Knowledge, Relationships And The Proper Yacht Broker

An old story most of us have heard is the tale about the mechanic who charges what seems to be an exorbitant fee for merely turning a bolt on a broken machine, although it fixed the machine perfectly. The mechanic called the retired designer of the machine at home on a Sunday afternoon to confirm his diagnosis. When questioned about the apparently high fee, he told his client, “The charge was ten dollars to turn the bolt. The rest of the fee was for knowing who to call and which bolt to turn.”

It’s a good idea to remember this story when choosing a yacht broker either to market your current yacht, assist you in finding a satisfactory pre-owned vessel or helping you design and build a new vessel. If the broker you choose to help you doesn’t have the knowledge and relationships necessary to make the transaction work properly, you’re going to feel like the owner with the broken machine.

On the other hand, if you choose the right yacht broker - the one with the right knowledge and relationships - you’re going to feel like the owner with the machine working perfectly.

As a yacht broker with more than 25 years experience and participation in the sale, purchase and construction of more than four hundred yachts, as well as being a yacht owner myself, the following comments are how I would suggest you choose a yacht broker with the right knowledge and relationships to help you either buy, sell or build a yacht.

Choosing A Knowledgeable Broker To Sell Your Existing Yacht

Most yacht brokers require you list your yacht with only one broker, or agree that the listing broker will have a “central agency listing.” In fact, the various multiple listing services require that a broker have a signed Central Agency listing for a vessel to be included on their system.

This type of arrangement assures the broker that even though the firm may, or may not, directly locate the eventual buyer of the vessel, a portion of the sales commission will be paid to the firm for their marketing efforts.

From both the owner’s and the broker’s perspective this makes sense because the listing broker will be designing a specific marketing plan for the yacht and implementing it. This plan may include advertising in print magazines, professional grade photography and brochures, displays in major boat shows, insertion into multiple listing services and web site based advertising.

Some yacht brokers will require the owner to pay the majority of, or almost all the marketing costs (which can cost tens of thousands of dollars) hoping some activity will motivate a potential buyer to call. Others will pay a portion of the costs, however very few brokers will agree to pay the entire marketing cost.

You probably don’t want to give a central listing on your 100’ plus motor yacht to a brokerage firm who’s most recent ten sales were 75 feet and under. If the listing broker knows the vessel personally from either having sold the yacht to you in the past, or been involved in the new build process, that’s even better.

Some brokers treat vessels they have sold almost like their children or grand children, and follow the yachts, owners and their crews’voyages, major service projects and refits very carefully.

The knowledge of a particular yacht’s history is important when discussing the vessel with a potential buyer, or the broker representing the buyer. Some yachts have been maintained by owners who spare no expense during their period of ownership.

Some owners minimize maintenance costs at the expense of the yacht’s overall condition. While not making a value judgment about either position, I think most potential buyers would value the information.

To determine whether a yacht broker is the right broker to sell your yacht, following are questions I would ask:

Choosing A Broker To Locate An Acceptable Existing Yacht

Although you may know exactly what attributes your next yacht should have, finding the right vessel at the right price takes time and effort. For smaller yachts - let’s say those under 100 feet - which frequently are production yachts, it’s fairly easy to find out what is available. Check the various yachting publications, both in your home country, and in the yachting centers around the world. Many magazines have web sites as do many of the world’s larger brokerage houses. If you use a search engine such as Google or Yacht World (www.yachtworld.com) and search for “Hatteras 75 For Sale” or “Broward 100’ For Sale” you’ll usually find several depending upon the day you look.

When you begin to look for larger, either more customized semi-production yachts or full custom yachts, the search becomes more difficult and you’ll likely appreciate the services of a knowledgeable megayacht broker. The broker will not only be more familiar with the current listings available, he will probably be more familiar with the various naval architects that designed the yachts and the custom shipyards that built them. It’s more realistic to have a familiarity with a few hundred custom yachts than the thousands of production or semi-custom yachts.

As brokers specializing in megayachts frequently travel to major boat shows and shipyards throughout the world, it’s possible that they have personally inspected the vessel either in service or while under construction.

