You probably heard by now that there are major class action lawsuits going on in the real estate industry regarding brokers' commissions.
My wife Jan is in real estate so I get to hear about the arguments from all sides.
It didn't take long for it to spill over to other industries and the yacht brokerage industry is next with class action lawyers now hard at work suing everyone involved - our MLS systems, our industry trade association, and the leading brokerage firms.
THE SELLER KNOWS HE PAYS
I've always found that the seller knows he pays all the commission in yacht brokerage, right? I mean the entire commission is listed right there on the seller's closing statement.
BUT THE BUYER SAYS HE PAYS
Anytime the subject of commissions comes up with buyers they will tell you that they pay 100% of the commissions including the seller's commission and the buyer's commission.
The conversation goes something like, "There is no commission until I show up with the money, and when you brokers keep telling me I have to raise my offer repeatedly we all know we're just talking about your commission!"
BOTH AGREE ON ONE THING
When it comes to commissions, the only thing the seller and buyer both agree on is that the broker is not worth the money.
An attorney was in our office this week after just selling his yacht and was incensed that he paid a 10% commission. And the broker involved had represented him in buying the boat years before.
BUYERS BROKER - SEPARATE AGREEMENT
What is going to happen in real estate and probably yacht brokerage is that there will be two separate broker agreements - one for the seller's broker and one for the buyer's broker.
In a recent real estate poll over 70% of the homeowners interviewed said that a buyer needed someone to represent them in these transactions.
I think in yacht sales probably 100% need someone to represent them.
There is an old expression in our industry, "Most deals fall apart" and it is so true. I can't even count the number of different ways that everything goes down the tube as the seller keeps paying heavy bills month after month and the buyer is wandering around the boat shows after paying for 3 or even 4 surveys that blew up wondering how can this be happening to them.
THERE'S A REASON WHY FSBO NOT HERE
If boats sold themselves there would not even be a brokerage industry.
It's one thing to buy a small boat directly from an owner after riding around for 30 minutes on a test drive and hoping it works out ok.
When you're looking at bigger boats there is so much to know, so much to be concerned about, that you need someone to help you - whether you are the seller or the buyer.
GOING DIRECT? WHO GETS THE COMMISSION MONEY?
When it comes to buying a yacht directly from the owner the initial assumptions on both sides are dead wrong.
The seller immediately assumes that he won't have to pay a 10% brokerage fee and will put all that money in his pocket.
The buyer assumes that since there is no broker involved he should be buying the boat for way less and keeping that extra 10% brokerage fee in his pocket.
There's a reason why wealthy people hire the best people to represent them in any major transaction.
When I sold my boat yard I was a law clerk for the top trial attorney in Upstate New York and he once told me, "Only a fool has himself for a client."
Listen, I'm in the business and I can't even represent myself when I sell one of my yachts. How would you like to do business with a seller like me whose motto has always been, "Make sure you're the first one to get up and leave the table!"
Good brokers don't cost you money they save you money.
