One Paragraph Summary: If you are buying a yacht and are negotiating with the seller directly, whether it’s the owner, the broker or the manufacturer, you’re putting yourself at a big disadvantage. If you don’t appoint your own broker to represent your interests, chances are high that you will never be provided the historical sales data for your particular yacht, you may be able to obtain service records or accurate running cost information and you may be told that charter potential is through the roof. If you do have a broker representing you and they fail to present you with potential better alternatives and they don’t reveal how large the commission payable upon the sale is, your broker may be misguiding you.
It’s in our human nature; we all love getting a great deal on our purchases and yacht buyers are CERTAINLY no different. To make sure you do so however, it’s necessary that you secure a good balance of trust in your advisor while trusting yourself. To do exactly this, make sure you have the information handy before making any sort of offer.
- Historical Sales Price – If you’re looking into purchasing a 2012 116’ Azimut, guess what? The first question you should be asking either the seller or the broker you appointed is to find out what the most recently sold 2012 116’ Azimut went for, to establish the price ceiling for what you’re willing to pay. This information is recorded in the Yachting MLS and is only available to yacht sales professionals but the problem is that if you’re negotiating against the seller or listing broker directly, they probably will omit or forget to mention this information. Do yourself a favor and fill out this form to access the information or better yet, appoint a yacht broker to represent you in your transaction just as you would an attorney or real estate agent.
- Commission Available – Standard commission on the sale of a yacht is 10% (If you didn’t know, you’re probably questioning your career choice) and this is typically split between the broker and brokerage with the listing of the yacht, and the broker representing you and their brokerage. If you don’t have a broker, the listing agent stands to make the whole 10%. If you do have a broker and you agree on a price and they quickly change their mind about why the yacht works and at what price it can be bought for, I’d be skeptical that your broker found out there’s less than a 10% commission at play so they’ll have you search elsewhere, despite the fact that that yacht, at that price is best for you.
- True Costs of Ownership – It’s common practice to ask for running costs and service records to determine how the yacht was cared for under the current owners care, and how much in costs you can expect to accumulate once you purchase her. If you have your own broker representing you, chances are that they’ll have contact to captains or clients with similar vessels to make sure the operating costs you’re being shown are correct. Sellers often times tend to understate operation costs by citing standard 10% operation projections; never take the word but confirm.
- Better Alternatives – Unless you’re the Yacht Hunter, every broker, manufacturer or owner has a particular yacht that they know well, have in inventory, or want to sell you for their convenience, not for your benefit. Through the inspiration of the cloud, YachtZero was created to provide buyers with access to all the inventory on the market (and off) so that only the best yachts at the best prices are purchased for Yacht Hunter clients.
- Broken Charter Promise – If your broker tells you that you can buy a yacht and you can charter it to eliminate operational costs or make a profit, be highly, highly skeptical. I always advise my clients that chartering is a great way to reduce and possibly offset operational costs but, as more owners turn to chartering to obtain these benefits, the charter market is constantly flooded with newer, cheaper more attractive charter options which has instilled a new volatility to yacht ownership.
If you haven’t yet appointed a yacht broker or better, a strategic yacht purchasing advisor to represent you in your transaction, it would be a privilege to guide you through the purchasing process and your enjoyment.
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