MOBILE HOME PARK FOR SALE

MHP Podcast Pitfalls of Selling Your Park Off-Market

March 14, 2022 by Maxwell Baker

In this episode of The MHP Broker’s ® Tips and Tricks, we outline the multiple risks in selling your mobile home or RV community through a broker who represents buyers. Maxwell Baker explains the drawbacks for sellers in terms of fewer prospects, weaker or missed due diligence and a broker working for the buyer-not for you.

As always, this episode is narrated by Max, co-founder of The MHP Broker ®, and brought to you by our proprietary Community Price Maximizer. Use our four-step system, and we guarantee you a higher price when you sell your mobile home or RV community.

Here Are Some Show Highlights:

  • Buyers and brokers have a lot of good reasons to want to sell you park off-market, but those reasons solely benefit them, not the seller. (1:36)
  • When you only have one buyer for your property, and no backup buyer, you have little leverage for negotiation. (1:36)
  • Brokers in off-market deals aren’t as motivated to do appropriate market research and due diligence. (1:53)
  • Those off-market brokers are likely to have a relatively small network of buyers they’ve worked with in the past, and that’s all who’ll see or know about your property. (2:15)
  • These brokers will be paid by the buyer, so that’s naturally where their loyalty is. (2:15)
  • The buyers want to be in a position of power, the only ones looking at your property. (3:37)
  • If you come to Max at that point to help close the sale, he’s at a disadvantage becaue he doesn’t have backup buyer and the groundwork’s already been laid in favor of the prospective buyer. (3:37)
  • Such off-market dealings can also lead to crappy contract-to-close ratios, with an unhealthy amount of deals falling through because of weak or non-existent due diligence. (5:14)
  • The contract-to-close ratio at The Mobile Home Park Broker is in the upper 80% range, much higher than community owners are likely to get in an off-market deal. (6:38)
  • About 90% of The MHP Broker deals are exclusive listings, because that give more power to the seller and usually leads to a much better deal. (7:25)
  • Max’s company also offers the advantage of seller-friendly contracts. He’s seen off-market contracts that are 30 pages long, and put the buyer in control and leave sellers scratching their heads. (7:56)

Want to learn more about the multiple advantages of becoming an exclusive listing of The Mobile Home Park Broker? Want to find out more about why you’re better of steering clear of off-market brokers? Just drop us a line at info@themhpbroker.com or give me a call at 678-932-0200.

Power Quotes From Max on This Episode

  •  (Off-market deals are)…”just a higher probability for them and not (for) you as a seller.” (1:37)
  • “…these brokers are getting paid by the buyer..and you’re going to be negotiating uphill.” (2:15)
  • “Brokers rarely do as much research or due diligence as they do when they exclusively list a property for sale, because it’s a lot easier to just slam a deal together and make a bunch of money.” (2:15)
  • “…you don’t have somebody who’s hustling continuously to find you another buyer in case this guy blows out.” (3:37)
  • “…anytime you try and sell your community off market, there’s going to be a higher probability of it falling out of contract.” (5:14)
  • There’s just a zillion things when it comes to selling your community that we have to take into consideration.” (5:14)
  • The way we’ve built this company is very methodical; we’re very like step by step. We have checks and balances all across the board and our close ratio is up in the upper 80s for exclusive listing once we put it under contract.” (9:07)

 

Hello, and welcome to the mobile home park brokers tips and tricks. This is the podcast where we talk about mobile home park investing, because that’s what we’ve been involved in for the last decade. Let’s dive into today’s episode. Here’s your host, Maxwell Baker.

00:22 Maxwell Baker 

Welcome to another beautiful episode of the mobile home park brokers tips and tricks podcast. This episode, as always, is brought to you by the Community Price Maximizer. It is our proprietary system that we have worked on over a decade to get you guaranteed the highest price you will ever get when you sell your mobile home park with us exclusively. It’s a four step program, give us a call at 678-932-0200 and one of our rockstar agents can explain it to you.

