Who Really Pays the Brokerage Commission?

A PROMINENT YACHT BROKER SAYS HE DOES

Preface: This opinion piece is presented as background for the series that Peter Swanson (Loose Cannon) and Phil Friedman (For Yacht Builders, Buyers, and Owners) have teamed up to write in covering the multiple class-action suits that have been filed against several major players in the U.S. yacht brokerage sector. It also takes up a theme introduced in a previous edition of the series, by Peter Swanson’s confidential source, “Deep Bilge”.

Michael Joyce, CEO of Hargrave Custom Yachts (Fort Lauderdale, FL) recently published an article on LinkedIn posing the question, who really pays the commission in a yacht brokerage deal? (See “Who Really Pays …”) In Joyce’s somewhat ironic view, the yacht broker does.

I’ve known Mike Joyce since I was a Senior Editor at Power and Motoryacht magazine. In the intervening years, if I learned anything about Mike, it’s that he doesn’t run with the current. Consequently, whether or not you agree with him, it’s generally worthwhile to at least consider what he has to say. And according to Joyce,

“… the seller knows he pays all the commission in yacht brokerage, right? I mean the entire commission is listed right there on the seller's closing statement…

Joyce then goes on to make the point (as did “Deep Bilge” in a previous edition of this series) that both buyer and seller know and agree to the rate of commission prior to initiating the transaction that results in the sale of the yacht. So, Mike argues, the commission rate certainly doesn’t come as a surprise to either party to the sale; and neither should have a beef about it post-closing.

He also quips that,

“When it comes to commissions, the only thing the seller and buyer both agree on is that the broker is not worth the money….”

To which assertion, Mike naturally takes exception. And says,

“The seller immediately assumes that [without] a 10% brokerage fee [the seller] will put all that money in his pocket.

Which Mike argues simply isn’t true because, without broker involvement/representation in between the buyer and the seller, a high percentage of potential deals fall apart, ultimately creating added costs for both. It’s Mike Joyce’s considered opinion, therefore, that,

“Good brokers don't cost you money; they save you money….”

Look, for the most part, Mike is correct. Indeed, I said in a comment on his LinkedIn post:

“Mike… I think you make several strong points here about brokerage commissions. The bottom line is (or should be) what is the least net a seller is willing to accept, and what is the most a buyer is willing to pay, all up?”

But, Is This Really What the Current Legal Actions Are About?

I think not.

Irrespective of what “Deep Bilge”, Mike Joyce, or others may (rightfully or otherwise) assert about the reasonableness (or lack thereof) of a 10% sales commission, it’s a mistake to think that the amount or rate of the commission in boat and yacht brokerage sales is truly at the center of the legal actions currently before the Court.

Read the Full Article at:

?? https://portroyalgroup.substack.com/p/who-really-pays-the-commission???

This Special Edition Series on the Class-Action suits which have been filed against a group of brokerage houses, industry associations, and yacht sales MLS companies, is available primarily to Premium Level subscribers of For Yacht Builders, Buyers, and Owners based at our publishing hub on Substack. You can, nevertheless, read the rest of this article at the above link by accepting the option for courtesy access offered when you get there. However, it would be greatly appreciated if you'd consider taking a paid premium subscription which will give you access to our full range of services, including full open access without time limit to all our current coverage and our full archive, as well as open access to participate in our community chat space... and more.

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