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Old 09-15-2019, 07:09 AM   #1
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“USUAL” Broker’s commission

I’m considering selling my trawler and my broker is asking 10% commission. Is that the usual rate?
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Old 09-15-2019, 07:36 AM   #2
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That is the typical rate. You can negotiate less sometimes, particularly for an expensive boat, but you need to be careful.

Just like real estate, the total commission is split with the selling broker, usually 50/50. If you negotiate less, say 8%, then the selling broker may get less thereby reducing his incentive to show your boat. Always work out your agreement with the listing broker so that the selling broker gets the full 5% he expects. In other words, take the discount out of the listing broker's part of the commission.

In some markets, listing brokers sell 90% of their own listings, so it may not matter. But discuss it with your listing broker.

David
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Old 09-15-2019, 08:58 AM   #3
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I once had very good luck with a realtor. Negotiated the commission to 5% from the normal 7% on a $500,000 house. I then turned around and offered a $2,000 cash bonus to the selling agent.

May not work in modern times or with a boat broker but it worked for me.

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Old 09-15-2019, 12:06 PM   #4
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Thanks David and Pete.
Good advice!
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Old 09-15-2019, 02:05 PM   #5
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How many boats does a broker sell in a year? 15?
If they cost 150,000 average .. that would be 45,000 commission per boat X 15 = $675,000 per year. That’s more than my SS.
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Old 09-15-2019, 02:23 PM   #6
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How many boats does a broker sell in a year? 15?
If they cost 150,000 average .. that would be 45,000 commission per boat X 15 = $675,000 per year. That’s more than my SS.
I don’t understand your math. If they sell a 150K boat that would be $15K commission not 45K. So 15K times 15 boats would be 225K in commissions. Now you have to figure that if the selling broker is not the listing broker the commission is split in half. Then if the selling broker is not the owner of the brokerage the half commission is again split in half so the selling broker would not be making 15K per boat but rather $3750. Now if he or she sells 15 boats per year the commission will be $56250.
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Old 09-15-2019, 02:58 PM   #7
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Yes you’re right.
For some reason I was multiplying .30 X 150000 duh....

Not the first time I muffed my arithmetic on TF.
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Old 09-15-2019, 03:59 PM   #8
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That’s ok, I am sure the brokers would love it...
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Old 09-15-2019, 04:11 PM   #9
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To Comodave and Nomad,
Thanks for your input.
STEM is where is at today. Right?
“M” stands for “math”.
So, let’s hope our future generations of boat sellers study the “m word”!
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Old 09-15-2019, 06:44 PM   #10
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In a short post retirement time playing in real estate, I was often told a good broker/salesperson`s first sales job is getting the listing and not having to lower the commission to get it. The broker who immediately butchers his own commission may do the same to the price of your boat.
At the end when there is a buyer, some brokers will reduce commission to help get a deal over the line. Something is better than nothing.
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Old 09-15-2019, 10:25 PM   #11
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Another thought, a good broker may show your boat 10-20 times and answer dozens of calls/emails/text about your boat. Depending on the location of your boat it might be a total of an hour of time +/- when you calculate a scheduled showing/travel/etc. So a Broker might have 20+ hours into selling your boat maybe even more. Add in Sea Trials and help in getting the boat delivered. All the while the Broker hasn't been paid until the boat is actually sold. Not too many people would sign up for 100% commission job that has all these cost up front and no guarantee of an actual sale. When it comes to top Brokers or other sales positions I am glad to pay a reasonable commission. If my goals are met it's a win-win for all parties.
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Old 09-15-2019, 10:31 PM   #12
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How many boats does a broker sell in a year? 15?
If they cost 150,000 average .. that would be 45,000 commission per boat X 15 = $675,000 per year. That’s more than my SS.
So, using your numbers but not your "modern" math. At 10%, the broker gets 5% for one side of the deal. That's $7,500 and times 15 is $112,500. Sounds fine, but the median income of boat brokers is far less than that. If I had to guess, and this is strictly a guess, the median is likely in the $40-50k range as many brokers make nothing or nearly nothing with one or two sales a year. At the other end you have brokers selling multi-million dollar yachts and making well into six figures. So, the average is likely more in the $80-100k range.

