Buyers and sellers should know what to look for in a good broker.
Vin Petrella, executive director of the Yacht Brokers Association of America (YBAA), corrects me immediately when I ask about the subtle qualities of a good yacht broker. “We don’t use the term yacht broker anymore,” he said. “We now say ‘yacht sales professional,’ which we think is a more fair and comprehensive description for those individuals selling new and pre-owned vessels.”
This sets the tone for my conversation with Petrella and with others who agree that today, selling boats is viewed more as a profession and a career choice rather than just a job with a paycheck. Times have changed.
Everyone likes to work with professionals who are honest and educated and conduct business with integrity, but what about the more specific and subtle characteristics and attributes of a good broker? (Broker will be used interchangeably with yacht sales professional throughout this story.) Look for the following characteristics, and you’ll be on the right track when it’s time to buy or sell a vessel.
1 CERTIFICATION & EDUCATION
Back when your dad was buying a boat, he may have dealt with a friend, neighbor or someone who hung up a shingle after failing the real estate exam. Not so today. Certification is becoming a key aspect of the career path.
“Younger people coming into the industry are more interested in certification and official credentialing,” Petrella said.
A Certified Professional Yacht Broker (CPYB) designation means the broker has passed a three-hour exam that covers the necessary industry body of knowledge. The test has more than 150 questions, including ones on technical competence and ethics. An experienced boat salesperson may take more than three months to read and understand the contents of the CPYBprovided study guide. After successfully passing the exam, a broker must provide proof of 30 continuing education units (CEUs) every three years in order to recertify. Brokers have to meet eight requirements to sit for the exam, one of which is being employed as a broker for three of the previous 10 years, including the year immediately prior to taking the exam.
YBAA is a national association that in 2002 launched a certification program as a self-regulating measure in a mostly unregulated industry. Since then, more than 500 brokers have achieved CPYB status, and they consider it a badge of professionalism since only 10 to 20 percent of individuals in the country who claim to be boat salespeople hold this title.
While some places are still widely unregulated, in California nobody can sell a boat without a license. The California Yacht Brokers Association (CYBA) is a regional association that together with the California Department of Boating & Waterways (DBW) develops two licensing exams, one for salespeople (think agent) and one for brokers (think fully licensed professional or organization able to post a bond). Per Adeline Yee of the DBW, this state government arm licenses and regulates yacht brokers and salespersons who are defined as any person selling used vessels 16 feet or longer and less than 300 gross tons and who does not own those vessels. The DBW enforces the Harbors and Navigation Codes 700-740 to regulate the activities of licensees to ensure compliance and provide consumer protection. Certification therefore, is a matter of prestigious professionalism. It’s the first thing to check when looking for a broker to represent you on either side of a transaction.
2 PROBES FOR TRUE NEEDS
A good salesperson knows how to probe and find the customer’s needs, and that goes double for vessel sales. A buyer may walk into a broker’s office convinced he’s looking for a cherry red cigarette boat, but once the broker digs and asks how the buyer sees himself using the vessel and what would make his wife and kids happy, she may discover that what the buyer really needs is a baby blue trawler. Boat brokering is a bit like matchmaking, and once one’s true desires are unearthed, then the search can start in earnest, wasting less time and energy for everyone involved.
3 MANAGES EXPECTATIONS
A good broker should be willing to take time to ask questions and really understand the details of a boat he’s seeking or selling for a client, so he can manage expectations on both sides. “Most people will have already researched the boat online, so they have a rough idea of what’s for sale,” said Mik Maguire, current president of CYBA. “But the key is to know what equipment is included or excluded and what the actual condition of the vessel is.”
Boats can look good in pictures, and brokers tend to use flowery terms to make them sound better, but a barrage of superlatives in broker-speak could be an indication to head elsewhere. CYBA is considering creating a standardized rating system for vessel condition, which it hopes will bring clarity to the process. “Of the 21 complaints we logged at CYBA, half of them were because the broker didn’t communicate the excluded equipment or the condition wasn’t as described,” Maguire said. “If the broker says it’s a 10, then it must be a 10, or the mismanaged expectations will blow the deal.”
