April 2, 2024

We have some excellent news to share this week but first, a bit more on the yacht broker class action lawsuit unfolding in the United States. Last week we wrote that the suit was brought against several organizations in the yacht sales world. The plaintiff who listed his boat with a brokerage service, alleges he paid a non-negotiable and “inflated” broker commission equal to 10 percent of the price.

The suit was inspired by recent landmark litigation in a Missouri federal court, where it was alleged that most powerful players in the U.S. real estate market had engaged in a price-fixing scheme involving multiple listing services. Last October, a jury found that the National Association of Realtors and large brokerages had inflated broker commissions and awarded $1.8 billion to the class-action plaintiffs.

At the heart of the case against the yacht-sales establishment is a “Buyer-Broker Commission Rule,” which compensates a buyer’s representative broker with funds paid by the seller.

We will let the details come out as the case evolves (if it does) but what’s fair, what’s reasonable, and what do you want?

I emphasize that I am not a lawyer, (my mother is still upset about that) but there seems to me, to be two sides to this. At my own simple level of knowledge, I vaguely understand that setting a rigid commission rule could be seen as a restriction of trade, but I can also see that there needs to be some arrangement that recognizes the value of the work that brokers on both sides of a yacht sale, each contribute to the deal.

At this moment, a family member is selling a yacht down south and I am seeing up close, some of the challenges. It’s a 54-foot sport fish with a lot of custom rigging and it’s in showroom shape, but it’s a 1984. No broker so far, in several months of trying, has wanted to take it on.

As long as the owner still owns the boat, he’s paying a captain to look after it, insurance, ongoing maintenance, slip costs and so on. He’s stopped using the boat but the bills keep coming. For a selling broker, the marketing costs are probably not very different than they would be if the boat was a far more valuable late-model yacht of the same size. And, actually, it takes two to properly handle this boat where a joy-stick equipped yacht could be handled by one person.

I assume that most yacht brokers take it on the averages and they do well with some boats but less well with others. Also, every deal and every relationship contributes to your reputation and impacts your future referrals. So, what’s fair?

Maybe the owner of our family yacht would be willing to pay a greater commission to more quickly escape the ongoing costs. Would that be fair?

GOOD NEWS – to close this week’s Editor’s Message, you may recall the great news for Georgian College about the very generous scholarships being donated by Schulich Builders; five students in the one-year certificate and five students in the two-year diploma programs will each receive $20,000 for each year of their program.

The good news is that we now understand these scholarships are open to all Georgian College students including those in Marine. That’s a really generous amount and should be a real incentive to apply. Share the news and visit the Georgian College website to learn more.

Andy Adams – Editor