01:00

Without further ado, we’re going to talk about selling your mobile home park or RV park off market and some of the pitfalls on why you shouldn’t be doing it when it comes to putting yourself in a good position. Every buyer out there and every broker really out there are all looking for it. Everybody wants it because it’s kind of elusive and it puts the buyer and the broker in a very good position when it comes to getting a deal done. But we’re going to talk about some of these pitfalls and why you shouldn’t be selling your park off market and put you in a better position when you’re ready to sell with us.

01:36   

Like I said before, there’s a lot of good reasoning on why buyers and brokers are going to want to put a deal together off market. It’s just a higher probability for them and not you as a seller, when it comes to getting a good deal. When you’ve only got one buyer looking at your property, you’re not going to be in a good spot as far as negotiating wise and having a backup buyer. We’re going to go over four little things that are the biggest pitfalls that I have seen in my humble experience as a broker and we’ll go into why it’ll hurt you as a seller of your community, and why exclusively listing it is going to be a better route for you.

02:15  

Like I mentioned before, number one, brokers love off-market deals as much as buyers. Brokers rarely do as much research or due diligence as they do when they exclusively list a property for sale because it’s a lot easier to just slam a deal together and make a bunch of money. However, these brokers they’re really only going to have maybe ten buyers, really probably closer to three to five that they have a real relationship with. Those are the people that are going to be seeing your deal that you’re trying to sell. A lot of times when that’s the case, these brokers are getting paid by the buyer. The buyer has a previous relationship with them obviously, and you’re going to be negotiating uphill. So we always want to put you in a good position when you come to exclusively listing your property. These brokers, they just care about getting these deals done. They are very transactional, they very rarely will try and build relationships with you, the seller and like I said before, they don’t do the upfront due diligence.  They do just the tip of the iceberg, they don’t dive into it, because they don’t want to spend any time on it, because their loyalty goes to the buyer. So like I said, they’re always looking for a quick deal, and the buyer is usually going to get a screaming deal because they’ve only got a few eyeballs looking at your park.

03:37

Next, let’s go into the buyers. Buyers are about the same as the brokers when it comes to off-market deals. They want a position of power, and they want to be the only one looking at your community when you sell it. Like I’ve always mentioned in my previous podcasts, it’s all about probabilities of success. I say that because if I’m a buyer, and I’m looking at your park, and I’m the only one looking at it, as well as the only broker looking at it, like I mentioned before, then the probabilities are, I’m going to get a good deal because nobody has properly marketed your deal. It hasn’t been exposed to the entire market and you haven’t gotten market feedback. If you do get under contract with me, I am in a position of weakness because you don’t have a backup buyer and you don’t have somebody who’s hustling continuously to find you another buyer in case this guy blows out. So like I mentioned before, it’s about those probabilities of success and as a buyer that’s what you’re always positioning to put yourself in.

04:39

A lot of times these buyers will also retrain right before they go to closing for some BS reason they just do it just because they can. A lot of times they’ll smell blood in the water somebody is trying to retire or they’re tired of negotiating or like fine, just do whatever, I don’t care. I have seen that happen to a lot of our clients and we have fought for them and saying like, “No, don’t do that”. We’ve helped out a lot of people with earnest money and mobile home titles, also rents collected on some of these annual leases. There’s just numerous amount of things that are involved there, that these buyers will come in and try and finagle.

05:14

The third thing that we’ll talk about is a really crappy contract to close ratios. It’s been shown that anytime you try and sell your community off-market, there’s going to be a higher probability of it falling out of contract. As your broker we’ve done a ton of upfront due diligence before we even think about showing it to the market, like the home age, the local rental rates, whether it sits in an opportunity zone, flood zone, magistrate culture, county restrictions, management, etc, etc, etc.. There’s just a zillion things when it comes to selling your community that we have to take into consideration. As always, it’s all about the probabilities of success, we always wanted to uncover all of the problems because problems don’t kill deals, surprises do. When you sell your park off market, it’s highly unlikely, like I mentioned before that the brokers done any due diligence on your deal. When that happens, your contract to close ratio is going to go to the dumpster fire. The buyer is looking at your deal at face value, typically just at your P&L and rent roll. When they’re do the due diligence, that’s when all of that soap opera mama drama comes out. They’re going to either retrade you big time, or it’s going to fall on a contract and you’d have to start all over again.

