Rattner says his eight-year relationship with broker Kevin Merrigan, president of Northrop & Johnson in Ft. Lauderdale, has been financially beneficial. "A good broker will be much more knowledgeable than most boaters. He’ll see hundreds of boats each year, so he’ll have a better idea of the values out there," he says. Carney also uses Johnson as a litmus test for new boats. "He knows what I like in sailboats," Carney says. "He doesn’t BS. What he tells me, I can take to the bank."

Others employ a less exclusive approach. "We work with maybe 25 brokers we’ve come to trust," says Felix Sabates, owner of Trinity Yachts. "I use them as our eyes and ears and they forward new customers to us."
Jonathan Naylor, who has created a cottage industry in Ft. Lauderdale by refurbishing dowdy name-brand boats and reselling them for a healthy profit, only uses brokers. "I never deal with a customer directly," he says. "I’m happy to pay the yacht brokers their commissions. It saves much hassle."

The shoals and reefs of the global market for luxury yachts and superyachts are best navigated with the aid of an experienced broker.

The commission is typically 10 percent of the yacht’s purchase price, with about 40 percent going to the listing broker and 60 percent to the selling broker (some brokerage houses still use a traditional 30/70 split)—incentive for both brokers to keep on top of the sales process.

Merrigan says owners should expect the yacht to sell within a year of listing it with a central broker. Typically, a broker’s commission pays for a marketing program that includes brokerage ads in national boating magazines, Web listings in multiple listing services, such as www.yachtcouncil.com, as well as brochure mailings to other brokers. Extra services could include displaying the yacht at boat shows and full-page magazine ads, though those costs are extra.

The bottom line, says Merrigan and every other broker interviewed, is staying smart on the price. "You need to match the price to meet the market," he insists. "If you give the boat an outrageous number, it could sit there for two or three years and follow the market downward. Then it gets a reputation."

Hazards to Navigation
Pricing is a sensitive subject, particularly in this softer market, says Bruce Schattenburg, managing director of the Sacks Group, a Ft. Lauderdale-based brokerage and charter firm. "Every owner takes pride of ownership in his boat," he says. "But he often has to get over the notion that the boat will sell at a premium. It can be painful to face reality, but we’re in a soft market." The ownership cost means it makes no sense to price a boat high, especially if it is not being used.

Schattenburg says pricing is a slippery slope for many brokers who want listings, yet are afraid to tell the owners that their yacht is worth less than they paid for it. "But then the broker can’t produce the sale, and a year later it’s worth even less," he says.

He recommends clients do a prepurchase evaluation of the yacht to get a sense of its fair market value, and even invest money in sprucing it up. "We took one 60-foot yacht, the worst boat in the fleet, and invested about $25,000 in new carpet, furniture and a high-gloss wax job, and turned it into the best in class," he says. "We recouped the money many times over, and the owner saved months of operating expenses."

Most brokers caution that yachts will not sell overnight. "It takes several months to get a good marketing program going," says Joe Killian, a broker at Camper & Nicholsons, who says to start looking for responses after six months.

What are the signs that your broker is being proactive rather than just accumulating listings and hoping one will sell? "He should have it on at least one multiple listing service, and tell you when it’s being advertised and shown to potential buyers," says Schattenburg. He also says the boat should be shown at open houses to other brokers.

Finding the right broker is crucial to the sales process. Carney estimates that about 10 percent of the brokers in the field are intimately knowledgeable about boats; Sabates puts that number up to 25 percent. "The large commission on such a high-ticket item turns a lot of honest people into dishonest people," he says. "I think probably a quarter of the brokers will put your interests before theirs." While it is impossible to create an integrity index, making a shortlist of good brokers is feasible.

Schattenburg urges us to make certain our broker belongs to a professional organization, such as the Florida Yacht Brokers Association or Mediterranean Yacht Brokers Association, both of which maintain codes of business ethics. Killian says that brokers are best found through word of mouth, from other yachtsmen or maritime attorneys. Schattenburg advises that clients should interview several brokers, ask about yachting experience and past sales, and seek references from former clients. "Check for lawsuits," adds Schattenburg. "I’ve never been a party to litigation, but that’s not the case with some firms."

