Spiff for sale should come from owner, not broker

Aug 4, 2015 by Peter Herm

I read the recent article discussing captain/broker relationships with great interest. [Triton Survey, July issue] Owners have a slightly different view from many of the opinions expressed. I think most of us have sympathy for both sides of this equation.

First, brokers. There is no question that the listing broker should know the boat they are selling in detail. That is his job. His knowledge should be reflected in a scrupulous, well-written listing with current information about the boat.

I get a huge chuckle out of listings with typos, incorrect information, lousy photos and, my favorite, comments noting engine hours from two years ago and “batteries replaced in 2009”. Read some listings and I dare you to find many without completely laughable mistakes. There are not many proofreaders in this industry.

There is no question that brokers should give as much notice for showings as humanly possible. And if there is a change of plans, they should notify the crew immediately. This is just common courtesy. And why not?

But brokers are also saddled with buyers who may not know what they want until they see a lot of boats. Yes, buyer’s brokers should preview boats, but this is not always possible for a long list of reasons, not the least of which is the location of the boat.

And some owners (me excluded, of course) don’t always give their brokers the requested 48-hour notice. It may be just one hour, so that’s not necessarily the broker’s fault.

However, in defense of brokers, they live deal to deal. The great majority of them are paid straight commission. Unlike captains and crew, they do not get a check every two weeks, or paid health insurance. There is no paid vacation time, no paid meals, no paid housing. Yacht brokers only get paid when a deal closes. Crew get paid and enjoy multiple benefits every single day, whether the boat is sold or not.

To put the broker’s challenge in perspective, in the first quarter of this year, Boat International says 92 yachts over 24m sold out of the 1,977 listed globally. There are almost 700 licensed yacht brokers in South Florida’s Broward and Miami-Dade counties alone.

Certainly, many of these brokers sell boats under 24m, but in the size boats that require crew, this is a tough business. The brokers have to kiss a lot of frogs and show many boats before making a sale and getting paid.

Based on the current sales rate (annualizing the first quarter out over the year) 18 percent of the boats on the market today will sell during the course of the year, or about 366 sales globally. For the average broker, this means showing a lot of boats to sell far less than one this year.

Yes, when they actually close a deal, they make what appears to be a big check. But that windfall covers past months of no sales and likely many more months of showings with no sales ahead. It looks easy, but in most cases, it is not.

From the captain and crew perspective, the sale of the boat is not going to be a fun event if another boat with the same owner is not in the cards. It behooves owners to provide captains and crew with not only severance based on time served, but also a spiff when the boat is sold. I realize that they may work themselves out of a job in the sales process and so some financial incentive makes sense, given human nature.

However, it is the crew’s job to assist in the sale in any way possible. There is a long list of things the crew can do to enhance a sale, which I will detail in another column, but they are all pretty simple items that won’t hurt.

As for brokers spiffing captains, I believe this is a conflict of interest. Does the captain of a charter yacht share the tips with the charter broker? Certainly a heart-felt thank you, a celebration dinner and common courtesy in the process is not out of line. But I am not sure it is the broker’s responsibility to compensate the captain/crew for doing the job they are already paid well to do.

To me, the real issue in all of this is that captains should counsel the owner on what brokers to choose. Captains are far closer to the “industry” than most owners. They are more likely to know the good and the not-so-good brokers. It’s their job to help an owner choose a broker, one most qualified for the sale of their boat.

I know that relationships and friendships are involved, but it seems that they guy writing the check should get some consideration from his captain in this process. But I could be wrong.

Peter Herm is the pen name for a real yacht owner who is an entrepreneur based on the East Coast of the U.S. It comes from Pieter Harmensz, original owner of the oldest known stock certificate in 1606, issued for a Dutch company with the largest shipping fleet in the world. Comments are welcome at editorial@the-triton.com.