Staying Afloat in Yacht Business Takes Skillful Navigation

Landlubbers think it’s a cushy job.

Selling yachts does sound easy. After all, don’t boat sellers spend their days cruising the Pacific, chatting with the rich and famous about rigging, sails and plush staterooms?

“Oh, people think you’re out having martinis on the fantail,” says David Fraser, chief executive of Fraser Yachts in Newport Beach, who’s been selling yachts for 52 years. “But it’s not so. We’re only on boats about 10% of the time. The rest of the time it’s paperwork, Web sites, advertising and phone calls, just like other sales businesses.”

Yacht brokers (who sell previously owned boats) and sales agents (who may sell either new or used boats) are a cross between real estate agents and car dealers. Most work entirely on commission. They receive 10% or less of a yacht’s sales price when they introduce buyers to what’s likely to be the second-most expensive purchase of their lifetime.

Like real estate agents, yacht brokers and sales agents escort clients through bedrooms, bathrooms (“heads” in nautical terminology), kitchen areas and across decks. But like car dealers, they also accompany the clients on test drives--called “sea trials.”

“We sell dreams,” says Richard Nathanson, a broker at Golden West Yachts in Marina del Rey. And it’s true. The definition of “yacht” is a boat used exclusively for pleasure cruising or sailing. Contrary to popular belief, a yacht can be any size. But brokers and agents tend to handle only those boats 22 feet long and larger. Boats below that size are sold privately through classified ads.

To get into the business, brokers and agents must first obtain a license from the California Department of Boating and Waterways. They have to pass a written exam that covers yacht design, navigation, ethics and advertising regulations, says Nathanson.

It helps if they know the boat business inside and out. They should be able to tell a Hatteras from a Hinckley and a Catalina from a Nautor Swan. They’ve got to be personable.

Even once they’ve landed a job, they’re still far from easy street.

“Be prepared for some hard times the first three years,” says George Klessinger, a broker at California Yacht Sales in San Diego. “But if you stay with it, I guarantee you’ll enjoy what you’re doing.”

Fraser advises budding yacht sales agents to stockpile at least two years’ income before entering the field. That way, if they’re slow to earn commission fees, they won’t panic.

“It’s a hugely competitive field,” says Janet Schlihs of Marina Yacht Sales in Marina del Rey. “My movie friends complain that they’re in a rough business, but I tell them, ‘Hey, if you want to try a rough business, go into yacht sales.’ ”

Industry sources say Southern California-based yacht sales agents may make as little as $20,000 their first year on the job. Established brokers and agents can earn $50,000 to $100,000 or more “if they have good listings and the money to advertise those listings,” Schlihs says. They’ll work hard for their fees.

Schlihs says she might show a client dozens of boats over a several month period. If the client likes one, she’ll arrange a marine survey for the boat to determine its seaworthiness and accompany the client on a sea trial. Even after this investment of time and effort, Schlihs’ sale may still fall through.

“I’ve had dream sales and nightmares,” says Schlihs, recalling two instances where, after months of intense work, her clients were snatched away by rather unscrupulous rivals. Nonetheless, Schlihs loves her job--”the walking around the marina, looking at boats, showing boats, making calls and doing the sea trials.”

Because brokers and agents earn money not for their time but for their victories, they must painstakingly scrutinize potential clients. They try to avoid what Paul Gannett, a vice president at Catalina Yachts in Marina del Rey, calls “the whistling gofer” (a.k.a. the “looky-loo”).

“They ask us, “How much does that boat go-fer?’ ” says Gannett. “And when we tell them, they get a surprised look on their face, and they go . . . “ He makes a long, low, doleful whistle.

“People like that are a bit like train spotters and bird watchers,” he says. “They come to look at the boats, with no intent of buying. We do want to be nice to them--they’re human beings, just as we are. But most of us are on commission, and our time is very limited.”

To prevent spending their hours fruitlessly, brokers and agents try to qualify potential clients by asking pointed questions: How long have you been looking? What boats have you seen that you like? What price range are you considering?

“If the boat buyer is serious, they pretty much know what they’re looking for,” Schlihs says.

But sizing up a prospect based on appearance--another subtle, unwritten industry practice--can be tricky. Klessinger happily recounts a recent instance when a scruffy-looking man entered his brokerage and asked to be shown high-dollar luxury yachts.

“It seemed that he’d been turned away by other brokers,” Klessinger says. “He looked like he might not be able to afford even a $5,000 yacht, but I showed him what he wanted.”

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Eventually, the man bought a large $500,000 motor yacht from Klessinger. He turned out to be the owner and chief executive of an electronics company.