Johnson says to focus on firms that deal with specific types of yachts. "We specialize in high-quality sailboats that are 50 to 120 feet," he says. "Other firms might trade in larger motoryachts or sportfishermen." Johnson adds that his firm’s knowledge about the history of the boats is another asset he brings to the table. "We’ve sold many of the boats two or three times now, and keep records. We know how they’ve been treated," he says.

But James Carney also recognizes Johnson’s value as a buyer’s broker. "I had him oversee a new-boat build for me in Washington state," he says. "He knows the industry inside-out, and can tell if they’re building it right."

Master of All Trades
Buyers’ brokers should be active in the brokerage process beyond just forwarding prospective boats, advises Merrigan. "A broker should know all about yacht construction, pedigrees and different taxation and flagging issues," he says. "He should also be able to help negotiate the contract, set up a survey and assist with due diligence. If he doesn’t have the right answer, he should have a cadre of experts who do."

One of those experts is a yacht documentation service, which researches U.S.-flagged vessels to ensure there are no outstanding liens, and documents its history with the Coast Guard. "It creates a paper trail and is really the best form of title for a yacht," says Linda Dunn of Marine Documentation in Newport, R.I. "It makes financial sense, since lenders require this information, and allows the sale to go through quickly."

Up from the Depths There are recent signs that the yacht market is firming. ShowBoats International’s 2004 Order Book, which tracks new-yacht builds over 80 feet around the world, reported that the 80- to 99-foot market is up 11.3 percent this year compared to last. The word from last fall’s Ft. Lauderdale International Boat Show, considered the industry’s finger on the pulse, is resurgence. Boatyards and brokers reported more activity than the last three shows—welcome news for new builds and the brokerage market. Still, analysts caution it might be too early to signal a change in used-boat sales, and many brokers still see a glut of late-model product. But brokers like Kevin Merrigan believe the market is fundamentally healthy. "Yes, it’s soft, but people aren’t giving their yachts away," he says, noting that selling a yacht is different than most other luxury items. "There is a time/value ratio, since the yacht costs X amount of dollars to hold each day. We don’t want those holding costs to exceed the joy the owner gets from owning the boat. Our goal is to get the highest return on the investment in the shortest amount of time."

Moore says that documentation will reveal maritime liens, which are "secret" until they are uncovered. "You can’t do a title search like a real estate transaction," he says. "There’s no title insurance. So you have to do due diligence on a yacht to know its history and where it has been. Liens attach to boats like barnacles, and travel from owner to owner until they’re discovered and removed," he says. "It behooves you to know that it’s being sold free and clear of any encumbrances." There can be other issues involved in yacht ownership, such as classification and taxation, adds Moore, so it pays to have a maritime attorney.

Most brokers also recommend going to specialists for items like insurance. "Marine insurance has a language and subculture all its own," says David Allen, president of Allied Marine Risk Managers in Ft. Lauderdale. "It pays in the long run to deal with an agency that understands that language."

Allen says that since 9/11, there has been a crisis in the insurance industry, and half the companies that insured luxury yachts in the ’90s have exited the business, raising rates. "There are only a few good companies left that will insure a large yacht," he says. But even those are more selective. Allen says that yacht owners tend to have complex needs for their yachts. "You don’t just insure a yacht," he says. "There are many variables. If, for instance, you plan to cruise to Mexico, you’ll need a Mexican liability insurance policy or you could end up in jail."

Allen adds that top-line insurance support does not cost any more than substandard support. "If something happens to your yacht, you want to work with a company that sends out surveyors, and not lawyers," he says.
 
Ultimately, though, all thoughts of lawyers and brokers drift away once an owner sets sail on the high seas—which is why one buys a yacht in the first place. "We love our yacht," says Steven Rattner. "I liken it to a second house. The difference is that instead of being tied to Palm Beach or Nantucket, our family has traveled all over the U.S., Med and Caribbean. But on board, we feel at home."