Whenever it comes to selling or buying a yacht, there is the moment to decide whether to hire a yacht broker or not. Many owners or people looking to purchase a yacht consider spending that extra money for a broker not worth it, but after all this is a very relative topic as it depends on the size of the boat, time the owner or the buyer has in his hands and the budget he/she has to promote the vessel or look for one.
If you take the decision to hire a broker, we believe this is the right thing to do, especially if you are on the market with or for a yacht above 15m. Many people compare yacht brokers to real estate brokers and discuss the huge difference in commissions. While both types of brokers do sell expensive products, both jobs are very different from each other.
What is the commission a yacht broker usually makes from finding the right yacht as a buyer representative or selling the vessel? Well, the general commission is 10%. However, this percentage decreases with the amount of money the yacht sells for. Up to $10,000,000 the brokers are supposed to get a commission of 10%, for the second $10,000,000 the percentage is 5% and above this amount it goes to 2.5%. The distribution of commission between buyer representative and owner representative is usually 60/40. However, on certain occasions, the commission split is 50/50. Whenever a Central Agreement (CA) is signed by the owner and the broker, the commission is usually mentioned which obligates the owner to share the specific percentage of the sale price with the broker after the deal is completed. By signing such an agreement, the broker gets more motivated to promote the vessel and simply push the sale as he/she has guaranteed revenue if a sale is achieved. Open listing agreements are not the greatest stimulus for brokers as their efforts might not be rewarded.
It is important to read all the points of the Central Agreement contract because in many cases, even when the yacht doesn’t get sold by the broker, a certain commission should be paid to the one. Conditions are different, so read before you sign and ask for clarification if something is not clear.
Usually, bigger well-established brokerage companies don’t compromise with the commission percentage. In other cases, with smaller brokerage houses, brokers are even happy to reduce their commission up to 5%-6% to be split between the two representing brokers so the sale can take place. However, such cases are not common practice – first because 10% sounds better than 5% and second because it creates general discontent in the industry.
In any case, it depends on the agreement between a client and a broker and the particular situation. There are occasions when the seller wants to upgrade to a bigger vessel and has the same broker for the sale of his/her current boat and the purchase of the new one. In such situations, the broker might only get a commission from the sale of the yacht. In other cases, brokers have created long time relationships with their clients when many deals have come to an end and have resulted beneficial for both parties, and certain rates might apply.
However, as a rule, there is a 10% commission which yacht brokers work really hard for. This commission usually includes boat’s advertising online, in paper magazines, leaflets, etc. Sometimes, certain marketing campaigns might be covered by the owner if they include a big expense. When it comes to buyer representatives, trust-worthy brokers will lead you to the best deal possible where all parties are happy. Choose well when finding a broker to sell your current yacht or find your dream yacht. The right broker will be worth the money spent on commission.