Broker's listing agreement language; question

[Rufus]

I'm considering listing our boat with a broker. They sent their standard contract language which has a paragraph:

"AGENCY. Broker may act as an agent for both the seller and the buyer. Owner consents to such and any related additional compensation payable to the broker from the other party..........."

There are some stipulations as to what may not be discussed with either party, but it seems like a built-in conflict of interest. ...a different spin on the buyer's broker routine? Thoughts?

[BruceK]

How on earth could the broker resolve a buyer/seller conflict? Delete it and see what happens. The mere fact it`s proposed is a worry. Might the priority be $ for the broker, not serving you the seller in a fiduciary capacity?

[tiltrider1]

Line it out initial it and then sign it. If they complain tell them you are paying a commission for them to represent you and only you. Then look them in the eye and say would you pay me to work for some other brokerage?

[Crusty Chief]

Rufus,

A pretty standard item in agreement contract. It allows the listing agent, or broker to bring in a potential buyer into the transaction. Many times a reputable broker will have buyers (in the wings ) that are interested in a particular boat and therefore they can represent both the buyer and seller. Typical broker fee’s are 10% with 50% to both parties representative.
When we sold our boat, the broker ( PM me if you’re interested in our broker) represented us (Seller) and one of his agents represented the buyer. This also allowed us to negotiate the total fee’s charged by the broker upfront.
To be honest it worked well for us and the buyer. It basically gave this buyer first crack at the boat before it actually hit the market.
Hope this information helped you in some way.
Cheers

[Arc]

It seems brokers always play both sides. You list the boat. Buyer makes contact with your broker and it’s game on. Brokers job is to sell the boat so he typically becomes the sole negotiator. The fact that someone my hire him to find a boat really doesn’t change anything. As long as your commission fee doesn’t increase, so be it. Since he may be getting it from both parties it may give you more negotiating power.

[BruceK]

Except the clause says "AGENCY. Broker may act as an agent for both the seller and the buyer. Owner consents to such and any related additional compensation payable to the broker from the other party."
Nothing prevents the broker introducing the boat to a buyer on his database, in fact that`s part of his job. He doesn`t need to act for the buyer as well.

[Comodave]

We have bought boats with a similar statement in the contract and never had any problems.

[Rufus]

This broker told us they sometimes split the 10% commission with other brokerages who bring a customer to the table. As mentioned above, I can't understand the additional compensation payable to the broker from another party. Maybe it's a finders fee, which seems almost ridiculous in today's internet data age, and with the buying frenzy becoming a thing of the past. In either case it seems unethical from a seller's standpoint. If this broker can't sell the boat without depending on other brokerages (and a third party on top of that), I have to wonder about their capability. Bruce mentioned a potential breach in fiduciary responsibility....precisely my concern. I realize that real estate does the shared commission routine. (Seems like it's bordering on unethical...certainly unnecessary in the age of Zillow, etc)

Comdave, I wouldn't expect that a buyer would have a concern.

I am thinking of asking them to delete that language to see if they can convince me that there is advantage to me (not them). BTW, this is apparently a boiler plate contract from an on-line entity called Yachtcloser.com....similar to DOCKWA for slip rental and boat storage.

BTW, there's another tediously worded section that appears to give the broker rights to a commission for 365 days after the initial contract ends (without a sale). It seems to officially place blame for a "no sale" on the seller rather than poor performance by the broker.

[Judy at JWY]

Yacht brokers frequently represent both buyer and seller. With my specialty in trawlers and subspecialty in metal boats, most clients who call me for listing their boat are counting on me to have buyers in the ready or at least be able to attract appropriate buyers. That's called reputation and I think that's where the conflict of interest question becomes somewhat moot. Do you trust your broker or not? A Listing Broker's job is to get the boat sold. A Buyer's Broker's job is to find the right boat. As long as the broker discloses all s/he knows to the Buyer and as long as the Seller agrees to the offered price, I don't see why this is necessarily considered a conflict. For me, it means one less person (Selling Broker) is involved so the deal becomes more efficient and with one less ego involved. My relationship, knowing both parties, helps me to better negotiate, explain, and keep peace in the process. It becomes more conducive to not just a "happy deal," but builds a better relationship between B and S without the Selling Broker playing buffer. Out of approximately 300 yacht sales, I would estimate that I represented Buyer and Seller on maybe 70%. With much gratitude, not one complaint.

