Reasonable buyer's broker fee if I'm selling boat myself

My current seller's broker agreement expires soon and I'm thinking of selling my boat myself without a broker. If I am approached by a broker who says he has a potential buyer, what is a reasonable fee to pay him? When there are two brokers involved, the seller's broker usually gets half of the buyer's broker's fee of 10%. Am I right in thinking 5% would be a reasonable offer in this situation?

Yes.

He will want a contract, of course. I would probably make the contract client specific or at the very least that the commission is only earned on clients that he brings. No "Exclusive Right to Sell" type of agreement or else he gets paid when you sell your own boat.

Agree that 5% is right number. Skeptic in me warns a broker may use the "I got a guy who's interested" line as conversation starter to get your listing, so totally support the idea that contract should be client specific.

I see you have a Swift Trawler 34. I would think demand for that boat would be high right now given the skewed Covid market. What's your sense of the market?

Peter

I will disagree slightly saying buyers broker fee could be in the 4-6% range and is often negotiable when a buyer and seller broker is involved.
I only used a buyers broker once on current boat purchase. Boat was already listed with a selling broker and when I asked my guy to make contact and make an offer he told me the sellers broker told him he would split 60 / 40 with buyer getting 60%.
He was surprised himself and was counting on a 50 /50. I think the key was the boat had been on the market for some time and they were anxious to move it.
The other factor that comes into play is how much will you as seller provide vs the buyer broker. Will you arrange & attend all viewings, surveys, inspections, sea trial, etc, arrange & hold deposits in escrow, or leave it to him or her? That is your key negotiating point if you will handle many time consuming tasks. I'm thinking its less common for seller to have a contract with a buyers broker at the start of putting it on the market than a buyer is approaching you... as a buyer I would want to choose my broker not take one the seller chooses.
Isn't the point of having a buyers broker that they represent the buyers interests?
In my mind if listed as private sale you as seller might offer to split buyers broker fee (up to 2.5%) with the buyer if they choose to go that route.

I have a hard time with a percentage, same with houses.
There's not a lot of difference in work to sell a $50k boat than a $300k boat. So why pay on a percentage?


I would prefer a flat fee, and perhaps an additional percentage for performance (getting a higher than asking price).



Also, depends on what he'll do. Just hand over a name?



And need to find out who handles the dollars. If there's ANY dollars that are not refundable, I'd want to hold them as seller (or my agent would hold them).



5% is probably not a bad start point for a $100k boat, but would not work well for a $20K boat or a $300k boat. So, some modification is in order.



(Note: realtors are now figuring this out).

Seevee...
"5% is probably not a bad start point for a $100k boat, but would not work well for a $20K boat or a $300k boat. So, some modification is in order. "
I dont think you will find many brokers that will take on selling a $20k boat unless it's a favor and counting on or rewarding you for using them for the $100k purchase.
Most will have a min sale price they will bother with.

A few years ago we contacted a broker to look at a listing he had. While we were looking at the 'new' boat he asked what we currently had. Told him and stated we were selling it ourselves.

He said he had a client that was looking for the exact boat we were selling. Sure. Agreed we'd give him 5% if he put a successful deal together with this "client".

Turns out the client really existed and the broker worked for his money - previewing our boat, attending the survey, and helping resolve a paperwork discrepancy with the HIN. Deal went thru and all were happy.

Another good-broker story.

Most of this broker stuff is new to me, but here is my take.
In my mind if I hire a Buyers Broker, I am paying his fees if he finds a boat that is privately listed that I am interested in. I would try to negotiate the price to cover his fees.

mvweebles said:

Skeptic in me warns a broker may use the "I got a guy who's interested" line as conversation starter to get your listing......

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I was approached by a broker recently with the same angle. First, he put a business card on almost all of the boats in the marina. I then see him later working on a listing for a neighbor, when he started with the "I have two potential buyers interested in these" pointing to my boat.

When I pressed him for simple details, he suddenly became very vague.

"What price range are they in?"

"Are they looking for Trawlers, or Mainship 350, 390, 400 models specifically"

"What time frame are they looking to buy?"

