When listing mobile home parks, you want to decide if you want to use a broker, or do a for sale by owner deal. There are pros and cons to both. If you sell it yourself, you don’t have to pay a commission. But the downside is, you probably didn’t price it right, and chances are you’re leaving money on the table.
That buyer will likely also get leverage on you further down the deal. They can use this to negotiate a further discount, cutting into profits. They’ll also be able to manipulate the due diligence process to drag things out. This isn’t to say every buyer is like this. But it is very likely that almost every independent seller has experienced this.
Delays From Due Diligence Requests
One of the ways that a buyer may buy time later in a deal is by making several due diligence requests. These can lengthen the process a great deal. Most buyer’s contracts say that due diligence doesn’t start until ALL documents are in. This may seem simple enough, but in fact there’s often some information that’s difficult to get.
This can bring progress to a screeching halt. This often puts the seller in a bad place. The buyer holds the power to say when the contract officially starts. It becomes a waiting game to see how long you’ll hold out before offering a discount. Before you know it, a month has gone by without an official contract starting date. They’ll be well within the legal limits to do so. This can be a real nightmare for a FSBO (For Sale By Owner) seller. They get put in a very compromising corner.
Are Brokers Necessary?
Now let’s say you decide to use a broker when listing mobile home parks. Now you have to consider what the broker is charging. This is usually between 1%-10%. The includes the added value that the broker is bringing that you wouldn’t have in their absence. If a property has the capacity for a high value, a good broker will be able to secure it. As Glenn puts it, “something like 1:1, 1:2, or 1:3, or more”. This justifies the broker’s fee, and hopefully gets the seller a little extra.
If it’s a professional broker, ask about a marketing plan, influence, and track record. Also, ask as many questions as you can about the different possible outcomes of each step of the process. These questions are pertinent for getting your best deal. Even a new broker should know the bare minimum surrounding industry trends. You’ll want to avoid bad brokers at all costs. They can’t justify their fee, and won’t be able to get you the rate you deserve. “Their underwriting is often piss-poor,” asserts Glenn.
The Mobile Home Park Expert
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