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Knowledge, Relationships And The Proper Yacht Broker
An old story most of us have heard is the tale about the mechanic who charges what seems to be an exorbitant fee for merely turning a bolt on a broken machine, although it fixed the machine perfectly. The mechanic called the retired designer of the machine at home on a Sunday afternoon to confirm his diagnosis. When questioned about the apparently high fee, he told his client, “The charge was ten dollars to turn the bolt. The rest of the fee was for knowing who to call and which bolt to turn.”
It’s a good idea to remember this story when choosing a yacht broker either to market your current yacht, assist you in finding a satisfactory pre-owned vessel or helping you design and build a new vessel. If the broker you choose to help you doesn’t have the knowledge and relationships necessary to make the transaction work properly, you’re going to feel like the owner with the broken machine.
On the other hand, if you choose the right yacht broker - the one with the right knowledge and relationships - you’re going to feel like the owner with the machine working perfectly.
As a yacht broker with more than 25 years experience and participation in the sale, purchase and construction of more than four hundred yachts, as well as being a yacht owner myself, the following comments are how I would suggest you choose a yacht broker with the right knowledge and relationships to help you either buy, sell or build a yacht.
While we look at the type of information and relationships your chosen broker should have, let’s also review the positions in the yacht purchase or sale transaction you can expect to utilize your broker’s knowledge and expertise.
The three most common scenarios when a yacht broker’s knowledge can be of great value for a client are: 1) representing a client when selling his existing vessel, 2) representing a client who wants to purchase a pre-owned vessel and 3) representing a client who wants to build a new vessel.
Choosing A Knowledgeable Broker To Sell Your Existing Yacht
Most yacht brokers require you list your yacht with only one broker, or agree that the listing broker will have a “central agency listing.” In fact, the various multiple listing services require that a broker have a signed Central Agency listing for a vessel to be included on their system.
This type of arrangement assures the broker that even though the firm may, or may not, directly locate the eventual buyer of the vessel, a portion of the sales commission will be paid to the firm for their marketing efforts.
From both the owner’s and the broker’s perspective this makes sense because the listing broker will be designing a specific marketing plan for the yacht and implementing it. This plan may include advertising in print magazines, professional grade photography and brochures, displays in major boat shows, insertion into multiple listing services and web site based advertising.
Some yacht brokers will require the owner to pay the majority of, or almost all the marketing costs (which can cost tens of thousands of dollars) hoping some activity will motivate a potential buyer to call. Others will pay a portion of the costs, however very few brokers will agree to pay the entire marketing cost.
You can be assured the brokers who pay the entire cost are quite confident they’ll be able to sell your yacht. My firm is one of those firms, and I can assure you neither we, nor any other firm paying the entire marketing cost, is going to invest $20,000 to $30,000, or even more, in marketing a yacht that we’re not virtually positive we will sell.
This also means that we are very selective about the yachts we accept as central listings. Unlike some firms who require the owner and their crew voyages to pay the marketing expense, we won’t list vessels with the hope that one of the multiple listing services will produce a broker and client to purchase the yacht and pay us handsomely for merely listing the vessel.
This is where a broker’s knowledge and relationships are important. From the owner’s perspective it’s important that the listing broker, or “central agent,” know the market for your yacht thoroughly. For example, if you want to sell your 130’ Christensen, you would probably be best served by a brokerage firm that has sold several 115’ to 145’ yachts recently.
If the firm has sold a few Christensens, either pre-owned or new build projects, that’s even better. A broker who has sold several similar yachts recently probably has a better idea of what your yacht is really worth in the current market than one who has not. He also is probably very aware of what similar vessels are available that could offer competition for prospective buyers.
You probably don’t want to give a central listing on your 100’ plus motor yacht to a brokerage firm who’s most recent ten sales were 75 feet and under. If the listing broker knows the vessel personally from either having sold the yacht to you in the past, or been involved in the new build process, that’s even better.
Some brokers treat vessels they have sold almost like their children or grand children, and follow the yachts, owners and their crews’voyages, major service projects and refits very carefully.
The knowledge of a particular yacht’s history is important when discussing the vessel with a potential buyer, or the broker representing the buyer. Some yachts have been maintained by owners who spare no expense during their period of ownership.
Some owners minimize maintenance costs at the expense of the yacht’s overall condition. While not making a value judgment about either position, I think most potential buyers would value the information.
To determine whether a yacht broker is the right broker to sell your yacht, following are questions I would ask:
Who will cover the costs of marketing the vessel in regard to professional photography, magazine and internet advertising, brochures and boat show participation and will you provide me with a detailed written proposal?
In what boat shows does your firm have organized displays?
Which yachts has your firm listed and sold in the past 24 months?
Have you listed and sold any comparable yachts in the past 24 months?
Have you sold any yachts by the same builder?
What do you think is a realistic asking price for my vessel?
What activities would you recommend to market the yacht?
How long would you estimate it will take to sell the yacht?
Is there anything I (the owner) can do to assist the marketing and sales effort?
