How to Select a Great Yacht Broker
Updated: Sep 21, 2022
“Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great. We don’t have great schools, principally because we have good schools. We don’t have a great government, principally because we have a good government.”
Jim Collins, Author of “Good to Great.”
The global COVID-19 pandemic has surprisingly impacted the luxury yachting industry. As travel worldwide ground to a halt in the name of safety, airlines, hotels, and cruise lines took a significant hit, while yachting emerged as a stand-out alternative. For this reason, the luxury yacht market is ON FIRE and expected to increase more than 5% yearly for the next 5+ years!
Where else can you travel in complete luxury and have access to exotic destinations while maintaining full control over your environment?
You guessed it – on board your private luxury yacht!
…And you’d be in great company!
According to Grand View Research’s “Yacht Market Size, Share & Trends Analysis Report 2021-2028,” The 2020 Yacht market was valued at 8.15 Billion and is expected to expand to a compound annual growth rate of 5.2% from 2021 to 2028.
“Expert” vs. “Authority.” What’s the difference?
To be a subject matter expert is to have mastered your trade skills. You know your stuff! You have completed all the necessary education and training, got your feet nice and wet, and achieved a level of expertise that allows you to manage your client’s needs effectively, wants and problems, guiding them through the process to an overall successful solution. This is the goal…right?
Well…The answer might surprise you. Being an expert is certainly the goal in many industries. You would expect your child’s pediatrician to be an expert in pediatric medicine. The person who prepares your taxes should be a tax expert. You likewise expect the person who fixes your car, arranges your mortgage loan, or cuts your hair to be an expert as well.
However, to be a subject matter authority goes far beyond expertise. The authority is the person from whom the expert seeks advice. An authority has the benefit of layers upon layers of first-hand experience and decades of diverse expertise, which builds to a level of unmitigated authority.
When you’re prepared to invest six, seven, eight, even nine figures into the purchase of a yacht, you’re going to need to know that you’re dealing with someone who is a true
California and Florida are the only states in the U.S. that require yacht brokers to be licensed. This means in many of the remaining 48 states; you could be represented by someone with as little as a GED (General Educational Development) test in place of a high school diploma, calling themselves an expert.
The expert yacht broker should know how to show a boat, arrange for a survey, complete the paperwork, manage listings on various internet sites, discuss options with their clients, and ultimately close the deal. This could be just as well describing a used car salesman.
The authority is an experienced yachter with tens of thousands of ocean hours under its belt. With decades, not years, of experience. They know a boat the way a mechanic knows his own car. They are prepared to handle the most complex transactions that only someone who has been brokering for decades would have been exposed to. They know how to effectively troubleshoot potential issues before turning the vessel over to their client. Someone who has sold domestically and abroad; and understands the global markets. They are part of the roughly 10% of all U.S. yacht brokers who are CPYBs (Certified Professional Yacht Brokers) under the Yacht Broker’s Association of America.
To be a true authority means you’ve gone far beyond “Good.”
and have reached GREAT!
Buyers and Sellers
A yacht broker represents both buyers and sellers. These transactions differ greatly, but both require the utmost care from a great broker.
Buyers vary from first-timers to seasoned yachties. First-timers rely on their broker to introduce them to the yacht buying experience from point A. They may require tremendous education, guidance, and insight to determine the best option. They may be unaware of what they can comfortably afford. This is where an experienced broker is critical. These buyers need the expertise of a great broker to protect their interests; to help them find the boat that best fits their needs, skills, and budget. These clients may need help understanding the ongoing ownership costs, legal considerations, registration requirements, etc. They also need a broker who will negotiate the best purchase price on their behalf. An experienced broker will have an extensive network, offering greater bargaining power. Seasoned yachties may be more familiar with the buying process. However, they rely on an experienced broker to represent their interests. They may be upgrading and need to understand their limits. They may be considering a different class of boat with which they are not as familiar. They also need to know that their broker is using their immense network to negotiate their best options.
