Let me tell you a quick story about a time when I felt challenged with the ‘I don’t want to pay until the boat is sold’ comment… and what you can learn from it.
It was a pretty normal afternoon at BASCO head office, I was looking out across the marina, the water sparkling in the sunlight. I was feeling somewhat anxious this day, I’d just got off a call from a boat owner who had been trying to sell his boat for more than a year. It had been listed with a broker with no luck, only 1 low-ball offer. Two months ago, he listed it with a second broker to try to improve his chances.
He reached out to us to see if we could help him sell his boat. He’d heard that we generate 3 times the sales enquiries in 60-days compared to traditional methods or do-it-yourself, so naturally, he was interested to find out more.
I asked him a couple of questions, including ‘why do you think your boat hasn’t sold?’
I love asking boat owners this question, as it gives a lot of insight into their awareness of the market and the situation, they’re in, so gives an insight into what their options might be moving forward to sell their boat.
We’d had a long call, around 40 minutes and while I was intrigued by a couple of things he said, I was even more perplexed that my answers didn’t seem to completely satisfy him. We operate a hybrid fee model in BASCO, where we guarantee results, as well as the lowest commission rates guarantee, but we ask boat owners to commit to the program.
This can be challenging for some owners, as it’s not how it’s done’ traditionally. But to be fair neither is guaranteed results, lowest commission rates and 3 times the sale enquiries in 60 days, but I get that, and it’s up to me to adequately answer all concerns and questions.
So, I set out to do some research and I wrote a paper called ‘How much should I pay and when should I pay, when selling my boat?’ (please email me if you’d like a copy).
You see, I’d learned a lot from my time as a Business Coach and Chartered Accountant in public practice in New Zealand in the 1990’s — seems like I’ve always been a bit of a pioneer with industry trends and developments and yep, business coaching in the 1990s, even I think that’s quite astonishing. But credit where credit’s due — I get this sense of developing trends from my mother — after all, she was a Hatha Yoga instructor in the 1970s!
But what I learned was that if we worked with clients over a period of time, carrying out a specific plan with pre-determined outcomes, making the payment was a no-brainer due to the guaranteed outcomes and benefits that were returned.
Fast-forward 25 years and the focus is now on the boat brokerage business, so the idea ever since then has been to do the same as I successfully did with clients in the 1990’s. But even though I was working in corporate Singapore until last year, I always knew that when that opportunity was done, I would be back here.
I have watched my hubby challenged by the way it’s done in traditional boat brokerage, the remuneration model, the wheelers and the dealers and the backhanders, and the opportunistic sales practices and after 10 years in this environment in Singapore, he quit, worn down and exhausted.
So, I have spent some time researching the remuneration models of boat brokerages and how and where the ‘success fee, commission only’ method sits among the alternatives.
I found some answers quickly.
According to the Corporate Finance Institute, there may be a problem with commission only models where the likelihood of a sale is low (bingo — aka 90% of boats!).
This is what they say:
“If the probability of success is low, the adviser may make little effort toward working on the deal since they doubt, they will be able to earn a commission.”
Double bingo, I now have more understanding of the root cause of all that discontent from boat owners about ‘lazy brokers not doing anything’!!
And they go on to say:
“The adviser is exposed to a lot of risks if they are working on a deal with the possibility that — if they are unable to put a deal together — they may earn nothing at all for their efforts.” (Tell me about it, I’ve been married with that risk for 34 years and to say that’s been a challenging aspect to our marriage and our family, is a bit of an understatement.)
But that’s just the way it works, right?
“Because of this possibility, many contingent fee arrangements provide for the adviser to receive some nominal compensation for their time and efforts even if they are ultimately unsuccessful in helping the client set up a deal.”
Bingo again, not making money is one aspect, but losing money on costs and expenses as well is another. I was feeling vindicated and relieved that something that makes so much sense to me is well established in corporate finance deals! I am sure this applies to yachts as well…
But the thing I really want you to take away from this is increasing commitment on both sides gets guaranteed superior results. And it’s way more fun to work together as a team on a project, and with the lowest commission rates in the market plus you get your money back, it’s a welcomed disruption to the traditional model.
So what this means to you as a boat owner – if the probability of your boat sale success is inherently low, with no plan, everyone loses and it’s a big waste of everyone’s time. But by committing resources to the project we all have a vested interest in getting the job done successfully.
So here’s your next step as it relates to what you and I just shared: consider what you are losing out on by not making an all-out commitment to selling your boat, and be straightforward and open with your boat adviser about your boat sale goals. With a clear step by step plan to get from point A to point B plus 100% commitment from both sides, results are guaranteed!
And remember, if you want to sell your boat yourself, without a broker, here’s something for you.
Be sure to check out our brand-new boat selling toolkit ‘The Complete DIY Toolkit to Selling a Boat’. This tool will show you how to generate 3 times the sales enquiries in 60-days, compared to the traditional methods, so you can sell your boat faster, without worry of how long it will take to get an offer. Happy boat selling!