Broker's fee for unlisted boat

No, they don't. Here's an example from http://homebuying.about.com/od/buyingahome/qt/BuyersBroker.htm

"Buyer Broker Agreement - Exclusive Right to Represent

This is the form that I use with my buyers. It is similar in scope to the non-exclusive form except for one major distinction: the buyer has agreed to work exclusively with the broker / agent.

The buyer cannot hire more than one broker / agent to represent her
The commission is negotiable
Buyer has the right to demand single agency
The buyer is not responsible for the commission if another party (such as the seller) pays it
The broker / agent can receive a higher commission than the negotiable fee stated in the agreement if the seller elects to pay more and it is disclosed
While non-exclusive agreement terms may run for a month or two, exclusive agreement terms are typically anywhere from three months to one year. If the buyer elects to subsequently purchase any property introduced to her by the agent, she will owe the agency a commission. Exclusive representation gives the broker / agent the ability to negotiate with unrepresented sellers (such as for sale by owners) on the buyer's behalf. In these instances, the commission is often added to the sale price and then paid by the buyer to the broker as part of the financing. If the buyer is able to purchase the property at a substantial discount through the power of the broker's / agent's negotiating ability, the broker / agent will have more than earned her fee. Exclusive representation means the broker / agent is employed by the buyer and will work diligently on the buyer's behalf. "

Yes, everything is negotiable. The point of this whole discussion is that the person selling the boat, in this specific case, has not contracted with a selling agent/broker and, therefore, has no legal obligation to pay anything to the broker who has approached him with a potential buyer. It should be assumed that the agent/broker has contracted with the buyer as a buyer's agent, thus looking out exclusively for the buyer's interests. If he wants to pay the guy something, that's fine - it's his money. HOWEVER, if the same laws apply to boat sales as real estate then the broker is REQUIRED BY LAW to disclose any payment of commission by the buyer. Any money paid in excess of what was agreed to in either a buyer's or seller's contract must also be disclosed. I would NOT contract with this broker as he will essentially be working as a dual agent. In the spy business that's called a doule agent. Whose inerests is he representing, yours or the buyers? Both? Neither? In some states dual agency is illegal! If you are going to pay a commission you're no worse off listing with your own broker, paying for someone who is working for YOU! You will probably be ahead because he is working to get you the highest price at the best terms. The buyer's broker is going to try to get the buyer the lowest price at the best terms.
 
I am also in the Real Estate business. This is rediculous! The question was what would be the appropriate fee to pay this broker? There is all this talk about obligations to pay and who represents who. Like many have said, call the broker and find out what would be fair. As a seller of anything...I don't give a darn who represents me! I made the decision to sell my house, boat, car or whatever on my own. I am representing my own interests. If he has a buyer that might want to buy my boat and wants an acceptable payment for bringing him to me then darn right I'll pay him! He puts the terms in writing before I show it to them and the guy buys it, I feel he has earned the right to some money. I don't care who he represents, he did both of us a service.

Jim
 
You're in the real estate business and then say "I don't care who he represents?" You're kidding, right? Or do you like paying someone who isn't representing your interests? No wonder things are so screwed up, especially in the boating industry.
 
Personally, I think it is a pretty easy decision. If you WANT to sell the boat and you think the broker has a legitimate buyer, what harm comes in giving the broker the listing for 5 business days at 3-5% commission to see if he can get the deal together?

Of course this assumes that if you pay the 3-5% you are still acceptable to the net proceeds to you.

If the broker is not agreeable to the arrangement, shake hands and move on.
 
When I, or anyone, makes the decision to sell their own boat, house, car etc. they take on the responsibility for themselves. As long as I know how much I'm paying the broker I have no problem with him trying to get the best deal for his buyer. I actually have the ability to say "no" to an offer. I have absolutely no problem paying someone who provides me a service....like selling my boat. It's done all the time.