In your (the broker's) opinion, is the yacht ready for sale, or is there some work that should be completed (painting, new carpet, brightwork,
rebuild engine(s) or generator(s), etc.) prior to offering the yacht for sale?
Do you have existing relationships with the principal support team (yard for haul out, surveyors, maritime attorney, etc.) to expedite the
transaction and complete it in a timely manner?
What services or promotions does your firm provide that separates you from your competitors?
Choosing A Broker To Locate An Acceptable Existing Yacht
Although you may know exactly what attributes your next yacht should have, finding the right vessel at the right price takes time and effort. For smaller yachts - let’s say those under 100 feet - which frequently are production yachts, it’s fairly easy to find out what is available. Check the various yachting publications, both in your home country, and in the yachting centers around the world. Many magazines have web sites as do many of the world’s larger brokerage houses. If you use a search engine such as Google or Yacht World (www.yachtworld.com) and search for “Hatteras 75 For Sale” or “Broward 100’ For Sale” you’ll usually find several depending upon the day you look.
When you begin to look for larger, either more customized semi-production yachts or full custom yachts, the search becomes more difficult and you’ll likely appreciate the services of a knowledgeable megayacht broker. The broker will not only be more familiar with the current listings available, he will probably be more familiar with the various naval architects that designed the yachts and the custom shipyards that built them. It’s more realistic to have a familiarity with a few hundred custom yachts than the thousands of production or semi-custom yachts.
As brokers specializing in megayachts frequently travel to major boat shows and shipyards throughout the world, it’s possible that they have personally inspected the vessel either in service or while under construction.
For example, I have personally inspected shipyards around the world including the Feadship facilities of Devries and Van Lent in Holland, Lurssen’s shipyard in Bremen, Germany, both Benetti and Codecasa Shipyards based in Viareggio, Italy, Christensen Shipyard, Westport Yachts and Delta Marine in Washington, Palmer Johnson in Sturgeon Bay, WI, Derecktor Shipyard in New York, and Trinity Shipyards in New Orleans, LA and Gulfport, MS as well as the yards of many other less familiar, but high quality facilities. Additionally, mybrokerage office was located in the Broward Marine shipyard for many years. Several vessels on the market today were under construction and availablefor inspection during my visits.
Just as important as knowing what megayachts are available, and the characteristics of many, is the broker’s knowledge about what you really want in your next yacht. For a broker to locate an existing yacht that meets all, or even most of your requirements, he or she will need your co-operation, and frankly, your candor. To narrow the field down to truly qualified offerings the broker must know how you plan on using the vessel, and what attributes you consider important.
Some owners prefer a semi-formal lifestyle when on board including dressing for dinner. Others are more casual, and live in shorts and T-shirts just like their kids and crew while aboard. Many owners prefer short day trips from port to port; others enjoy long passages to out of the way anchorages. Provisions, fuel and supply storage capabilities are more important for this type of use.
Some of the questions I ask are: Where would you like to travel? With how many people? For what period of time?
The answers to these questions will help your broker determine a vessel that will meet your needs. In short, until the broker knows how you really plan to use the vessel, he can’t make intelligent or informed decisions on which vessels to recommend you inspect to determine whether they meet your needs. To determine whether a yacht broker has the right knowledge to competently advise you and locate your next pre-owned, or existing yacht, following are questions I would ask:
How many yachts over 100 feet have you and your brokerage house sold in the past year or two?
What was the pedigree (builder) of the yachts?
What boat shows have you attended and what megayachts and megayacht shipyards have you inspected in the past several years?
What do you need to know about my yachting requirements, lifestyle and plans to make appropriate recommendation
Building Your Dream Yacht - Choosing The Right Yacht Broker
When you and your broker are unable to locate a yacht that meets your specific requirements in the pre-owned market, it’s likely you’ll look at the semi-custom offerings available from various builders, and also consider having a custom, or “one off” yacht designed and built.
Before you decide which course to follow, however, you should make sure you’re working with a yacht broker that has the right knowledge, relationships, qualifications, and experience to be of assistance in this, a major project and investment which will last several years.
Let’s look at knowledge first. Although every yacht broker that becomes involved in a new build projects has to begin with a “first” project, I don’t think you want to intentionally choose a broker to have a learning experience with your new yacht.
Working with a naval architect or yacht designer, choosing a shipyard, negotiating the building contract, hiring a project manager and overseeing all the details involved in the construction of a semi-custom or custom yacht to meet your specifications and expectations is a very complex undertaking with almost an endless series of opportunities to make both minor and major mistakes.
A broker who has participated in a new build project, or major refit project, will probably be more comfortable and effective than one who has not yet had the experience.
Because you and the broker will be working together for a long time, I think it’s important there’s a strong compatibility factor. Neither you nor the broker want to work closely for two to four years, or even longer, with someone you personally find objectionable. Even though the new build experience is complicated, ideally it’s a project that will bring you great satisfaction.
I’ve found in the numerous new build and major refit projects I’ve been involved with that my clients chose me to handle the transaction because of a relationship of mutual respect and trust we’ve established together over the years, or because a friend or associate of theirs has established a relationship and recommended me to a client that wanted to build a new yacht.
