Why Use a Broker Part 3: for Sellers
This blog series was originally published on Howard Boat Works in fall 2012
In Part 1 of this discussion I wrote about the value of using a broker in general. Part 2 discussed how buyers benefit, and in this final part of the series I’ll talk about how sellers benefit from using a broker.
Part 3: How sellers benefit
Get the value right
When you decide to sell your boat, one of the first questions that will come to mind is, “what is my boat worth?” This is one of the first things a broker can help you figure out. We use a variety of methods to arrive at this number. Proprietary ‘sold boat’ data is but one of the tools in the toolbox. These ‘comps,’ much like the real estate market, provide an apples to apples comparison of boat values upon which to help arrive at a fair asking price.
That alone is not enough, however. For example, If you decided to list your boat for sale with a broker, one of the first things that should happen is you and your broker should go through the boat together, from stem to stern and top to bottom so that the broker can get a feel for the condition of the boat and how it is equipped. As you and the broker tour the boat you should share with him or her the history of the vessel since you purchased it. The more detailed this discussion and ‘inventory,’ if you will, the better.
Other factors that come into play when determining fair market value include the geographical location of the boat, its age and amount of use, how well it is equipped, and how up to date electronics and other installed equipment are. Detailed maintenance records are also of value here; the more detailed the better.
In the end, the fair market value for your boat will be based on what the market will bear. After researching the local market and thoroughly reviewing your boat, your broker will be able to arrive at this number.
What you're agreeing to
The next step will be to execute a listing agreement. This agreement constitutes a contract between you and your broker, outlining the terms and conditions of the seller and broker mutual obligations. This contract will also document the agreed commission due the broker upon closing the sale. The industry standard commission is 10 percent.
It’s important to consider what value you, as the seller, are getting for that amount of compensation. Chief among these factors is market exposure. Your listing, when held by a professional brokerage, should be seen, literally, around the world. This is a question you should ask when your broker presents you with a listing agreement: “Where will my boat be advertised?” The answer should be simply “everywhere." There are many internet-based portals for buying and selling boats. These include yacht world, boat trader, moreboats, and many others. You should feel comfortable that your boat will be posted to all these sites to maximize the exposure your boat receives. Print ads in national and local magazines and periodicals should also be in play.
Your broker should be able to describe for you a comprehensive marketing campaign for your boat. This will include a first rate, thoroughly documented and expertly photographed listing brochure. You should ask to see examples of listings from your broker and others from his brokerage to be assured of the level of quality your listing will receive.
What a good listing looks like
You never get a second chance at making a first impression so it is of fundamental importance that the listing itself show your vessel in the best possible light. You’ve no doubt seen examples of very good and very poor listings as you browse the internet search engines. Your broker should ensure your listing pops and helps break you out from your competition. This is why when your broker shows up to photograph your boat that she be as clean as she can be. Your broker should spend a great deal of time on the boat over the course of one or more days, staging, photographing and documenting the boat for the listing.
Once the listing goes live your broker should be in touch with you often, letting you know how much internet traffic the listing gets as well as any calls or email leads he has received. Your broker should strive to personally conduct as many showings as possible to potential buyers. If scheduling conflicts arise it’s perfectly acceptable for the potential buyer’s broker to show the boat instead.
Broker as document-handler and guide
When a potential buyer makes an offer on the boat, your broker swings into high gear. He will take care of the negotiations on your behalf, staying in close touch with you throughout this critical time until an agreement on sale price is reached. It’s important to note that all of this is done in writing via a document known as a ‘purchase and sale agreement’. Your broker will go over this document in depth with you, but suffice to say it is a contract that looks after the interests of both buyer and seller from the point of initial offer all the way through closing. It will stipulate the requirement for the buyer to make a good faith deposit to be held in escrow before the deal moves forward to the survey/trial run stage. Upon completion of survey there are normally issues that need to be addressed based on the surveyors report. Your broker will handle these as they come up, again staying in close touch with you throughout the process. He will guide the process all the way to the buyer’s acceptance of the vessel and closing when ownership actually changes hands.
All of the actions called out above cumulatively represent many ‘man hours’ of work on the part of your broker. This is in part the answer when a seller rightfully asks “what value am I getting for your 10 percent commission?” In sum, in return for this commission, a seller is having his fiduciary interests protected as well as having his boat professionally marketed, shown, negotiated, and sold.