Jim
 
I think Dauntless and other are getting wrap around the axle on the issue of 'contracting". In the case at hand, no, there is no obligation for the seller to pay anything to the broker... there is no contract. That said, however, a finder's fee or perhaps your rather call it a tip (in the car business its called a bird dog) is accepted and normal practice. Hey, my son-in-law sold a car for me to a private buyer. I was under no obligation to pay him anything but I did give him $100 as a finder's fee. You can call me stupid for doing that and I'll call you a cheap SOB in return.
 
The thing is, the sort of practice of paying the other party's agent corrupts the process and, in most cases is illegal. In most states it is illegal to act as as dual agency (where the agent "works" for both the seller and buyer - which is a non sequitur).

"As long as I know how much I'm paying the broker I have no problem with him trying to get the best deal for his buyer."

WOW! Can I sell some of your stuff? That is fiscal insanity! If I'm paying someone it's because they work for ME! You are willing to pay someone who is not serving YOUR best interests. I have GOT to get into the boat brokerage business if that is the way it works, I'll make a killing!

And, MikeeH, in your case your son-in-law is essentially acting as your agent, not the buyers. If he weren't, and he were my son-in-law, I'd question his loyalties and my daughter's choice in men.
 
Sell anything of mine you like...and please read the post....I have the ability to say NO! You obviously know nothing about how the Real Estate business works. A for sale by owner being approached by a Realtor with a buyer for the property can receive a commission from the seller and represent the buyer all day long. It's done in boating all the time, without a problem.

Jim
 
The issue isn't that you can say "no," the issue is, are your interests being represented - do you know whether or not you should say "NO!" As an a real estate agent you are acting as a fiduciary. A fiduciary cannot have a conflict of interest. If your state allows dual agency (Colorado, Florida and Kansas do not) you, in all certainty MUST disclose that fact to both parties AND disclose the limitations this situation places on you with regard to each party's interests. Yes, in a techincal sense the real estate market does dual agency - but it must be disclosed AND it is an outcome of the MLS regime.

Bottom line, the issue is not "I can say 'NO'" to a deal." The issue is, are your interests being served? Is someone possbily (likely?) taking advantage of one or both parties in the transaction?

So, the boat broker comes to you and says he has a client who is a buyer. The broker presents you with an offer that is reasonable. You agree to pay him a commission on top of that because you're such a swell guy and the broker deserves to make a living. OK, so, did the broker disclose to you that he got a commission form the buyer, too, in the form of, say, a finder's fee? So, he essentially got paid by two people for the same work? Is that fair? Is that ethical? Is that legal? If you and the buyer were aware of that you could have saved each other some money - instead you BOTH got ripped off. If you found out that the buyer and the broker were in collusion (can you say kick-back?), what would you think then?

Sorry, I have my own broker/agent. That way MY interests are his interests. He gets paid to make ME happy. Do it any other way and you deserve to get taken. I tell you, I'll take twice the pay for doing what I'm doing now any day of the week! Where do I sign up?
 
"So, the boat broker comes to you and says he has a client who is a buyer. The broker presents you with an offer that is reasonable. You agree to pay him a commission on top of that because you're such a swell guy and the broker deserves to make a living. OK, so, did the broker disclose to you that he got a commission form the buyer, too, in the form of, say, a finder's fee? So, he essentially got paid by two people for the same work? Is that fair? Is that ethical? Is that legal? If you and the buyer were aware of that you could have saved each other some money - instead you BOTH got ripped off. If you found out that the buyer and the broker were in collusion (can you say kick-back?), what would you think then?"

If at the end of the day, I netted the amount of cash I was looking for, I do not give a monkey's azz what the buyer paid the broker or how many times the broker got paid.

The broker did what he/she is supposed to do, brought together a willing buyer and seller.

The only person that looks out for my interests is me.
 
So, let's say the buyer came to you directly and offered you more than what you would have agreed to by cutting out the broker? I guess you'd be OK with that?
 