Interview the broker, ask for references on the last deals sold with the broker representing both sides. Confirm unblemished reputation of both broker and brokerage house. Due diligence can reveal red flags or hopefully will bring confidence.

[Each finger a marlinspike]

Completely normal and standard line in a yacht broker's contract. Check with another broker and you will see the same statement. You will see the same thing in a real estate contract. The listing broker has to reserve the right to represent the buyer if they buyer comes directly to him/her.
My own opinion from having been a yacht broker previously, I would always use a buyer's broker unless I personally knew the listing broker. However, I also know that the majority of buyers will just contact the listing broker directly.

I don't see it as a conflict of interest representing both sides. The broker wants the sale to close, he/she doesn't care what the final price ends up being, only that everything goes smoothly and both sides leave happy and are future customers. There's no incentive to the broker to favor one side to the detriment of the other.

[mvweebles]

Originally Posted by Judy at JWY

Yacht brokers frequently represent both buyer and seller. With my specialty in trawlers and subspecialty in metal boats, most clients who call me for listing their boat are counting on me to have buyers in the ready or at least be able to attract appropriate buyers. That's called reputation and I think that's where the conflict of interest question becomes somewhat moot. Do you trust your broker or not? A Listing Broker's job is to get the boat sold. A Buyer's Broker's job is to find the right boat. As long as the broker discloses all s/he knows to the Buyer and as long as the Seller agrees to the offered price, I don't see why this is necessarily considered a conflict. For me, it means one less person (Selling Broker) is involved so the deal becomes more efficient and with one less ego involved. My relationship, knowing both parties, helps me to better negotiate, explain, and keep peace in the process. It becomes more conducive to not just a "happy deal," but builds a better relationship between B and S without the Selling Broker playing buffer. Out of approximately 300 yacht sales, I would estimate that I represented Buyer and Seller on maybe 70%. With much gratitude, not one complaint.

Interview the broker, ask for references on the last deals sold with the broker representing both sides. Confirm unblemished reputation of both broker and brokerage house. Due diligence can reveal red flags or hopefully will bring confidence.

My read of the OP's posts were slightly different. Now, I only breezed the posts so perhaps I misunderstood: First, there was murky language about additional compensation if a "third party" becomes involved. Second, there was language that if the boat sold 12-months after the listing expired, a commission could still be claimed by the listing broker.

I would think most sellers would be thrilled to have a broker with a deep Rolodex of buyers who could bring a deal together quickly ----- as long as it's transparent. While a good broker is often a mediator to bring buyer and seller together, I think it important that in the transaction, ultimate responsibility is to the seller.

To my eyes, the clauses cited by the OP listed seem to have obfuscations and questionable risk-shift to the seller (specifically, POst #6).

Thoughts?

Peter

[Judy at JWY]

"......a different spin on the buyer's broker routine? Thoughts?"

That was the part of the email to which I responded. You're right, Peter, there are other questions raised in the original and subsequent post.

The OP says the contract was boilerplate from YachtCloser. I do not use YachtCloser for many reasons in spite of the convenience, so I can't comment on that contract specifically. The agreements I use are from the International Yacht Brokers Assoc. It states in Paragraph 10 that the owner shall pay the commission if within 6 months after termination of the Agreement the Owner charters, donates, or otherwise transfers or conveys the Vessel to any party to whom the Brokerage or Co-Brokerage physically showed the Vessel during the Term.

[Rufus]

Originally Posted by Each finger a marlinspike

The listing broker has to reserve the right to represent the buyer if they buyer comes directly to him/her.
My own opinion from having been a yacht broker previously, I would always use a buyer's broker unless I personally knew the listing broker. However, I also know that the majority of buyers will just contact the listing broker directly.

I don't see it as a conflict of interest representing both sides. The broker wants the sale to close, he/she doesn't care what the final price ends up being, only that everything goes smoothly and both sides leave happy and are future customers. There's no incentive to the broker to favor one side to the detriment of the other.

Well, the brokers in this string all like buyers brokers...but of course...potential business for them. My expectation is for my broker is to help get the boat sold at the best possible price....not just get the boat sold and move on to the next commission. If the sole objective is to make the sale, there is a good chance the broker's presentation will be skewed toward a buyer. I call that unethical from the perspective of the person paying the big bucks 10%. The introduction of the third party is unethical....and I don't care what real estate brokers do.