"What have they been looking at so far?"

These seem like straightforward questions that a broker who's vetted his customer would be able to answer.

I’m selling my boat for $500k without a broker ostensibly because I don’t want to pay brokers’ fees. Two people walk down the dock and one agrees to buy it for the asking price. The other one is standing there with his hand out and says “I’m with him. Give me an additional $25k.” Something about this scenario doesn’t sound right.

I was under the impression that if there is no seller broker, the practice is the buyer pays their own broker who they hired and contracted with to work for them. Is there a moral or ethical obligation to pay someone you didn’t hire? I can understand that they may or may not have found the buyer for you but is it the seller’s obligation to pay?

What if the buyer found the boat then engaged the broker to look at it and negotiate the price? Should the seller pay the broker who was there for the purpose of getting the seller less money than they are asking?

Not a cheapskate or morally bereft but, wondering.

I agree with $0. You are selling it yourself, you are putting in the time and effort to find a buyer. You are not the buyer, which means a buyers broker is not working for you and shouldn’t be paid by you.

Porgy said:

I’m selling my boat for $500k without a broker ostensibly because I don’t want to pay brokers’ fees. Two people walk down the dock and one agrees to buy it for the asking price. The other one is standing there with his hand out and says “I’m with him. Give me an additional $25k.” Something about this scenario doesn’t sound right.

I was under the impression that if there is no seller broker, the practice is the buyer pays their own broker who they hired and contracted with to work for them. Is there a moral or ethical obligation to pay someone you didn’t hire? I can understand that they may or may not have found the buyer for you but is it the seller’s obligation to pay?

What if the buyer found the boat then engaged the broker to look at it and negotiate the price? Should the seller pay the broker who was there for the purpose of getting the seller less money than they are asking?

Not a cheapskate or morally bereft but, wondering.

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There is an agreement between the brokers to split the commission. The selling broker splits 50% of the commission as a 'finders fee'.

You are not obligated to pay the buyers broker in that scenario. However, you risk losing the sale in the process. You're acting as the listing broker, pocketing 100% of the commission and refusing to split the commission with the buyers broker.

Refusal to split the commission will force the buyers broker to charge the commission to his customer. Now the customer is forced to pay (Purchase $ + 5%), which will more than likely cause the customer to walk.

I guess I see it differently. You’re not “acting as the listing broker.” You are the owner of the boat selling it without an agent to whom you pay a commission to find and arrange a sale with a buyer. There is no commission to split or refuse to split because you have not contracted with a broker to whom you owe a commission. Any fee is between the buyer and the buyer’s broker. They are the parties that have a contract between them.

If the buyer asks you to come down in price and you agree in order to make the deal work, fine. The buyer should still be the one who pays the broker who they contracted with. Maybe in the end, the same amount of money changes hands but the seller doesn’t “owe” a broker.

One has to think, what’s the purpose of selling one’s boat themselves without a broker, if they end up paying some amount of broker’s fee. Yes, it does give a seller more negotiating room but, the intent of self-selling is to pocket what would have been a commission fee.

I am in the process right now of buying a for sale by owner boat. I've been working with a great broker for months looking for the right boat and he pointed me towards the FSBO boat. I am happily paying him 5% of the purchase price as 1) he's earned it and 2) he can facilitate all of the things that need to be done up to and including closing. I certainly wouldn't expect the seller to pay that given that he listed it as FSBO. That being said, I am working with a phenomenal broker. In the past I've worked with many brokers who didn't earn a penny of their fee.

tparrent said:

I am in the process right now of buying a for sale by owner boat. I've been working with a great broker for months looking for the right boat and he pointed me towards the FSBO boat. I am happily paying him 5% of the purchase price as 1) he's earned it and 2) he can facilitate all of the things that need to be done up to and including closing. I certainly wouldn't expect the seller to pay that given that he listed it as FSBO. That being said, I am working with a phenomenal broker. In the past I've worked with many brokers who didn't earn a penny of their fee.

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That is very smart. I see lots of boat transactions without brokers these days and it boggles my mind that buyers wouldn't want the help of a broker to facilitate a smooth transaction on such a large purchase. Well, its really a dunning- kruger thing, I suppose.