Zip recruiter shows average for yacht brokers of $69k with range from $20k to $157k. Indeed shows income between $120k and $140k. That all ties to numbers from the Yacht Sales Academy which says 10% of the brokers make 87% of the sales. While I think that's a bit high, I would say that I would bet 80% of the income is concentrated in no more than 15% of all brokers.

As to 15 sales per year, I'd think the average broker does much fewer.

I think 10% is reasonable for doing a professional sales job as a boat broker. Wanting one of the brokers to take less than 5% really bothers me. I see a dangerous trend right now in Real Estate designed to circumvent the typical Real Estate Agent. I don't argue with the assertion that some don't need an agent, I just hope it isn't taken to the extreme and eliminates a resource many need. I still remember the full service travel agency, something now eliminated.
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Old 09-15-2019, 11:04 PM   #13
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So, using your numbers but not your "modern" math. At 10%, the broker gets 5% for one side of the deal. That's $7,500 and times 15 is $112,500. Sounds fine, but the median income of boat brokers is far less than that. If I had to guess, and this is strictly a guess, the median is likely in the $40-50k range as many brokers make nothing or nearly nothing with one or two sales a year. At the other end you have brokers selling multi-million dollar yachts and making well into six figures. So, the average is likely more in the $80-100k range.

Zip recruiter shows average for yacht brokers of $69k with range from $20k to $157k. Indeed shows income between $120k and $140k. That all ties to numbers from the Yacht Sales Academy which says 10% of the brokers make 87% of the sales. While I think that's a bit high, I would say that I would bet 80% of the income is concentrated in no more than 15% of all brokers.

As to 15 sales per year, I'd think the average broker does much fewer.

I think 10% is reasonable for doing a professional sales job as a boat broker. Wanting one of the brokers to take less than 5% really bothers me. I see a dangerous trend right now in Real Estate designed to circumvent the typical Real Estate Agent. I don't argue with the assertion that some don't need an agent, I just hope it isn't taken to the extreme and eliminates a resource many need. I still remember the full service travel agency, something now eliminated.
The internet access to both RealEstate listings and boat listings has changed the game.. I'm not saying its good or bad. The days of driving Fred and Mabe l around town are gone. New gen buyers are savy and see their dream boat or home on line and just need a broker to connect them for a showing and offer..Lots of old school realtors don't understand this and scratch their head. Open houses? its a joke but sellers expect it. Its a way for some realtors to pick up additional biz but not a sales tool for a listed home. Nosy Neighbors come by for snacks
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Old 09-16-2019, 03:31 AM   #14
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Last year my son was selling his boat, he decided that all he needed was a listing on YW and would show the boat himself so the broker didn't do anything per se.


Also didn't mater where the broker was located, he called a lot of them up found a broker for 2% in FL to publish the listing.


Sold the boat in NY for $550K to the 3rd buyer, I think when a buyer knows their dealing with an owner you get less tire kickers wasting your time.


So the broker made an easy $11,000


By the way several wanted 5%
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Old 09-16-2019, 04:58 AM   #15
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In a short post retirement time playing in real estate, I was often told a good broker/salesperson`s first sales job is getting the listing and not having to lower the commission to get it. The broker who immediately butchers his own commission may do the same to the price of your boat.
At the end when there is a buyer, some brokers will reduce commission to help get a deal over the line. Something is better than nothing.
I agree with this and would add that perhaps the best place to negotiate a commission reduction is with a trusted buying broker... if and a big if... you have located the boat you want yourself and have NOT contacted the listing/selling broker.
It does depend on where each broker is located relative to the and who does what during the inspection, survey, sea trial & closing.
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Old 09-16-2019, 08:50 AM   #16
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Well, let me talk about my 10 months as a yacht broker in Annapolis, about 20 years ago:

I sold thirteen boats during that period. Three were my own listings, but as a new broker that was not surprising, you need to develop a repeat clientele to get your own listings. The average sales price was about $50,000. So for my own listings I made 5% (the other half went to the brokerage firm) or about $7,500. For the other sales, I got 2-1/2% or about $12,500. So my total was about $20,000. I had some expenses against that- a decent car is required just like a real estate agent and I chose to set up an LLC for liability protection so I had some legal costs.