4 UNDERSTANDS THE BIGGER PICTURE
Part of the process of buying and selling a pre-owned vessel is the survey. It’s expensive and lengthy and sometimes halts a sale for ridiculous reasons. A seller once lost a deal because the surveyor stopped the survey due to an inoperative genset. A broker must understand what equipment is and isn’t mission critical and, more importantly, she must be able to relate this clearly to the buyer.
“Delaminated stringers may or may not tank a deal, and the broker needs to relate what it will take to fix the problem and if it’s a deal-breaker based on the expectations and resources of the buyer,” said Matt Maynard, past president of the Northwest Yacht Brokers Association (NYBA) and owner of Irwin Yacht Sales in Seattle. “New boaters especially can get wrapped up in the minute details, and a good broker must be technical enough to understand what would and should derail a deal.”
It’s the broker’s job to properly represent the problem and urge the owner to fix issues prior to a survey, if possible. He has to put it all in perspective for both sides or something fairly simple — a missing prop, for example — may be where it all ends.
Another bigger picture item is value, especially for buyers purchasing vessels out of the area. There are regional differences in both pricing and environmental conditions that boats have endured. A boat in Florida may seem like a deal to a buyer in California, but climate, type of use and shortages of similar vessels will all be a part of the market dynamics for a particular transaction. “Shipping calculators tell only a part of the story,” Maynard said. “That’s where experience and perspective differentiate a good broker.”
5 UNDERSTANDS & POSSESSES SPECIALIZED CONTRACTS
The amount of paperwork in a vessel transaction can be mindboggling, and competence with contracts and documentation is key. Jody McCormack, a San Francisco-based maritime attorney, noted that sometimes brokers are carried away by the enthusiasm to sell and they can get in too deep.
“Brokers need a solid understanding of their contracts and be mindful of the limits of those forms,” she said. “Sometimes the transaction calls for specialized knowledge, because there are specific variables.”
Brokers need to know when to consider custom agreements. Are they dealing with a sophisticated racing yacht that may have survey contingencies? What’s the dollar value of the asset? Will the vessel be flagged offshore, and what about taxation issues? “Precedents go back a long way in this industry and they may not be intuitive,” she said, “so brokers need to have a willingness to go beyond the standard forms.”
6 HAS NETWORKING REACH & TECHNICAL SAVVY
A broker should understand the marketplace for the kind of boat a client intends to buy or sell, and she needs to know that segment inside out. She needs to have an excellent knowledge of pricing and have reach — familiarity with not just local but national and international markets. Does she have co-brokering agreements with other brokers in different regions? Does she have a good database of reputable shipyards, surveyors, loan institutions and title companies to make the selling/buying process go smoothly?
Is the broker digitally savvy and does she use the latest marketing techniques, including direct email, Instagram, Facebook, YouTube and advertising in print and digital boating publications?
7 OWNS LONG-GAME MINDSET
A good broker also understands the customer’s exit strategy. Being there to sell a boat or move a customer to a bigger vessel when it’s time to move on is part of what yields longevity in the business. Dick Simon of Dick Simon Yachts in Dana Point cannot stress honesty and openness enough.
“You have to tell the truth even if it precludes the sale,” he said. “This business is all about long-term relationships and there’s no way to build them without integrity.”
Maynard agreed, adding, “You’ll never survive by focusing on a single boat sale. It’s all about repeat business.”
8 POSSESSES PASSION
Last, but never least, is passion. Selling boats can be a 24/7 occupation, and that’s tough for someone who is not passionate about the product and the lifestyle. Tamara Krimstock is a broker at Beneteau dealer South Coast Yachts in San Diego. She said she’s never worked harder but it’s the nature of the business and the people in the industry that keep her going. Someone who doesn’t love boats and the boating lifestyle but wants to sell for a living should go into real estate — houses are more abundant and the commissions higher.