The answers to these questions will help your broker determine a vessel that will meet your needs. In short, until the broker knows how you really plan to use the vessel, he can’t make intelligent or informed decisions on which vessels to recommend you inspect to determine whether they meet your needs. To determine whether a yacht broker has the right knowledge to competently advise you and locate your next pre-owned, or existing yacht, following are questions I would ask:

1. How many yachts over 100 feet have you and your brokerage house sold in the past year or two?
2. What was the pedigree (builder) of the yachts?
3. What boat shows have you attended and what megayachts and megayacht shipyards have you inspected in the past several years?
4. What do you need to know about my yachting requirements, lifestyle and plans to make appropriate recommendation

Because you and the broker will be working together for a long time, I think it’s important there’s a strong compatibility factor. Neither you nor the broker want to work closely for two to four years, or even longer, with someone you personally find objectionable. Even though the new build experience is complicated, ideally it’s a project that will bring you great satisfaction.

I’ve found in the numerous new build and major refit projects I’ve been involved with that my clients chose me to handle the transaction because of a relationship of mutual respect and trust we’ve established together over the years, or because a friend or associate of theirs has established a relationship and recommended me to a client that wanted to build a new yacht.

In some cases I’ve located previous yachts for them. In other cases, I’ve sold previous yachts for them, or assisted them with a new build project. In all cases the client and I have worked closely together and, obviously, developed a relationship of mutual trust, respect and effectiveness.

Although not always possible, ideally your broker should be personally acquainted with the shipyards recommended for the project. I find a personal visit offers me an opportunity to meet the key management people, evaluate the facilities and the craftsmen and provide my clients with an informed opinion about the suitability of using a particular yard for their new build project. A knowledgeable broker is able to gain a unique insight into the techniques and professionalism of the yard when a yacht is in the construction phase prior to all the finishing materials and coatings being installed and applied.

Choose Carefully

When you sell your existing vessel, in effect, you’re disposing of a large asset. When you purchase an existing vessel you’re acquiring a large asset. When you design and build a new vessel, you’re creating a new, large asset. In all cases the transaction will involve a large amount of your money.

To be in a position where you can afford to invest your money in a large yacht, most people are financially successful. To be financially successful most people perform their “due diligence” before hiring advisors or entering into contracts.

I suggest you perform your due diligence when selecting a yacht broker to assist you in a transaction. The right yacht broker will, like the mechanic mentioned at the beginning of this chapter, have the necessary knowledge and relationships to turn the right bolt, or in this case, to make the process of successfully selling an existing vessel or the acquisition of a new vessel as smooth, trouble free and rewarding as possible.

Because of my firm’s many year relationship with Bradford Marine of Fort Lauderdale, the yard was able to insert the larger yacht into their haul out schedule with only two days notice, haul the yacht for inspection and re-launch it late the same day for sea trials the next day. The surveyors also adjusted their schedules to accommodate the short notice.

The yard manager of Rybovich in West Palm Beach, a 20 year professional colleague, did the same with the vessel offered in trade - insert into busy haul out schedule, out of, and back in the water the same day. Unfortunately, the following day during sea trials, the surveyors discovered an engine problem, which they diagnosed long after usual business hours. Repairs were completed and a successful sea trial completed the following day. The surveyors completed their reports over the weekend for final review, and acceptance of both vessels was confirmed. With both acceptances in hand, I called a trusted maritime attorney and long time colleague at home on Sunday afternoon to modify the purchase agreements. I contacted the Documentation Agent to prepare the Bills of Sale and Powers of Attorney, and organize for a simultaneous two vessel closing, one in Freeport, Bahamas, the other in international waters.

The entire process from the original purchase agreement to the successful dual closing, took less than 30-days. This would not have been possible without the tremendous cooperation of all parties involved. These efforts by all were above and beyond what would be required on a "normal" transaction, but I would like to think that the 15-20 year relationships that have been created, and that I value, helped produce this successful outcome for both my buyer and seller.