Sellers, as experienced yachters, have a general understanding of the buying/selling process. However, their needs differ significantly from the needs of a buyer. Sellers naturally want the most value for their vessel. The broker’s job is to make this happen. This often requires sea trials, cleaning, repairing, and even refurbishing the boat. The broker’s knowledge of the market is instrumental in deciding what needs to be done to fetch the best price.
A great broker will leverage an immense domestic and international network to maximize exposure and find the perfect buyer. Collaboration with fellow brokers is a must.
“Each client comes with a
unique set of asks….”
Each Client is Unique
Unlike a real estate transaction, purchasing a luxury yacht carries a unique set of specifics. Beyond bed and headcount, other equally important considerations exist.
What size is ideal for the client?
What are they using it for?
Where is the sweet spot in the client’s budget?
Will the client need a crew, or will they captain the boat themselves?
Will the client need relocation assistance?
Does the buyer require repairs and renovations before closing?
Where will the client keep their boat?
Motor Yacht or Sailing Yacht?
Where will the transaction take place?
What flag state (country of registry)?
A great yacht broker understands that each client comes with a unique set of asks and is prepared to address these specific asks. Although first-time buyers may require more assistance, seasoned buyers rely on their broker’s expertise to meet their needs.
And beyond the transaction, a genuinely great broker will be there far beyond the sale to assist their clients with vessel transportation, relocation, storage, and maintenance challenges. Chesapeake Bay Magazine recently said in an article entitled “5 Ways Choosing a Yacht Broker Beats Going It Alone,” Mike Titgemeyer, owner of Crusader Yacht Sales in Annapolis, said, “After the sale, we expect our owners to call us when issues arrive. We all have large networks throughout the marine industry, and chances are we know somebody. We can also help our owners when they want to change or upgrade their boats. We can help them determine what equipment is best for the boat and how it will affect resale value down the road.” Brokers of authority generally have life-long clients earned by their exceptional integrity and service.
You can’t afford to settle for anything less than GREAT!
Laws and Regulations
A great yacht broker never stops learning. Maintaining current knowledge of industry-related laws and regulations, which vary by state and country, is not a task to be taken lightly and certainly not overlooked. A certified yacht broker is a member of the CPYB, which requires updated certification every three years, ensuring each CPYB member is current in all laws, regulations, and other guidance.
These laws and regulations are issued by federal and state governments, Coast Guard, and other state agencies designated to protect boaters and their vessels. They vary by type and size of the vessel, capacity information, navigation areas, documentation, penalties, and much more.
Your yacht broker should be familiar with the laws and regulations governing your area and specific vessel to ensure the yacht their client is buying or selling is compliant with all applicable laws and regulations and that the captain knows their rights and obligations under these directives.
Who’s Managing Your Money?
Before you turn your hard-earned money over to anyone, you need to be sure they are qualified to manage your money correctly.
Are funds kept in a secure trust account?
Is the broker bonded?
Whether or not your broker uses a trust account should be a massive consideration when selecting a yacht broker. The agreement on how the funds will be held should be written into the contract signed by all parties.
What Does it Cost to Own a Yacht?
Buying a mega yacht is just the beginning. Before you secure the purchase of your shiny new mega yacht, be sure you know the ongoing operating costs.
A general rule of thumb when calculating ownership costs of a yacht is about 10% of its value. This cost varies by type of vessel, age, and usage. These costs include routine maintenance, repairs, dockage, additional supplies, and the cost of captain, crew, or yacht manager if needed. Docking can run anywhere from $18 to $40+ per foot, plus utilities. You’ll need to add fuel, registration, taxes, insurance, and provisions to this list.
You are working with your yacht broker to understand all the costs of ownership before closing is essential to ensure the most positive experience.
Some of these costs can be offset by tax deductions (liveaboard) or lending your vessel out for chartering. Your broker can discuss these options with you.