If I had agreed to compensate the broker prior to him bringing me a buyer then no, I don't go behind his back. That's the point. I don't expect him to give me the name of his buyer out of the goodness of his heart, and I sure as heck won't pay him out of the goodness of mine. But again, if we come to terms prior to him showing my boat, I too don't give a monkeys azz what he makes on the deal. He would have provided me a service, which I will pay for.

And the "issue" is what is fair compensation. If you are not willing to pay, then don't expect to get the buyer.

Jim
 
quote:
Originally posted by pdecat

I repeat if you want to sell the boat talk to the broker without preconditions and see what he has to say. Then establish your conditions and negotiate.

Click to expand...
Thanks, Bruce, for taking us back to my initial basic question. I intend to negotiate with the broker but just wanted some input on what would be considered a fair amount to agree to pay the broker, as a one shot deal, should his client buy my boat so that he has some incentive to bring us together.

Based on the discussion, here are three choices, which one would others feel is fair to us both? Remember, the broker only has to bring us together, I will show the boat.

1. 3% of the purchase price (approx. $8,100), this being the usual fee paid to a broker representing the buyer but who did not list the boat.

2. $5,000 as a “finder’s fee.”

3. $2,000 as a “finder’s fee.”
 
harlen: it really doesent matter what we think. That broker has something in mind and you need to find out what that is. He has an opeining offer and a floor in mind. the first to mention any price or conditions in a negotiation establishes the upper limit of negotiation and is likly the looser.
 
Nope, it doesn't matter what we think. However, I would not go into this with any form of compensation in mind. He has a client, let them bring you an offer, that's it, end of story. Let the broker tell you what, if anything, he is looking for in compensation in the offer. I would begin with the assumption that he is being paid some form of compensation by the buyer for finding the buyer the boat he is looking for. Actually, I'd begin with no assumptions, just the simple statement, "bring me an offer and a deposit."

And, Jim, I'd love to broker deals with you, I'd be RICH! I ignore my ethics if the person I'm making the dollars from doesn't care if I'm ethical or not.
 
Dauntless,
First of all hello.
Let me see if I'm understanding you correctly. I will give an example with "made up" terms just for the sake of discussion.
You have a boat for sale by owner and are asking $100,000. A broker calls you and says he has a buyer for your boat and we will give you your asking price. He puts together a purchase agreement in which you are getting your $100K but the buyer is paying $115,000 for the boat in the P.A. Are you going to turn down this P.A. because the broker might be making a little too much?
He is bringing in a buyer that you would never have gotten if it wasn't for this Broker searching for his buyer.
Just my interjection....Thanks for listening.
 
I would have no problem with that. I asked $100K and got $100K. The broker was working for the buyer. The buyer paid him $15K (15%) for his services to him. What I would object to is paying the broker the $15K myself. I didn't ask him to sell my boat. I didn't contract with him to sell my boat. To me he is no different that the actual buyer - we call that transparency.

Here is where I would have a problem. I have a boat for $100K. A "broker" comes knocking and says he has a buyer. In fact, the buyer will pay me the full price! Wow! OK. Now, for some reason that escapes me, I feel I shold pay this broker $15K (15%) as a commission. He's doing his job and his family needs to eat, right? OK, so this broker never had a buyer, he's the buyer. He just bought my boat for $85K. And it doesn't stop there. He now tells a client that he has a seller with a boat for $100K. The buyer says "OK, what a deal!" He buys the boat and pays the broker his commission, which happens to be $15K (15%) again. The broker just made $30K on a transaction that, if he were ethical, would have only made $15K. Now, how many of you DON'T have a problem with that? Let's say he even has that buyer already set to buy. His commission is 15%. He gets 15% from both? Sorry, that's not how it works. That's also why a dual agent is a bad idea.

