Fee Agreement

Would like your opinion on the follow “Fee Agreement” an agent sent me. Doesn’t seem right to me.

Paul,

Please acknowledge on behalf of Paul St Martin and or related Entities/Persons that you will The MHP Broker LLC/Marcus & Millichap of Atlanta a total fee of SIX PERCENT (6%) commission to be paid in cash at closing. The 6% fee will be for all brokers, referral agents, and anyone with a claim to commission. The 6% fee is an aggregated total of all commissions paid by the buyer and seller. If the seller does not pay the full 6% then the buyer will pay the difference up to 6%. At no time will the commission exceed 6%.

If you agree to this fee agreement please reply by typing “ACCEPT”. This agreement is valid for 12 months from acceptance.

How much is the park? If it is in the 7 figures I would think 6% high.

The agent talked about 1 listing @ 1.5M

I just sold an industrial building for $1.92M and the commission was 4%. The listing was with a very professional brokerage house who had to split the commission with the buyer’s agent. I believe it is common for MHPs to be bought without a buyer’s agent which means the commission is not split and 4% (in your case $56k) should still be a handsome payday for your broker.

Have you thought about listing it yourself? With internet sites like Loopnet and the Mobile Home Park Store it is not expensive to reach just about everyone in the market.

The reason I listed my building instead with a broker instead of doing so myself is that almost all industrial buildings are bought by corporations who hire agents to find the properties for them and advise them as to the market value, so you pretty much have to do it within the commercial real estate brokerage community. Not so with parks.

I would NOT sign that Buyer’s agreement.

The way this business works is that brokers have agreements with Sellers to be paid. Any brokerage firm asking a Buyer to sign an agreement like that indicates:

  1. That that firm is not representing the Seller, so you should feel free to speak directly with the Seller, or Seller’s broker (of course, the Seller will be liable for the fees to the legitimate listing broker), and

  2. If you sign that agreement, you will not get the deal anyway. The Seller’s broker will have to split the commission with your (Buyer’s) broker, and you will not win the deal. The Seller’s broker will sell steer the deal to someone else who does not have a Buyer’s broker so that the Seller’s broker can keep all the commission.

There are plenty of other deals out there. You do not need this one that badly, and you are not likely to win it if you sign that agreement anyway. Pass on this deal, and/or just approach the Seller or Seller’s broker directly.

My 2 cents worth,

-jl-

This is my fee agreement. I use this fee agreement when I have deals that are off market and only use it for this situation. My goal is to protect myself on a deal I do not have a listing on. So Jefferson you are correct I do not have an exclusive on the park. Its off market and the seller doesnt want to list and they told me to just “bring them an offer”. If you had a broker representing you then yes I would split the fee 50/50 with your broker as I have no problem with that. In this case I dont think you do.

I charge my commission depending on how the deal is structured. If it’s a great deal then my commission is going to reflect that. Im sure Dave Reynolds can back me up on this.

Also, being that this is all I do the amount of value I add to your first park purchase is high. I prep the seller to get all of the DD materials, I know who the MH movers are in the area, I know who the MH wholesalers are, and I have rental data in every metro area in the state of Georgia, Tennessee, South Carolina, and North Carolina.

If you are uncomfortable with this I understand. I am just trying to protect myself.

Thanks everyone and Im for questions if needed

Maxwell Baker

Maxwell -

How many of these ‘just bring me an offer’ sellers actually sell when you produce an offer? How many prove to be just ‘lookey-loos’ wasting everyone’s time and do not sell even when a reasonable offer is produced?

Thanks,

-jl-

It varys but since the market has been changing and I have buyers paying 7-8 CAP rates for premier communities I am able to find buyers for these type of deals. I obviously qualify the park with the numbers they give me and do my own DD on it prior to even bringing it to people. Its a waste of time for you the investor and me the broker if I have a park with zero info on it and just “try” to get a deal done.

I don’t like throwing Hail Mary passes and I’m guessing you don’t either. Thus I work hard to pre-qualify sellers before even bringing it to your table to take a look at it.

-Maxwell