boat is being used as a liveaboard boat is irrelevant. I would not rule out the experience of someone who knows sailboats more than we do–which is almost every broker. Even better would be to bring a liveaboard friend to go see boats with us.
  • Can you explain your commission and compensation structure? The industry standard is seller pays commission. What I’m looking for here is any other compensation such as kickbacks or referral fees. Namely, there shouldn’t be any.
  • How will you advise me during the negotiating process? For example, where do you draw the line between a good first bargain offer and one that is so low that it offends the seller? The feedback I got was that we would be doing the negotiating, not the broker although he can give advice and additional information (like how long as the boat been on the market, how does it compare to recent sales, has the seller lowered asking price already, etc…) I agree, of course we are the ones making the offer.
  • What are the costs involved in shipping a boat? In buying a boat in different region? Here, because of our lack of experience, we were just looking for a ballpark figure for the boat size we are looking at. Of course, the best bet is to get quotes from shippers and truckers.
  • Explain the process of getting a sea trial. My understanding is that the only thing you need for a sea trial is a contract with deposit. Unlike a car, I was informed, we’re not “driving” the boat.. the seller (or his captain) will, so whether we have sailing experience is not relevant.
  • What other costs are involved in buying a boat such as tax, excise, registration, other fees? The broker can provide some information here, though I was warned to double check local tax laws first since there are many variables. Also, the boatUS website has information on tax and registration laws by state.
  • Will you be holding and protecting our deposit? Rules vary by states. Someone posted that in Florida deposis must be kept in separate escrow accounts where as in other states they can mix it with their own funds (more risky).
  • Please provide several references. Someone questioned the usefulness of getting references since they will be cherry-picked. I still think it can be helpful in getting a sense of how the broker works. And no matter how positive the former client is, I can usually press for constructive feedback.

Sometimes the answer is not as important as the way a broker converses with us. Did he bristle at having to answer certain questions? Or was he open and encouraging us to think?

What are your experiences with buyer’s brokers? What else are we missing?