“USUAL” Broker’s commission

I’m considering selling my trawler and my broker is asking 10% commission. Is that the usual rate?

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

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.

pete

Thanks David and Pete.
Good advice!

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.

Nomad Willy said:

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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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.

Yes you’re right.
For some reason I was multiplying .30 X 150000 duh....

Not the first time I muffed my arithmetic on TF.

That’s ok, I am sure the brokers would love it...

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”!
Sea Fever

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.

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.

Nomad Willy said:

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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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.

BandB said:

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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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

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%

BruceK said:

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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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.

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.

David

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.

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.

Sailor of Fortune said:

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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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.

Shrew said:

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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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.

I have seen a few different options in the PNW.
A few local places in Everett are 10%
If you need a slip its another 550 a month
A local place with a yard in Everett is 10% and 250.00 a month for on the hard storage to show your boat.
Up North its 10-15% and 250-500 a month to store it on the hard for viewing.
And there is one place that's a flat 20% includes storage on the hard for viewing for 12 months, I think they also have a bottom listing price. If the boat does not sell within the 12 months... you owe them 500.00 per month. (helps keep owners in line of what the boat is really going to sell for).


For boats over 50k I would use a agent, for boats under I would list myself for the first 2-4 months. A lot of the boats we were really interested in were just over priced in my mind. I feel the owners priced them high on the average, and then tacked on the 10% commission and added in say 2-6 months of storage fees. And now you have a boat that's 15-20% over its true value. And then you get some cheap ass like myself that will come in and take 25-30% off the asking price (10% commission, 10% over value and 5-10% to give back to make a deal).

But if you list with a broker, go in and talk to them. We hit 4 different places up North. Only one of the places knew anything about boats, (I'm no expert) about what they had to show, and what the owners were wanting out of the deal. Most were just people wanting a part time job and happen to like boats but know nothing about them.

Make a fair market price, see what's listed and what sells in your area. We had been looking for about a year, several of the boats that we were interested in are still for sale. Good boats, just over priced, I am not sure if the owners are really wanting to sell them, or if they are just willing to sell if the price point is met.

Brokerage commissions have been 10% for 100+ years but the cost of living has gone up 10+ times. You get what you pay for. Cut a brokers commission and you will get half ass service and the broker will hold the listing in house only and not cobroker it. They won't tell you that, but that's what 90% of them will do. And your boat will just sit because when a cobroker who has a buyer calls on it, the listing broker will just tell him it's a 6-7-8% deal and that broker will just move his client on to the next boat that is paying a full commission.

The only way to negotiate a commission is to set a net price agreement of dollars. If you want 200K and it's a reasonable number then the broker needs to sell the boat for 222K to make 10%. If your number is not reasonable just expect the boat to take forever to sell either way.

Guys, a lot more to selling a boat than selling a house. Anyone can buy a house and real estate agents sell 100s a year per sales person or they aren't very good. A good broker might sell 10-30 boats a year.

Boats require real expertise in not just one boat but a lot of models and takes years to develop. We also we get every tom, dick and harry wanna be yacht owner to deal with. Most sellers never know how many phone calls, showings and other time we spend on a listing.

Just my two cents but I've been selling boats professionally for 36+ years.

I was on commission in the insurance industry and of course experienced negativity to commissions. The nice thing about a commission is it is paid on successful completion of the job or product or service.

Remember the broker may have to do foolish things like purchase food for his/her family, pay the mortgage, pay for the car and insurance and all the other expenses related to living and a family. And also realize that in recreational markets economic slumps can hit hard so the broker making lots of money now won't be in the next downturn financially.

Many decades ago I was an orderly at a large Vancouver Hospital earning my way through university. I was dating the daughter of a high placed health care executive during a particularly intense strike which involved me at the low end and him at the high end. He asked me - "Rick, honestly how do you feel about your pay as an orderly?" I said: "For me, it's more than adequate but I don't want to speak for the orderlies who are raising a family and paying a mortgage, for them I don't know."

And I was a bus boy in Madison Wisconsin even further back in time at a Ramada Inn. As you can imagine I and the waiters and waitresses were dependent on tips. So we would feel it if we ran into a herd of cheapskates.

If you don't feel the broker's fee is fair, market the boat yourself.

rsn48 said:

I was on commission in the insurance industry and of course experienced negativity to commissions. The nice thing about a commission is it is paid on successful completion of the job or product or service.

Remember the broker may have to do foolish things like purchase food for his/her family, pay the mortgage, pay for the car and insurance and all the other expenses related to living and a family. And also realize that in recreational markets economic slumps can hit hard so the broker making lots of money now won't be in the next downturn financially.

Many decades ago I was an orderly at a large Vancouver Hospital earning my way through university. I was dating the daughter of a high placed health care executive during a particularly intense strike which involved me at the low end and him at the high end. He asked me - "Rick, honestly how do you feel about your pay as an orderly?" I said: "For me, it's more than adequate but I don't want to speak for the orderlies who are raising a family and paying a mortgage, for them I don't know."

And I was a bus boy in Madison Wisconsin even further back in time at a Ramada Inn. As you can imagine I and the waiters and waitresses were dependent on tips. So we would feel it if we ran into a herd of cheapskates.

