I am finding that it is hard to make an offer unless you first talk and present it to the broker. Then after he /she tells you it is to low or it is crazy offer or something then they say they will call the owner and see if he wants to talk to you or something along this line. ( Or I get, the owner will never consider this offer.)
When making an offer : Is this how it has to be? How is a basic offer made and do you have to pay for the time for due diligence ?
Make the offer to the broker. Use Frank & Dave’s offer paperwork. (Read it thoroughly and tweak it to meet your needs.)
I believe it is the law in all 50 states that brokers have to present bonafide offers like this to sellers for their consideration. Make it (politely) clear after delivering the offer that you are not trying to cut the broker out of the deal, that he/she gets paid by the seller, and that you’d like to negotiate directly with the seller. Be prepared to deposit earnest money with a title company to further establish your ‘earnestness.’ (Do NOT send your earnest money to the seller, or to the broker - use a neutral 3rd party like a local title company.)
Once you deliver your signed offer, you may find that the broker takes you more seriously and is amenable to letting you begin a discussion directly with the seller.
Good luck,
-jl-
When I notice a park is not prices correctly I tend to call the broker up front and ask how they went about pricing the park. I try not to offend the broker- because most of the time the broker has no clue how to price a income property. I then, go back to the income and expenses and walk the broker through how the property is priced including all of the stuff a good appraiser will look for. Many times, the broker will say- well the owner came up with the price… I will offer to walk the owner and broker via conference call through the pricing of a park and they can decide if they want to accept my offer. Remember- brokers want a pay check- and they probably KNOW the park is overpriced but they do not have the tools to educate the seller on how the park is priced. If you can walk everyone down the road- you can put parks that are overpriced under contract.
Just a side note- I have found that most people try to apply the CAP rate to the gross- or to a number that does not include all of the expense’s.
Good luck with your offers!
What you described is one of the possible outcomes, but all deals do not begin like that. In many cases, we are making an offer very nearly the same as the seller’s price. In other cases, the seller is begging for an offer. Every deal is different. All you can do is offer a fair price and see where it goes.
You do not have to pay for the due diligence time on the deal. The property examination period is free. However, if you are really going to buy the park, you will have to spend some money, ultimately, on a Phase I, survey and – if you are using a bank – an appraisal and even property condition report. But we do not engage any of those third party reports until we have checked out everything else and the deal is a go.