Yeah, in reality, 99.99% of the time the seller pays the commission. It's the nature of the market - you don't typically have a "buyer" MLS. However, if seller pays it is because he has CONTRACTED TO LIST THE PROPERTY. And it would be unethical, if not illegal, for the buyer to also pay the commission. And if you CONTRACTED TO BUY THOUGH A BROKER and buy from a private seller, YOU, the BUYER pays. There is no justification for the seller to pay. If both the BUYER AND SELLER are represented by brokers (and, I would hope smart enough to not use the same broker) the commission is split according to the agreement between the brokers and the seller would, more than likely in practice, pay all of the commission.

In reality, the buyer pays the commission - The seller gets X dollars less than the sales price. The buyer pays the full selling price. The difference that goes to the broker comes from the deposit/financing of the buyer. Basically, the price the seller accepts is what he owes on the property plus commission plus what he considers the minimum value remaining in equity he's wiling to accept (or the maximum remaining debt he's willing to take on if selling at a loss.)
 
Here is a scenario for you. I have a boat for sale for 100K - in my mind I want a net of at least 85K. A broker comes along and says he has a buyer would I be interested in listing with him for 5% commission

1) I say No, broker moves on and never tells the buyer about my boat

2) I say yes give broker a 5 day listing, sell the boat and net 95K

Under scenario 2, I do not give monkeys's azz what the buyer is paying the broker, if they are giving the broker a kilo of Columbia's finest bam bam, giving the broker their first born, etc, etc.

All I know is that I netted out above where I wanted to be.
 
OK, here is a scenario for you. I have a boat for sale and I'm asking $100K. I have in mind a bottom line price of $85K.

1) A broker comes along and says he has a buyer. I say "OK, bring me the buyer's offer." The buyer's offer (just a piece of paper with no buyer's name) is $96K. I take it, hand over the title and deposit the check for $95K in my bank account (we're assuming guaranteed funds).

2) The broker says, "I have a buyer. Would you be interested in listing with me for 5%?" I say, "do you have a buyer's contract with the buyer?" He says, "Yes." I say, "thanks, but no thanks, you'd have to work exclusively for me. If I wanted a broker I'd have contracted with one who doesn't represent a buyer."

3) Scenario 2 occurs and the next day scenario 1 occurs.

4) Somebody sees my boat or maybe the ad I have on "boatsforsale.com" (for which I pay a fee of $30 for each week I list my boat). He offers me $95,500. I take the check, deposit it in my account (assuming guaranteed funds) and transfer title.

Let's assume in example 4 the buyer just happens to be a broker, should I now pay him a commission? Let's assume the buyer isn't a broker. Should I now pay him a commission since he did all the work finding my boat?

I DO care what the buyer is paying the broker because if I am paying the broker, too, then he is taking advantage of both of us. That is unethical, if not illegal. I might have gotten a better offer if the broker were ethical. I would have probably gotten a better deal if the broker were working for ME. In the case of the double-dipping broker, he is secretly raising the cost of transaction to both the buyer and the seller while profiting through that sheme. Both the buyer and the seller got less for their dollar than they think they did (unless the buyer is in collusion with the broker).

Hey, it's your money. If you like to have the value of it diminished through unscrupulous transactions, be my guest. I won't allow it, I like to hold on to my money. BTW, doing that with the Federal Govt. will get you a 6 X 12 room with a rimless stainless steel toilet and a room mate who likes his salad tossed. It's in this cute little book called the FAR.
 
I think the notion of paying the broker for representation is where this gets all hung up. In Real Estate, it's a one time showing contract. Not a "listing". The broker is not there to represent me or look out for my best interests. He gets a contract signed where I agree to pay him x amount (either a dollar amount or percentage of the sale price). ONLY if his one client closes on the deal. Whether his client pays him or not is his issue with the buyer, not me. I would hate to look a possible sale in the face and tell it to pound sand and go away when there is a perfectly straight forward way to put together a deal. I'm not just paying the guy because I feel I'm obligated because he needs to eat....we signed a contract! If he can also collect a fee from the buyer, more power to him, however the buyer might have an issue.

Jim
 
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