I do my offers based on the formula. However, many park owners come back to me with unrealistic (2 times or 3 times of the formula total) asking price. They based their asking price on appraisal they did with real estate appraisal. How is accurate park appraisal?
If it is not very accurate, how can you explain it to a park owner?
Let’s be honest, you can obtain an appraisal to meet almost any purpose, if you try hard enough. So the seller goes to an appraiser and says “so what’s my property worth” and the appraiser knows that the owner wants as high a price as possible, so he pushes reality and also typically does not even know how to do a mobile home park appraisal (and caps the home income). The appraisal comes in incredibly high and the seller waives it around as though it’s the gospel truth. But, in reality, its meaningless. All that really matters is what the buyer will pay, and the buyer’s lender will loan. Some of these sellers already know that the true price is far lower than their asking price, and they cave quickly. Others have an open mind and cave slowly. And still others are stubbornly ignorant and will never cave on their price, and it will remain unsold for the balance of their lifetime. You don’t know kind of seller you’ve got until you make you offer.
But never, ever go by the seller’s appraisal of value as your measuring tool.
You can take the time to thoroughly explain the math, financing, home valuations etc. etc. spend a endless amount of time moving the seller to where you ultimately want them to be or simply say S**t or get off the pot we both have better things to do with our time than dance around the price.
The most difficult part of negotiating is in the realisation that most sellers have absolutely no negotiating skills and you must then lead them by the hand. Often made more difficult when you must manipulate the sellers real estate agent into negotiating with his own client. Fortunately agents are primarily out to make money and can’t if a sale does not happen.
@Greg Thank you for the explanation and examples. I do not have a problem to “lead them by the hand”. I just do not know the right way to do it, so I am getting ideas from this forum. Thank you for sharing your thoughts and experience.
@frankrolfe “but never, ever go by the seller’s appraisal” Ok. I understand this part clearly. In addition to your comments, I realize there are not many RE appraisals who appraise mobile home parks.
One more question, how should I follow up with the park owner who did not agree with my offer.
The park owner can not take the blood from your veins, the air from you lungs, or the jacket off your back the worst they can do is say no. If you have done do diligence properly and the park is in the winning bracket at a certain price and a losing bracket at a different price you have no choice but to try to explain your thinking and give the seller the chance to say yes. Sometimes they are just not motivated enough.
A lot of truth here in these posts. Most appraisers have no idea how to appraise a mobile home park. A couple reasons for this. Most states license appraisers as “certified general” which technically allows them to appraise any property type, any value, any complexity. Pretty easy to see how this could turn out badly.
Some bankers love to use their normal appraiser for every loan that comes across their desk, and don’t want to take the time to find a different appraiser who specializes in certain property types. They sell it to their borrowers as getting them a good deal because their normal appraiser is cheaper than the expert.
Ok. I explain it to the owners and see where the conversation will lead. Thank you
The purpose of a mobile home park appraisal is ________________________________________!!! We have had the experts that do mobile home parks as their main business appraise a park for a bank loan and we asked HOW could you appraisal be so high–partially what other properties have sold for and the income stream as to repayment of loan and living expenses. Remember as people pay lower and lower cap rates partially based on cheap money the appraisal have meanings plus this is a sellers market until sanity returns to more meaningful numbers. Recently trying to help a possible seller put together sane numbers was an impossibility since a realtors said his waterfront was so valuable and worth more than the business. Was the owner ready to remove buildings, trailer homes etc . to that effect no–since the property empty was not that valuable. Some sellers will learn if they want to sell NOW is the time to have attractive prices since higher interest rates can actually Lower there potential price and pool of buyers!!! .