Clients can range from “average Joes making about $30,000 to $40,000 a year” to trust fund babies and high-tech CEOs who pay for their 160-foot floating kingdoms in cash, Klessinger says. The mega-yachts of the super-rich--which run 120 feet or larger--can cost upward of $20 million and rack up more than $100,000 a month in maintenance costs, Fraser says. It’s not unheard-of for some ultra-wealthy gentry to keep large yachts on both coasts.

Although the yacht industry is just emerging from several years of flattened sales primarily as a result of the luxury tax imposed in 1992 on high-priced purchases, including boats, experts say mega-yacht sales remain unaffected.

In fact, they’ve been climbing steadily since the beginning of this decade. The average size for mega-yachts is increasing too. In other words, as the rich get richer, their boats get bigger.

Super-yacht brokers and agents, most of them based in Fort Lauderdale, Fla., America’s yachting capital, tend to earn the highest incomes in the business. If they sell a couple of $15-million boats in a year’s time, they might take home a seven-figure paycheck.

But don’t quit your day job to relocate to Fort Lauderdale. Sometimes the giant vessels take up to three years to sell, Fraser says.

Knowledgeable brokers and agents can lead clients in any income range to hot deals. Used boats are always in demand because they sell for between 10% and 60% of their original sticker price. The yacht’s condition is far more important than their age.

Brokers and agents can help clients evaluate the yacht’s construction, performance, interior condition, pedigree (designer’s reputation), prestige (top-class brand) and track record (a model having no known defects).

To find the perfect previously owned “dream boat” for clients, brokers and agents search their own inventory, consult multiple-listing services such as the BUC Yacht Sales Network, or access https://www.yachtworld.com, which charges monthly subscriber fees. Brokers and agents representing sellers must pay advertising fees to show off their inventory in boating periodicals.

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Most conscientious yacht brokers and agents advise buyers to purchase the most seaworthy boat they can afford. As one broker noted: “Buy quality, and you only cry once. There’s no such thing as a bargain during an ocean storm.”

And they’ll also warn novice buyers about the precipitous costs of boat ownership.

“There’s a saying, the definition of B.O.A.T. is ‘Break Out Another Thousand,’ ” Schlihs says. The adage is spot-on.

Before a buyer even takes title of a boat, he or she will put out anywhere from $250 to $2,250 for a marine survey. After the purchase, the boat must be berthed. If it’s a 40-foot sailboat, it might cost $320 a month for a slip in Los Angeles or $600 a month in Newport Beach, where slips are at a premium.

Then there’s insurance. And monthly maintenance charges for bottom cleaning, brightwork (woodwork), sanding, varnishing, oiling, engine maintenance, electrical system upkeep and so on.

These maintenance fees can easily run several hundred dollars, says Fraser, who says he paid $5,000 a month to maintain a 55-foot yawl several years ago. Of course, boat owners who perform the upkeep themselves can cut their monthly charges significantly.

Fuel is another big cost. Powerboats require a lot of it. A 60-foot powerboat may require 1,000 gallons of fuel (at $1 a gallon) for a fill-up, says Lynn Ring, president of Executive Yacht Management in Marina del Rey. For a three-hour trip to Catalina and back, the boat would burn 70 gallons an hour of fuel, she says.

Currently, the yacht sales industry is experiencing a “product shortage.” Many people are looking for boats, but there aren’t a lot for sale. The tight market is causing brokers and agents to scramble for inventory and clientele. The pressure to land a commission check is intense.

“People think we’re out boating, making lots of money, because this is a luxury industry,” Nathanson says. “But they don’t realize that we’re earning wages that don’t allow many of us to enjoy those luxury yachts.”

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Indeed, of the brokers and agents surveyed for this article, only one currently owns a boat.

“It’s a lot of unpaid work,” Nathanson says. “We’re fielding questions, providing information to the public and spending time in the office on the phones. It’s typical of any high-dollar sales field. We get many, many ‘nos.’ If you’re going to get discouraged by people not buying or not returning calls, then this isn’t the business for you.”

But those who stay in the business say the perks of their job--finding people their dream boats, making new friends and spending days at seaside offices--are unbeatable.

“The best part of the job is when somebody comes back and tells you how much he enjoys the boat,” Gannett says.

Many boaters become boaters for life, so there’s a lot of repeat business. Yacht owners tend to trade in their boats every three years.

Adds Klessinger, who on this sunny day looks up from his window at the bobbing sailboats, sport fishing boats and express cruisers: “I couldn’t see myself doing anything else--being in the marina, going on boat trials, accompanying deliveries. I just couldn’t imagine working in an office.”