As the world continues to battle Covid and its variants, boating has become the outdoor pursuit of choice for growing numbers of people worldwide. And it makes perfect sense.
At a time when we’re all trying to avoid crowds and spend more time with the people we love, getting out on the water in a boat is one of the few activities that ticks all of those boxes.
This has led to a massive surge in the sale of both new and used boats. Boat manufacturers have been struggling to keep up with skyrocketing demand while used boats are changing hands at lightning pace.
According to one source, the US boating market alone was worth $18.9bn in 2021, so it’s safe to say that there is big money involved with boating. But with big money comes big risk.
If you are looking to buy, sell or charter a yacht, it is critical that you select a reputable broker who understands your needs, knows their product, and can offer you the necessary financial guarantees. We want to ensure that you are not left high and dry on the rocks and out of pocket.
For this article, we spoke to some of the industry’s top brokerage professionals to get their advice about what every brokerage or charter client needs to know before signing that cheque. Here’s what they said.
Reputation is key
The importance of a strong industry reputation was repeatedly highlighted as a critical first consideration that every client needs to think about before buying, selling or chartering boats. According to Tim Derrico of HMY Yachts, established brokerages are focused on the bigger picture of client relationships: “Brokers at established firms will ensure that clients are happy and enjoying the whole process; they’ll take proper care of the client. When clients have a great experience with us, it ensures that we retain the relationship and that they’ll come back to us in future. In our case, 60-70% of our business is repeat clients. Established brokerages like us have built their reputations with time and experience, through keeping their clients happy.”
Darren Plymale of Galati Yacht Sales had similar comments: “Reputation is everything in this industry and you are only as good as your word,” he stresses. “We’ve always said that sometimes it is not what you buy, but who you buy it from”.
His views were echoed by Chuck Cashman from MarineMax, who commented: “I feel that it is very important for clients of all sizes to deal with established, reputable brokers. We work in an industry where the barrier to entry is very low, which makes it very tempting for people with little working knowledge of the industry to become a broker.”
Jon Burkard of Allied Marine agreed: “With so many inexperienced brokers in the industry, it’s more important than ever that clients should deal with experienced, reputable companies and their brokers. Just because someone understands yachts, doesn’t mean that they understand sales transactions and the complexity that comes with them.”
Paul Flannery (pictured left) from the International Yacht Brokers Association, or IYBA, offered this advice: “These days it’s easy for someone to create an online persona, but if you do just a little bit of research, you’ll be able to tell whether a broker or company you’re interested in doing business with, is established or new to the industry. It’s very hard to fake forty years of reliable transactional history.” Mr Plymale advised similarly, saying: “Be diligent and interview the brokerage house or dealership you are seeking to purchase from.”
Do background checks on a yacht broker
The message in this regard was therefore unambiguous: Clients should do their own research before spending money with a broker. Thoroughly investigate who the broker and/or brokerage firm is, what their background is and what their sales record is. Don’t be shy to ask tough questions.
Sometimes, a professional physical presence can also be a sign that you’re dealing with a reputable brokerage, according to Mr Flannery: “Some things to look for include a physical presence with an established staff of professionals, good bios on their website and a good inventory of listings available for sale,” he commented.
Mitigating financial risks and fraud
It was clear from all the responses we received, that reputation is so important because it’s tied to risk. Clients need to understand the very real and potentially substantial financial risks they’re taking when dealing with a broker who lacks the reputation and credibility of more established firms.
According to Mr Plymale (pictured left with his son Darren), clients are easily swindled in the excitement of buying such a large, luxurious item as a boat or a yacht: “Customers need to be vigilant to ensure that they don’t fall victim to fraud,” he remarked. “We have a tendency to let our guard down when making a luxury purchase, getting caught up in the moment instead of slowing down and safeguarding ourselves against people trying to take advantage of us.”
Mr Flannery agreed with him: “Don’t let your emotions run the show. It’s a business transaction. Let a pragmatic approach define your decision and ensure that you do all of your due diligence.”
Mr Cashman also highlighted fraud as a major risk factor: “Fraud is at an all-time high,” he noted. “My advice is that you ask your broker for references and look at their transaction history. Have they done a deal like this before, are their customers happy and can you speak with some of them? That would be a great start.”
Protect your money
Mr Flannery explained the financial risks in more detail: “In yacht and boat transactions, large sums of money are often involved. And while there are very few guarantees in life, your chances of experiencing misappropriation of funds are usually much less when dealing with established firms or brokers. Established, reputable firms will have practices in place to ensure that your transaction goes smoothly.”
Mr Burkard agreed, saying: “The financial risks can be big. Established brokerages keep escrow accounts and don’t co-mingle operational money with escrowed money under any circumstances.” But he added a disclaimer: “People need to understand that escrow accounts are not controlled by banks - they’re just regular accounts. They must not be co-mingled by law, however, it’s up to each company to follow those laws”.
The importance of expert advice
All of our contributors emphasised the importance of only dealing with professional experts. This way customers are guaranteed that they’ll get the best and most reliable boat for their needs, for the best price, with all of the relevant support in place to ensure loads of fun out on the water.
Mr Plymale explained that an expert broker will ensure their clients get the best possible boat for their needs: “Today, most quality sales professionals specialise in a product segment such as sportfishing, cruising, trawlers, superyachts, etc. They’ve invested their careers within that segment of the industry that they enjoy selling. Their market awareness in knowing the finest details of vessels on the market including their histories, the types of boating the vessel served etc, are extremely valuable.”
“Good brokers make sure to ask the right questions to ensure that the client gets the right boat,” Mr Burkard stated. “They have a depth of knowledge that would surprise most people. They gain that experience through having made sales and having attended surveys and sea trials.”
Mr Cashman had similar advice for buyers: “The right broker will source the proper boat for the client and they’ll bring to light both the positives of the boat and any areas of concern. These are not necessarily dealbreakers but they’re always better addressed before the new owner takes over. The various certifications and classes of yachts are a world unto themselves and it really requires a true professional.”
The reality of inexperience
Meanwhile, Tim Derrico of HMY Yachts highlighted the risk of dealing with inexperienced, unknowledgeable brokers: “Almost anyone can get a yacht broker’s license in the State of Florida,” he cautioned. “But that doesn’t mean that they have the experience or knowledge to properly list or sell a boat or yacht.”
Mr Flannery confirmed those comments, saying: “The standard is admittedly low, especially considering the amount of trust that the public places in a broker’s hands. Your best insurance, therefore, is to utilise the services of a well-established and well-respected brokerage firm.”
Mr Plymale concluded with some final words on the value of working with established, reputable brokers: “A true professional will offer a relationship that goes beyond just the sale of the boat. They’ll work with the client to help them navigate the process and make the best possible decisions. Brokers may have to compromise to achieve this, with decisions that may not necessarily be the best for themselves. It’s also a relationship that will offer access to the best interest rates on the market, the best insurance programs, access to dockage, captains crew etc and one that, most of all, will reinforce for both buyers and sellers, all the reasons why they’re doing business with the best professionals in the industry.”
Speak to a professional yacht broker
If you are looking to buy, sell or charter a boat or yacht, we invite you to contact any of the industry-leading professionals who so graciously contributed their knowledge to this article.
Images: Bahamas Tourist Office; supplied