Working with Wholesaler to Sell Trailer Park?

Question

A wholesaler reached out to us on craigslist to inquire about our 17 spot MHP that we are selling and says he has two perspective buyers. He is going to send an assignment contract. What are some terms we should look for in the contract to ensure it is legit and not a scam. Are there common wholesale scams we should be on the lookout for? We have never dealt with a wholesaler before and are a little skeptical because he 1. reached out to us on craigslist 2. doesn't have any references 3. doesn't have an MLS license 4. doesn't want to pay a deposit. Thanks!

Perri Weber · Answer

Hi April!

I am a commercial broker at Columbia Equity Advisors. I work alongside my dad Jim, who has 30 yrs. experience in the multi-family real estate world. We specialize in Mobile Home Park world; closed 5 parks last year and are in the process of closing a 98 space park.

There are people out there who are much more knowledgeable than I am in this subject (experts please chime in if I am wrong below), but here are my thoughts on wholesalers:

A wholesaler is reaching out because they feel that they have found a “good deal.” Common items that wholesalers look for are:

1.) Seller Motivation: What is the reason? How quickly are you looking to sell the property? What is your ideal closing? What are your plans if it doesn’t sell? They are looking for an angle.

2.) Equity/upside: if there is equity there is room for negotiation. If there is upside there is a way to market the property.

If they are looking to pursue the deal. I would take a moment to analyze if you have the right value on your property. I have seen so many transactions where people want to save money by not using a broker and get taken advantage of and/or under value their property. However, a commercial broker is not necessary if you do know what you are doing and know that the value is right.

In that case, here are a couple common items that I would look out for:

Licensing Issues:

-Ensure      you understand the Rules & Procedures Governing Real Estate      Transactions. Many states have unique laws, forms or disclosures requirements      for real estate purchase transactions. Not following these rules that are      specific to your state, could cause legal issues down the road. The end buyer      (not the wholesaler) could come back later and raise an issue with the      transaction, which could have been avoided if the proper procedures were      followed.

Disclosures:

-Just      as an FYI: You will see in the contract “a unilateral right to assign without      requiring the consent of the homeowner,” this is not common language in a      transaction, but they will throw something in the contract to that affect

-The      contract should spell out in detail where all the obligations are. It is      better to have these in detail rather than leave it open  (Running title? Inspections? At what      point is the earnest money refunded/non-refundable? Etc.)

-Make      sure they are not requiring you to run a extended title report (“ATLA”could      cost you $3k more than a standard)

-Attorney      fee clause- if there is legal action to enforce you should reserve the      right to have attorney fees covered

Overall, I would say if you are confident on the price, cover yourself legally, and the wholesaler shows their seriousness with an earnest money than you could move forward cautiously.

However, I personally would not work with a wholesaler if it was my property.

I hope this helps and feel free to reach out to me directly if you want any help reviewing your numbers and ensuring you have the right price. Just direct message me and I would be happy to help!

Perri Weber

Rachel H. · Answer

@April Eilers I'd be very careful signing anything with a wholesaler. Be sure they have a reputation for closing on deals they commit to when buyers back out. Last thing you want is to tie up the property with someone who can't perform. Best of luck!

April Eilers · Answer

@Rachel H. Good point!

Michael Wallimann · Answer

I completely agree with @Kaiser J. and @Jay Hinrichs. MHP's are a super hot commodity and if you want to sell I would recommend going with a reputable broker where you don't have to worry and you can get what you deserve for a property I'm sure you have worked hard to acquire and maintain. Best of luck to you moving forward!

Kaiser J. · Answer

Sounds like you answered your own question.  Wholesalers are a dime a dozen and many are unqualified.  I think you would be much better served listing it for sale with a qualified commercial real estate broker who specializes in MHPs.  Next best option would be a CRE broker who focuses on multifamily, as long as they understand the difference in how MHPs are valued relative to apartments.

Jay Hinrichs · Answer

if a wholesaler approached you it means one of two things.

1. your underpriced by a bunch

2. they are just trying to tie stuff up and sling it against the wall with the greater fool theory.

Parks are a hot commodity and a proper broker will get U more money than you will get on your own thats almost a given.

April Eilers · Answer

You were right, luckily I only got tied up for a week. What a waste! But a valuable learning lesson. Thank you for all of the insight!

Mark Freeman · Answer

RUN AWAY from the wholesaler!

They want to tie up your in demand property with no earnest money so they can walk away if they don’t find you a below market buyer.

DON’T DO IT!

April Eilers · Answer

@Perri Weber Thank you!

April Eilers · Answer

Thanks for the input!

Working with Wholesaler to Sell Trailer Park?

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