Some of my colleagues who had been in the business for 10+ years did much better, probably making $40-50,000 a year. Adjust these numbers for inflation and today would it probably be $30,000 for me and $60-75,000 for my colleagues. Ok but not rich either.

How did the brokerage firm do with their half of the commission? Ok but not earth shattering. They have overhead expenses: Yachtworld subscription dues, building rent, internet and phone utilities, secretarial and management costs. I don't know their net but I am sure it wasn't astounding. There were two partners in a five broker office and maybe each made $75-100,000 net in today's dollars.

So I believe that it takes about 10% to make the system work with maybe some discounts up front for expensive boats and some discounts to close the deal.

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Old 09-16-2019, 09:24 AM   #17
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Couple of things.

Your selling agent, and the buying agent, may not actually be the broker.

So the fee is not just split between two people, but potentially anywhere from 1 to four people, depending on if the agent is the broker, and if the listing agent/broker brings the buyer.

In today's world, if you are a very active cruiser and social media person there is a strong probability that many people know your boat and how well (or not) you have looked after it. So another option is to put together a selling page for your boat and make it known on your FB, TF, MTOA, Owner's Form etc. etc.

Your choice then is to do the whole thing yourself, or offer an agent a greatly reduced fee to do the paperwork as you are bringing the buyer yourself.

You could even do both. Try yourself for a few months until your are sure that your own points of contacts are not bringing anything - then switch to a listing agent. But be aware that fall and winter, especially in northern climes, may not be the best time for your own listing, spring better.

One more point, don't agree on a listing contract if you are going to try yourself. If a buyer finds your boat through an agent, that buyer is the agent's from then on - even a year later.
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Old 09-16-2019, 09:29 AM   #18
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Well I’m glad I flubbed up as I had a notion that most brokers just sat there and stuffed the money in their pockets as the boats sold. An exaggeration of course but not far off.

I did know a broker that sold a boat after doing nothing but putting the listing on the board. But I got my info from the seller .. I was the buyer. And like most sales of this kind some get dumb lucky and some require endless work. May mostly have to do w the degree boat salesmen are really salesmen. Many walk into the job knowing about as much as we all know about getting married .. not much. And there are few salesmen that actually study and learn something about being a salesman. Like most anything .. there’s a lot to learn. And then there’s the experience of finding out how to apply what was learned. Most salesmen probably lean on the “I know all I need to know” category.

But thanks for the above.
I needed at least some or more of what I said after my flub.
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Old 09-16-2019, 09:44 AM   #19
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Open houses? its a joke but sellers expect it. Its a way for some realtors to pick up additional biz but not a sales tool for a listed home. Nosy Neighbors come by for snacks
So true!!! I had a friend sell his house recently. He told me that 25% of the people who signed the register for the open house walk through were their neighbors who they weren't friendly with and had never been inside the house.
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Old 09-16-2019, 10:10 AM   #20
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So true!!! I had a friend sell his house recently. He told me that 25% of the people who signed the register for the open house walk through were their neighbors who they weren't friendly with and had never been inside the house.
Wifey B: Neighbors visiting during open houses are a very good part of it. Neighbors have friends. Some may be looking. Neighbors will let them know if they find the house to be nice. I was told by a successful realtor that she targeted three groups with open houses-potential buyers, other realtors, and neighbors who know potential buyers. She also said that open houses often lead to very quick sales on reasonably priced moderately priced homes. She does not hold them on extremely high priced homes as they attract sightseers and curiosity seekers.
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