BTW, my intial question was regarding my broker taking additional payoffs beyond the traditional sharing of my 10% fee that is sometimes shared with referring brokerage houses. I believe I'm going to have them delete the offending language and add that buyers brokers are not welcome in this sale.

[mvweebles]

Originally Posted by Judy at JWY

" the owner shall pay the commission if within 6 months after termination of the Agreement the Owner charters, donates, or otherwise transfers or conveys the Vessel to any party to whom the Brokerage or Co-Brokerage physically showed the Vessel during the Term.

That is eminently fair and reasonable.

BTW - I sold my house last year. The one alteration I wish I had negotiated with my broker was commission due on net proceeds of sale, not the gross selling price. In my mind, also fair and reasonable.

Peter

[Rufus]

Here's another paragraph from the proposed contract.

"Authorization. Broker is authorized to distribute information describing the vessle and to advertise and market the vessel in any medium and in any manner the Broker deems appropriate".

Most of this is fine, but the last phrase make me uncomfortable. i have seem many absolutely awful ad presentations with photographs taken inside dark storage buildings or crappy shots taken from docks. I have 17 years of quality phots and will ask for a phrase addressing "sellers approval of ad material" ....text and photographs. (They won't like it)

[Rufus]

Originally Posted by Judy at JWY

"......a different spin on the buyer's broker routine? Thoughts?"

That was the part of the email to which I responded. You're right, Peter, there are other questions raised in the original and subsequent post.

The OP says the contract was boilerplate from YachtCloser. I do not use YachtCloser for many reasons in spite of the convenience, so I can't comment on that contract specifically. The agreements I use are from the International Yacht Brokers Assoc. It states in Paragraph 10 that the owner shall pay the commission if within 6 months after termination of the Agreement the Owner charters, donates, or otherwise transfers or conveys the Vessel to any party to whom the Brokerage or Co-Brokerage physically showed the Vessel during the Term.

The yachtcloser language says one year I don'texpect an issuebecuse I expect the boat to be sold within the initial one year contract. Of course if it's not....that would never be the broker's fault...

[mvweebles]

Rufus - sounds like there is a different contract template out there per Judy W. Perhaps you might consider either that or a different broker?

I spent much of my career negotiating IT service contracts. Sometimes it simply wasn't practical to negotiate the full contract - Sometimes you just have to hold your nose and go with it. In those cases, I would negotiate generous exit rights so I could at least terminate. For your example, maybe an additional clause along the lines of allowing the seller to terminate for cause including all surviving obligations, if any. If you have to micromanage the marketing, you probably don't have the right broker in the first place.

Early in my career, a mentor told me 'a good supplier and a bad contract is much better than a good contract and a bad supplier.' If you've followed my fiasco with Hack Team boat repair company in Ensenada - the previous guys, you'll know exactly what I mean. I had a good agreement with them. Did more harm than good.

Peter

[mvweebles]

Originally Posted by Rufus

The yachtcloser language says one year I don'texpect an issuebecuse I expect the boat to be sold within the initial one year contract. Of course if it's not....that would never be the broker's fault...

Rufus - not only does Judy's language say six months vs one year, but it also states that residual commission is only payable if the boat is conveyed to a party the broker brought to the table. I didn't see such a limitation in the language you posted. The termination for cause concept in my previous post should terminate this language as well.

Good luck.

Peter

[tiltrider1]

Originally Posted by Rufus

The yachtcloser language says one year I don'texpect an issuebecuse I expect the boat to be sold within the initial one year contract. Of course if it's not....that would never be the broker's fault...

No reputable broker would represent both seller and buyer. Now you could have two brokers under the same agency representing both buyer and seller.

You may or may not be dealing with a reputable broker. However, you are dealing with a slimy contract. Your concerns are well founded and as a point we did not use these terms in our selling agreements. I understand why these terms are there. It’s to protect the broker from a customer who markets the boat at a high price then dumps the broker and reduces the price. Broker did the work and got aced out. When we sold boats we simply would not take on improperly priced boats so we didn’t need this language.

The contract is negotiable, if they won’t make the changes you have the wrong broker.

[Gdavid]

Seems very similar to a brokered boat where the buyer is not working with a buyer's broker. The buyer needs to understand that it is in the broker's interest to complete a sale, that said, a buyers broker has incentive to complete a sale as well.

There should be a realistic expectation about the manpower that goes into the search and sale relative to the budget. There is a world of difference in a $50K boat sale and >$1M sale when it comes to compensating brokers but some boaters don't seem recognize this.