In some cases I’ve located previous yachts for them. In other cases, I’ve sold previous yachts for them, or assisted them with a new build project. In all cases the client and I have worked closely together and, obviously, developed a relationship of mutual trust, respect and effectiveness.
Although not always possible, ideally your broker should be personally acquainted with the shipyards recommended for the project. I find a personal visit offers me an opportunity to meet the key management people, evaluate the facilities and the craftsmen and provide my clients with an informed opinion about the suitability of using a particular yard for their new build project. A knowledgeable broker is able to gain a unique insight into the techniques and professionalism of the yard when a yacht is in the construction phase prior to all the finishing materials and coatings being installed and applied.
To determine whether a yacht broker has the right knowledge and experience to competently advise you in the design of a new semi-custom or “one off” vessel, following are questions I would ask:
In what major refits or new design and construction projects have you participated?
What was your involvement, or scope of work in the projects?
May I contact the owners of several yachts to determine their satisfaction with your involvement?
What yards have you worked with in the past?
For the type of project I’m planning, what yards can you recommend, and why?
When you sell your existing vessel, in effect, you’re disposing of a large asset. When you purchase an existing vessel you’re acquiring a large asset. When you design and build a new vessel, you’re creating a new, large asset. In all cases the transaction will involve a large amount of your money.
To be in a position where you can afford to invest your money in a large yacht, most people are financially successful. To be financially successful most people perform their “due diligence” before hiring advisors or entering into contracts.
I suggest you perform your due diligence when selecting a yacht broker to assist you in a transaction. The right yacht broker will, like the mechanic mentioned at the beginning of this chapter, have the necessary knowledge and relationships to turn the right bolt, or in this case, to make the process of successfully selling an existing vessel or the acquisition of a new vessel as smooth, trouble free and rewarding as possible.
Many readers of this chapter have heard before that when selling expensive products or what are known as “big ticket” items, time is the enemy of closing the deal. When it comes to megayachts, I think that’s especially true. Sometimes, but rarely, there’s a sudden buyer’s or seller’s remorse to block a transaction, or a yacht under contract may be damaged, experience a time consuming mechanical problem or if the closing drags on too long, enter a totally new market or economic condition which could affect the agreed upon sales price, financing options or even the deal.
From the moment a buyer and seller agree upon price and terms, an uncomplicated closing can easily take 30 to 60 days, more than enough time for any of the above problems to occur. A complicated, multi-yacht transaction, can take much longer by the time multiple surveys, sea trails, sales contracts, etc., are completed.
A broker’s professional relationships with supporting team members can be of great value in closing the transaction quickly as is illustrated in the following example.
Recently my office took a Central Agency listing on a 128’ tri-deck motor yacht of Northwest pedigree and secured an acceptable offer from a buyer offering his 114’ motoryacht as partial payment. Not one yacht, but both yachts had to be hauled, surveyed, sea trialed, insured, etc. Both yachts were in southeast Florida and the transaction was begun in early January, the busy time for the megayacht industry when haul out schedules are booked weeks in advance, as are surveyors and other professionals.
Because of my firm’s many year relationship with Bradford Marine of Fort Lauderdale, the yard was able to insert the larger yacht into their haul out schedule with only two days notice, haul the yacht for inspection and re-launch it late the same day for sea trials the next day. The surveyors also adjusted their schedules to accommodate the short notice.
The yard manager of Rybovich in West Palm Beach, a 20 year professional colleague, did the same with the vessel offered in trade - insert into busy haul out schedule, out of, and back in the water the same day. Unfortunately, the following day during sea trials, the surveyors discovered an engine problem, which they diagnosed long after usual business hours. Repairs were completed and a successful sea trial completed the following day. The surveyors completed their reports over the weekend for final review, and acceptance of both vessels was confirmed. With both acceptances in hand, I called a trusted maritime attorney and long time colleague at home on Sunday afternoon to modify the purchase agreements. I contacted the Documentation Agent to prepare the Bills of Sale and Powers of Attorney, and organize for a simultaneous two vessel closing, one in Freeport, Bahamas, the other in international waters.
The entire process from the original purchase agreement to the successful dual closing, took less than 30-days. This would not have been possible without the tremendous cooperation of all parties involved. These efforts by all were above and beyond what would be required on a "normal" transaction, but I would like to think that the 15-20 year relationships that have been created, and that I value, helped produce this successful outcome for both my buyer and seller.
About The Author
Bob Cury, President of Robert J. Cury & Associates, a full service yacht brokerage firm in Fort Lauderdale, FL., is a 25 year yacht brokerage veteran. Bob developed his in-depth knowledge of existing and new build yachts and relationships with clients, builders and venders as a Hatteras sales professional (with the highest sales volume in the world one year). Subsequently, he formed and directed Broward Marine’s in house brokerage division, Broward Yacht Sales, before opening Robert J. Cury & Associates in 1996.
Bob has represented buyers, sellers and new build clients in more than 400 transactions. He is especially proud of his representation of a long time repeat client who is currently having a 242’ megayacht built by Trinity Yachts. It is the largest megayacht under construction in the U.S. as of this writing