THE COMPLETE GUIDE TO SELLING YOUR BOAT WITH A YACHT BROKER
At the Naples School of Boating, we believe that education is the key to your success as a boater. One of the biggest and most important decisions that you will make is selling your boat, and that requires some knowledge and information before you get started. That’s why we’ve put together this comprehensive guide to boat sales and selling your boat with a broker. If you have chosen to work with a professional yacht broker, he or she will help you with each step in the process and stages outlined below. If you are selling it yourself, we hope you find this guide helpful and informative.
If you have chosen to work with a professional yacht broker, you will need to find the right one to meet your needs. Similar to finding a realtor to sell your home, their experience and expertise will vary, as will the types of boats that they specialize in. Many brokers are passionate about the types of boats they sell. Think professional sailors and avid fishermen. Hiring an enthusiastic sailor to sell your high powered fishing boat is probably not the right fit. Any broker can take your listing, but the sign of a good broker is one who deals with your type of boat on a regular basis, and one who has a book of potential buyers who may be interested in your boat. The best way to find a broker is to conduct an online search using Google (look for the five-star reviews) or by referral.
The elephant in the room of course is the cost. Yacht brokers are compensated on a commission basis which is typically 10% of the selling price of the vessel, to be paid by the seller. Some will negotiate, but most will not. While it may seem like a lot of money (and it is), the listing broker does not get to keep it all. If the listing broker represents the seller and the buyer, they will split that commission equally (typically) between themselves and their brokerage firm. If another broker represents the buyer, each side of the transaction will get half of the commission payment, splitting again amongst each respective broker and their firm.
If you are interested in learning more about discounted commission rates, please visit our Brokerage Services Page. Through our affiliation with Knot 10 Yacht Sales we are able to offer our customers rates below 10% while still providing services equal to, or perhaps greater than, full priced brokerage firms.
Boat Sales Phase One: Pre-listing
The pre-listing stage is when you, the seller, will do the most amount of work. This is very similar to preparing a house to be listed on the market. Depending on the boat and the location, you may be able to hire professionals to do some of this work for you.
Mechanical Systems: Buyers expect that mechanicals (engines, pumps, systems, etc) will be in good working order during their first showing and especially during the survey. Nothing will sink your sale quicker than a boat with faulty mechanicals. That tells the buyer that the boat has not been well maintained.
Electronics and Electrical Systems: This is equally as important as mechanical systems. Make sure that your electrical systems (AC and DC power, battery chargers, inverters, etc) are working properly. Also, make note of how old your batteries are. That is a very common question during a survey. If your boat is equipped with electronics such as GPS, Sonar, VHF, Radar, Autopilot, etc, be sure to check that they are working properly.
Pro tip: If your boat has older electronics that are not working properly, don’t panic. You’ll need to price the boat accordingly and disclose the deficiency on the listing, but it is not recommended that you have new electronics installed just to sell the boat. Each buyer has their own taste when it comes to electronics, so it is often best to keep what is there and let the new owner pick the brand and features of the new electronics.
Safety Equipment: Your vessel needs to be prepared for sea trials as well as for survey, and that includes your safety gear. Be sure that your flares are not expired, have adequate life jackets aboard the vessel, and fire extinguishers and suppression systems are charged and unexpired. Navigation lights must also be working properly. Your vessel will not pass a survey if it is not compliant with federal safety regulations.
Cleaning: Clean it up and clean it out! First, remove all of your personal items from the vessel in addition to anything that is not part of the sale. Next, hire a professional cleaning and detailing company. The boat should be cleaned inside and out, top to bottom. If the boat is kept in the water, hire a diver to clean the hull and waterline. All cleaning should be done BEFORE any pictures are taken and posted online. Remember, you only have one chance to make a first impression, and when it comes to selling your boat, that first impression happens with online photos. Clean boats that are priced right get showings and offers.
Photos: Smartphones have excellent cameras, but that doesn’t make everyone a professional photographer. Depending on the type of boat and selling price, it may make sense to hire a professional and do a proper photo shoot. If you are working with a professional yacht broker, this may be included as part of their service.
Pro Tip: In addition to high quality photos, a walkthrough video is a great way to highlight your vessel.
Initial Listing Price: You will likely begin the price evaluation in the early stages of this pre-listing process, but your initial listing price will set the tone for the rest of the sales process. List it too high and buyers will think that you are unrealistic and they will move on to other boats. List it too low and buyers will think there is something wrong with it, or worse, you attract the buyers who want even deeper discounts. A professional broker can be of tremendous value at this stage in the process, as they have access to listing data for actual boats sold, not just those currently on the market. They can also offer insights as to the current market conditions and buyer sentiments.
Vessel Description: The way that you describe your vessel in the listing is what buyers are expecting from you. Be very specific about what is included, and more importantly what is NOT included in the sale. The same is true with your photos which are considered part of your vessel description. Don’t show pictures of the dinghy with an outboard motor if it’s not included in the sale or available for an additional price. If you are working with a broker, your vessel description is called Schedule A and is part of your legally binding contract with a buyer. Be thorough with your description.
Service Records: Gather all of your service records (hopefully you’ve kept those) and organize them into a binder if they are in paper format. If you have them stored digitally, create a file or folder that you can easily send to your broker or a potential buyer during the sales process. Having all service records tells the buyer that you have not only cared for your boat but that you were intentional about it and can prove what has, or has not been done.