We have done it both ways as a seller. The last time I used a broker, he sold the boat in one day at full asking price. But I did price it properly. The last 2 boats we have sold we sold ourselves. Both times the first person that looked at it bought it.

I have very mixed feelings about boat brokers. They tend to be a prickly bunch. I say this even though I have many friends who are brokers and are wonderful people. If you have a difficult boat to sell they can be helpful. Many brokers have very visible dock space in highly trafficked marinas, so if have a boat that benefits from that kind of exposure, they can be a good value. And, you can't get into Yacht World on your own (even as a broker you have to have 3 boats listed).

But 10% is outrageous. Just like 6% is outrageous for a house. I have had good and bad experiences with brokers, but even with the best of them >$100k for selling a boat, even with marketing and moorage costs, just doesn't make sense.

Are there Redfin-like services out there for boats? As a serial entrepreneur with a boat broker's license, I was thinking about building a service that would help owners sell their own boats. Software that helps you price and list your boat, access to certified services for photography, surveys, escrow, titles, insurance, etc. Is there anything out there? In FL perhaps?

FWIW, I bought Gallivant without a broker (and got yelled at by one of the local brokers for stealing his commission). While I didn't have a broker, I did have a third party that helped the out-of-state seller work through the process. I arranged for all of the services including the survey, haul-out, and title work. The total for all of those fees was less than 1% and it went much more smoothly than the previous transaction that had brokers on both sides.

Would I pay a buyer's agent if I were listing my own boat? I think it depends on the listing price for the boat and how hot the market is for your boat. For higher $ value, I would offer the buyer's broker a fixed price, dependant on the sale price. If, like now, the market is really hot, most brokers around here are hurting for inventory. That gives you some leverage for pushing the commission down even lower.

Good luck!

Porgy said:

I’m selling my boat for $500k without a broker ostensibly because I don’t want to pay brokers’ fees. Two people walk down the dock and one agrees to buy it for the asking price. The other one is standing there with his hand out and says “I’m with him. Give me an additional $25k.” Something about this scenario doesn’t sound right.

I was under the impression that if there is no seller broker, the practice is the buyer pays their own broker who they hired and contracted with to work for them. Is there a moral or ethical obligation to pay someone you didn’t hire? I can understand that they may or may not have found the buyer for you but is it the seller’s obligation to pay?

What if the buyer found the boat then engaged the broker to look at it and negotiate the price? Should the seller pay the broker who was there for the purpose of getting the seller less money than they are asking?

Not a cheapskate or morally bereft but, wondering.

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I don't think you're wrong exactly. But the issue is not a "moral or ethical" obligation, it's a practical one. There are buyers out there who are looking for a boat like yours but... they are working with a broker. They are not shopping on their own. Their broker likely won't tell them about your boat because they figure they won't get paid on the sale, which you freely admit. So you are missing out on potential buyers. The more expensive the boat, the more likely this is to be true.

In any industry, a broker is a person who brings buyers and sellers together and they are generally paid out of the sale proceeds. If the buyer and seller don't need that match making then no need to pay a broker.

Advertise the boat FSBO with asking price assuming NO BROKERS INVOLVED. In today's market, if you are selling a sought after boat, you may very well not need a broker. If a broker approaches you, tell them to have their buyer chose their offer appropriately, figuring any commission is the Buyer's to pay. Easy, Peasey. They make an offer commiserate with paying their Buyer's broker whatever their contract specifies. Relieves the Seller from agreeing to someone else's broker agreement.

Buyer needs to understand that the Seller's FSBO price asked is assuming NO BROKERS ARE INVOLVED, and that if there WERE a broker involved, than asking price would have been 10% higher than originally posted.
Alternately, tell the broker that if broker(s) are involved, asking price is 10% higher up front, and the buyer can start bargaining down from there.
Bottom line. Buyer makes a $$ offer, assuming he is paying any commissions. If he doesn't like it, he can offer on someone else's boat.