If you don't feel the broker's fee is fair, market the boat yourself.

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Each of your examples is excellent. It just always seems that so many are concerned that others are making too much. We see it in concerns about tipping, concerns about broker's commissions, concerns about West Marine prices. Yes, one should be fiscally responsible, but be careful when it comes to providing others a decent living.

We're all linked. Every dollar you spend, someone is depending on you spending it. They're just like you are or you were, working to make a living. There are families at home depending on it too.

First thing: Let me know by private message the details and price for your boat.

As a 40 year real estate broker and a potential boat buyer I would suspect there are a number of high $ brokers who move in a circle for those listings.

A large percentage of the boat brokers are going to be retired professionals or marine personnel selling. May be knowledgeable.

An average of $150,000 could well be on the high side. I have tied to limit my search to boats I could purchase out of pocket without financing or making a material shift in investments. I am amazed at how poorly boats are presented; particularly on the cheaper boats. It's hard to make a decent living selling $100,000 houses and I think it would be equally hard to do selling boats for one of the national firms.

BandB said:

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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Good point. I recently sold a house in the hot SW Ontario market. We had multiple offers, five above the asking price. Of those five, one was from a neighbor I didn't know, and one was from friends of my next door neighbor. Every market is different of course, but the open house was a key component of the sales strategy that our broker orchestrated, and in my view it was very effective.

Slowasyougo said:

F
An average of $150,000 could well be on the high side. I have tied to limit my search to boats I could purchase out of pocket without financing or making a material shift in investments. I am amazed at how poorly boats are presented; particularly on the cheaper boats. It's hard to make a decent living selling $100,000 houses and I think it would be equally hard to do selling boats for one of the national firms.

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Average first year real estate salesperson earns commissions of under $10,000. That's why so many start with rentals, just to have income while getting started. Now, the better firms do supplement the new realtor which is a very new trend and largely to comply with labor laws as they are employees rather than contractors. That increases them to $17-18,000 or so a year but puts them in the whole on draw vs. commission. New car and boat salesmen normally get a draw, typically anything from $1500 to $2000 per month. Most don't start out earning that in commissions and dig a hole. A lot of times, you'll see something after six months like Draw of $12,000, Earned commissions $8,000, Negative $4,000 Net. That means even if they double sales the next 6 months, they still will only get paid their draw. Now, some dealers have gotten to where at some point they'll wipe out the old negative situation.

If one sold six $100,000 homes and listed two more that sold, they'd earn 1.5% x $800,000 or $12,000 for the year. For boats it would be 2.5% or $20,000 but a new salesperson isn't likely to hit those numbers.

There are exceptions and companies are looking for the super stars. I had a cousin who made $90,000 his first year as a car salesman. He had lived in the city his whole life, knew everyone in town it seemed, and had the perfect outgoing personality that everyone liked him.

Hmm! I spent a short year as a boat broker in Annapolis. I didn't get a draw and don't know of any that did. I made about $25,000 in a bit less than a year. My long term colleagues made $50K or more and it was an average if not slow year, right after 9/11.


David

djmarchand said:

Hmm! I spent a short year as a boat broker in Annapolis. I didn't get a draw and don't know of any that did. I made about $25,000 in a bit less than a year. My long term colleagues made $50K or more and it was an average if not slow year, right after 9/11.


David

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You did well. Most at the brokerages do not get draws. Most at dealers do. However, it varies widely and it continues to change as both Federal and States get more serious about employees vs. contractors and pay.

There's a BIG spread in what brokers (salespeople) make and charge. Real Estate or Boats. While 10% might be somewhat typical, you can negotiate whatever you want.



Putting enough for a co broker does make some sense. (5% boats 3% real estate), but I could argue for a more expensive property, put a dollar amount. I don't feel it takes a lot more effort to sell or list a cheap property or and expensive one.



When I get properties that push a bunch over the $150 boats or $300 houses it's hard to spend a lot of dollars on commissions. The average Joe that owns property in that range averages about $100K in income, so he's spending 2 to 3 months of of work time to make the money to pay the commissions. And it wont take that long. Now, get more expensive stuff, even more compelling.


But here's the hitch. Access to the MLS and Yachtworld is a BIG help. And a lot of brokers have buyers in their pocket, especially when someone calls a broker for an ABC boat, and the broker only has an XYZ boat, and you have the ABC one. So, brokers, for sure have some advantages.... especially good ones.



And, FWIW, boats are harder to sell than houses, especially big ones. And house will always sell in any market, if priced right and look good. Boats won't.



As a rule, I usually do my own thing... buy and sell. But do use brokers. I have a real estate broker that will list it for cost, and I do all the work, which isn't hard, but still faced with a 3% split fee (or dollar amount), unless I sell it, and that works. It's a real hot market right now, but the vast majority of buyers use the MLS. Recently sold a house that way and only 1 response was not represented by a realtor, 15 offers were, so I had my pick of a buyer.



For boats, I just pick a broker that I know, and deals with the kind of boat I have. A few years back, sold a Formula, so I used the Formula dealer. He stored it for me as I had different plans for my lift and did a great job of selling it which worked out well. Last year I sold my Sundancer, did it with Boattrader and Craigs list, sold in two weeks. But, it was cream puff and priced right.



So, it all depends.