The Cost of Exclusivity
Listing agreements for the sale of a boat through a yacht broker may be either ’open’ or ’exclusive.’
As the name implies, an exclusive listing grants a broker the exclusive right to sell the boat without any competition. If the seller goes around the broker to sell the boat on his or her own, or through another broker, the exclusive listing agreement will typically require the payment of a full commission to the broker who holds the listing.
The provisions of an exclusive listing provide a significant benefit for the broker, but a seller should expect to sign an exclusive agreement if he or she wants a broker who is committed to the sale of the boat. Under California law, all exclusive listing agreements must have a fixed termination date.
Most brokers will require an exclusive listing for higher-end yachts, since the marketing effort tends to be more complex and expensive than the advertising that may be used for less expensive boats. A seller who is interested in selling the boat on his or her own should discuss this option. Some brokers will agree to carve an exception out of an exclusive listing to allow the boat to be sold without a broker, so long as the seller does not publicly advertise the boat.
Sellers who want the flexibility to work with more than one broker will sign open listing agreements with those brokers. An open listing will usually be valid until the boat is sold or until the agreement is terminated by either party and the commission is paid only to the broker who actually sells the boat. However, a seller may find the marketing efforts by the various brokers to be limited, since those efforts will be wasted if the boat is sold through another broker.
One feature that is common to both exclusive and open listings is the requirement for a commission to be paid to the broker, if the boat is sold to a buyer who was originally introduced to the boat by that broker. This provision will generally continue in force for up to a year after the termination of the listing agreement.
Ideally, the listing agreement will be set up to encourage the broker to use his best efforts to sell the boat and to reward the broker for those efforts.