I think if I were in the sellers shoes going FSBO and a broker approached with a buyers interest/offer I would respond with the following: (assuming any seller has some wiggle/ negotiating room built into ask $)
Ask price was determined assuming no broker fees
Price is firm at ask $ but...
Willing to consider buyer broker fee of 5% if buyer & seller split it. Seller ponies up 2.5%
I just hate to refuse a real offer and send a potential buyer away.

Totally agree. Don't want to loose a buyer or seller over 2 or 3%.... even 5% if the market isn't strong.



I've seen a lot of folks turn down an offer ($200k range) where they were a few thousand apart, only to end up with $20K less, 6 months down the road.


So, as much as one doesn't want to pay the other guys broker, sometimes it's prudent to do so and get the job done.

This seems pretty clear cut to me. The buyer's broker didn't help you out, he helped his client out. In real estate I think there is a signed agreement before a broker will spend time on you, so I would guess the buyer and the broker have already agreed on payment terms. This seems like a nice dinner/fancy bottle of hooch situation and a promise to recomend him if anyone you know needs his service.

Being in Beaumont anyone that comes to see my boat is coming for that reason, no other.

When we listed the boat I told our broker I would show the boat if he would reduce his percentage.

He sold me the boat, and would sell the next boat. He hesitated then agreed.

When we were thinking about listing it in Florida no one would really budge.

I think with the market now the would do about anything just for the listing.

We sold our boat with a 4% fee by doing most work ourselves. I provided the photos and showed the boat to prospects. Broker was not local to boat. IMO the only real advantages of using a broker are (1) to get boat listed on Yachtworld; (2) to have broker show boat, especially if you do not live near your vessel. In our case, the YW listing was the issue. Despite the broker's gripes about the fee, he ended up doing OK because the buyers did not bring a "buyer's broker" and he got to keep the 4% ($16K) for just listing the boat on YW.
If I were to list the boat myself (not on YW) and to do all the work, any payment to a "buyer's broker" would only happen as part of the final price negotiation. If the boat goes for the asking price (ha, ha) the broker I would happily pay a percentage (3-4%), otherwise any payment to the broker is essentially coming from the buyer getting less of a deal.

Chrisjs said:

We sold our boat with a 4% fee by doing most work ourselves. I provided the photos and showed the boat to prospects. Broker was not local to boat. IMO the only real advantages of using a broker are (1) to get boat listed on Yachtworld; (2) to have broker show boat, especially if you do not live near your vessel. In our case, the YW listing was the issue. Despite the broker's gripes about the fee, he ended up doing OK because the buyers did not bring a "buyer's broker" and he got to keep the 4% ($16K) for just listing the boat on YW.
If I were to list the boat myself (not on YW) and to do all the work, any payment to a "buyer's broker" would only happen as part of the final price negotiation. If the boat goes for the asking price (ha, ha) the broker I would happily pay a percentage (3-4%), otherwise any payment to the broker is essentially coming from the buyer getting less of a deal.

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I'd add one other potential advantage. A broker with an established brokerage will have an escrow account which adds security to the transaction when accepting payments and deposits.

Agreed! Not sure what the max is for PayPal!!!
Though once you get past the deposit stage the main payment can be made by wire transfer with little risk.

Chrisjs said:

Agreed! Not sure what the max is for PayPal!!!
Though once you get past the deposit stage the main payment can be made by wire transfer with little risk.

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Personally, I'd NEVER use PayPal for anything. Just google the Palpal lawsuits.... they are unregulated.


And, I really don't trust a brokerage's deposit account, either, unless they can be verified, have references, and have an excellent reputation. Most states to not recognize any qualifications for brokers.



I really like to write the check and get the boat with title at the same time... NO middlemen.

Yeah, that's why I mentioned "established brokerage". A large firm like United or HMY will be pretty secure.

Prospective said:

Yeah, that's why I mentioned "established brokerage". A large firm like United or HMY will be pretty secure.

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Yes, a large firm could be better... but what are they bringing to the table to hold your dollars? And, is there any reason they won't let you just exchange dollars when you get the title (after your do diligence)? I've never had one object to that... from either side of the transaction.



I guess I just get nervous when a third party wants to hold my money for anything.