Listing Agreement: If you are using a broker, you will be required to sign a listing agreement. Typically this agreement will be central/exclusive, meaning the vessel only has one selling broker or brokerage firm. In most cases the agreement will also state that the vessel is available for co brokerage, meaning that another broker or brokerage firm can represent the buyer. Using multiple listing brokers or listing your vessel as NOT available for co brokerage is not advised. Using multiple listing brokers will leave you, the seller as the coordinator of all the listing brokers and could potentially put you at a disadvantage. If you accept an offer on a Monday from one broker, but another broker calls you on Tuesday with a better offer, you’re stuck with the Monday offer. If you list your vessel as not available for co brokerage, you are cutting yourself off from buyers who wish to have their own representation in the transaction.
Boat Sales Phase Two: Active Listing
Now it’s time to activate your listing online. If you are working with a broker, they will activate your listing with high quality photos, an accurate description of your vessel and, hopefully, a walkthrough video of the boat. Here’s what to expect during this stage of the selling process.
Phone Calls and Showings: Be prepared for calls, either directly from potential buyers or from your broker. Like selling a house, try your best to keep the boat ready for showings on short notice. If you have a boat detailer, you may want to request more frequent cleanings. If the boat is kept in the water, you should consider having the hull cleaned more often. If you are not getting phone calls or showings within the first two weeks, it’s time to take a second look at your pricing strategy.
Prepare for Surveys: If there are any items that were not addressed in the pre-listing phase that will become an issue during a survey (home inspection for your boat) please use this time to address it IMMEDIATELY.
Market Movements and Price Reductions: It is important to keep track of boats on the market, including ones that have sold, that are exactly like or similar to yours. You need to remain flexible and realistic when it comes to market changes, price drops on competing boats, and seasonal market impacts. Remember, your boat is only worth what someone is willing to pay for it today.
Receiving Offers: Be prepared to quickly and thoughtfully review your offers. Price is only one factor in deciding whether or not to proceed with a buyer. How quickly will they close the sale? Are they paying cash or using financing? If you are using a broker, how much commission will you pay as part of the transaction? Think it through and run the numbers. The industry standard in yacht brokerage is a 10% deposit along with an offer in writing. Be sure to have both before accepting an offer and moving forward with a buyer. Avoid verbal agreements and free boat rides disguised as a sea trial.
Boat Sales Phase Three: Accepted Offer
Once you accept an offer, both the seller and the buyer will be bound by the contractual obligations agreed upon such as closing dates, survey, sea trial, and acceptance of the vessel. Here is what to expect once an offer is accepted.
Survey and Sea Trial: As soon as the offer is accepted, the buyer will begin the process of surveying your vessel including a sea trial. Depending on the vessel, this could be a one-day event or scheduled over several days. The buyer pays for the survey which can range from a few hundred to a few thousand dollars, depending on the size of the vessel. At the conclusion of the survey a report will be created indicating the condition of the vessel and any items or or defects that the buyer should be aware of. All boats, regardless of their age, will have issues reported on a survey. Some are minor and can be addressed by a mechanic or other professional. Some items are more concerning and may be cause for additional price negotiation or remedy by the seller. In a worst case scenario, the vessel fails a survey for something major, and the buyer cancels their offer. To learn more about the marine survey process, please read our Guide to Marine Surveys post.
Pro Tip: Your willingness to negotiate on survey findings is critical to your success in selling your boat. For example, if the survey report says that your generator needs $3,000 worth of repairs, and the buyer is still at the negotiating table, you should be there too. They have the right to refuse the vessel and receive their deposit back at this point. But if they’re still willing to work it out, it will benefit you in the long run to negotiate and get the deal closed. Don’t let this buyer go thinking that the next survey won’t find anything wrong with your generator. Fix it or give the discount.
Acceptance of Vessel: Once the final negotiations are finished and any obligations to make repair or remedy have been completed on the part of the seller, the buyer will then sign the acceptance of vessel form. Once this form is signed, it’s time to get prepared for the closing.
The Closing: At last, you make it to the closing! In the days leading up to this momentous event, all documents should be finalized and wire transfers should be used to transfer funds on the day of the closing. If you are using a broker, he or she will likely have a closing specialist on staff to assist in this process and to make it go smoothly for all parties. If you are selling your boat without a broker, it may be wise to ask an attorney for assistance with ESCROW funds. For more information about the closing process, please read our Yacht Sales Closing Guide.
Selling a boat is no easy task, and hopefully after reviewing the many steps involved, you see the value of using a professional yacht broker. If you wouldn’t sell your home without a real estate agent, you probably shouldn’t sell your boat without a knowledgeable broker as well. If you’re ready to begin the process of selling your boat, CLICK HERE to request a free consultation and market analysis of your vessel. There are no obligations except a few minutes of your time.
*Disclosures: Captain Frank Lecardo is a Licensed Yacht Broker in the State of Florida and is affiliated with Knot 10 Yacht Sales. License information available upon request. Naples School of Boating LLC is NOT a brokerage firm and does not engage in the purchase or sale of vessels. All brokerage transactions are completed through Knot 10 Yacht Sales and are subject to their policies, procedures and commission rates. Fees and commission rates are available upon request. For more information please visit Knot 10 Yacht Sales or Contact Us with any questions.