06:38

We don’t like doing that because you get to that point, you get like 45 days, you’ve got a little bit of rapport built with this buyer, and you’re like, “Alright, this guy’s gonna close, this girl’s gonna close”. These’s off-market deals just having a higher probability of blowing up. I think our contract to close ratio in the upper 80s. But when we try to do off-market deals, we don’t spend a bunch of time on due diligence, I’ll tell you first up as a broker, it’s about probabilities of success. For me, as a broker, I’m always going to choose to try and exclusively list something because it allows for a broker to be protected and you can do a bunch of due diligence on the community and your deal. That way you can assure success on the back end on these off-market deals

07:23

Don’t get me wrong, like will occasionally put one together. But it’s like 10% of our business. 90% of our business comes from exclusive listing because it actually protects the seller, and it puts the seller in a position of power versus these off-market deals. There’s just too many variables in mobile home community and RV transactions that could go south. So that’s the main reason why we always push the exclusive is because we’re all on the same page. We’re all on the same team, we’re working to maximize the value and we’re looking to try and eliminate as many variables as possible so that way we can overcome them.

07:56

Number four, using a contract that potentially could put you in a bind. As your broker we have contracts that we like to use, state to state that are very seller-friendly, but a lot of these buyers out there are going to bring their some of them are like 30-page contracts, I’ve seen them. Some of them are really good they spent a lot of money and time and energy and attorneys and it’s for good reason. I mean if you have a solid contract and you’re going into the transaction, and you’re a buyer and you’re an off-market deal, and you’re dealing with a mom and pop I mean better get ready for a steak dinner because somebody is about to get seared and it’s not going to be that buyer is going to be the seller. It’s just these contracts are a lot of them are just going to be very like I said buyer friendly. A lot of them just to give you some details of why, a lot of them are notoriously been real vague, buyer-friendly language in it when it comes to earnest money, there’s no teeth. A lot of times some of these buyers will never even deposit their earnest money. As a seller, you won’t know to check as soon as it goes and you get a check by the attorney or title company. Somebody has to show you proof. Some brokers don’t even check that but that’s a whole different can of worms.

09:07

As your exclusive broker we’re very wide glove when it comes to transactions. The way we’ve built this company is very methodical; we’re very like step by step. We have checks and balances all across the board and our close ratio is up in the upper 80’s for exclusive listing once we put it under contract. Like I said before, there’s some of these contracts, we want to put you as a seller in a position of power and a lot of these contracts are going to do that that we use. So when it’s time to close everything, all this stuff is figured out upfront. We’ve already negotiated all the admin stuff, there’s no negotiating at closing. It’s just we get there, the attorney does all the stuff that he’s going to do and then we close. As your broker, we’re always here to eliminate as many variables upfront that could blow your deal up. That’s the reason why we have this higher contract to close ratio.

10:00

So there you go. These are the reasons why you don’t ever want to sell your community off-market. When it comes to deal flow, you have to have three things figured out the facts, the variables and the probabilities. And as a seller, one of your biggest assets in probably your life, wouldn’t it make sense to position yourself to win. Just eliminate all the variables and increase the probability that you actually get to closing and it actually gets done? Give us a call. We’ll show you how to get there. We’ll show you our very cool proprietary system called the Community Price Maximizer which will guarantee you a higher price when you sell your mobile home or RV park, when it’s time to go. It’s a four-step program and we’ll happy to talk to you about it. Give us a call at 678-932-0200 or give us an email at info@themhpbroker.com, happy to talk to y’all until next time, look forward to it. Be well.

Maxwell Baker

Maxwell R. Baker founded The MHP Broker in 2009 as a commercial real estate broker specializing in helping Investors buy and sell mobile home communities throughout the Southeast. His family got started with mobile home parks in 2000 where Max gained experience in management, rehabilitation, and selling mobile home parks. Today, The MHP Broker has grown to a team of several agents with expanded services focused on owner and investor brokerage services, mobile home park audits, and in-depth market research, resulting in the sale of over $500 million worth of mobile home communities.