You cannot have a deal until both parties of signed. So how can you push the seller to sign on the dotted line after spending so much time on discussion? In this Mobile Home Park Mastery podcast we’re going to explore the different way to motivate sellers to execute the sales contract.
Episode 340: Strategies To Get Contracts Signed Transcript
We all know that time kills deals, that when you've arrived a price on a Mobile Home Park, it's up to you to get that thing signed quickly before somebody else walks in the door and steals it from you. But at the same time, often the seller is not aligned with your same sense of urgency, this is Frank Rolfe for the Mobile Home Park Mastery podcast. We're gonna talk about some strategies to help convince the seller to go ahead and sign up faster right now rather than later. Because literally in that expense of the weekend or between when you call them and call again, you may get delivered the bad news is somebody else has contacted them and offered them more money. And despite the fact you had the person all poised ready to sign it up, you may have well lost the deal, and that's very painful. So what are some real world suggestions of things that you can do? Well, let's first acknowledge that you can't force any seller to sign an agreement. If you can force people to sign agreements, that falls under the classification of win-lose negotiating, that means they're in a weakness position, and you basically tell them, "Look, either sign this or the deal's dead."
Now, that may work when you're trying to buy a car from a car dealer who has too many cars on the lot and not enough sales, but Mobile Home Park owners are almost unanimously well off. They really have very high living expense, they traditionally have no debt on the property, and you just can't push wealthy people around it, just doesn't work. So the suggestions, we're gonna go over our things and make it look to them as though it's in their best interest to motivate them to move forward, but not to threaten them. Threatening doesn't work. Has never worked. I know someone who has bought Mobile Home Parks always from a win-lose negotiating, threatening position, where they always think that the seller is in a weak position. And you know what? If you look at that portfolio, that person has amassed, none of those deals are very good. The problem is, when you go to sellers who feel they must sign the contract or else, it's typically a sign that they're harboring a property that has terrible problems to it, and that's why they're so desperate to unload it. Permitting issues, infrastructure issues, tenants who don't pay. That's the bastion of the seller who's in a weak position, but that's not what you wanna buy.
So assuming the time kills deals, and assuming you can't push sellers to sign things, then what are some ideas that are out there to help people sign? Well, the first one, which you're probably already aware, is bonding because most moms and pops like to help people that they like. And the more they like you, the more comfortable they are with you. And what holds back a lot of sellers from signing is you're not really sure if you're the right buyer for their property. Many of them do not look at it as strictly a dollars and cents proposition. They look at it as who would be the right steward of the property? Who could properly take this property to the next level? Who will treat the residents fairly? And once they've made that decision, it's a lot easier to push them forward to signing the dotted line, so that means it falls upon you as the buyer to bond with them.
Bonding does not mean you have to go have a picnic. It doesn't mean you have to be there in person. It does mean you have to talk to them frequently, spend a lot of time and listen a lot. A good bonding person is someone who does very little talking and just a whole lot of listening to what the seller says. Of course, interjecting in intelligent questions into the conversation. But if you wanna get things signed, the first thing you need to know is you've got a bond really heavily with the seller. That bonding is probably the single biggest driver and roadblock to them signing the agreement.
Next, you've gotta be enthusiastic. It drives me crazy in life when people think the key to success is to be coy, to not show your emotions. Once again, that might work if you're looking at buying a refrigerator, and it is the refrigerator that you really want, but you pretend, "Oh, I don't want the stainless one, I wanted the one that was black," hoping that the salesman in desperation will say, "Well, I don't have any of the black ones in stock, but I have the stainless one, so I'll tell you what, I'll take an extra $50 off of it." There's no question in most negotiations in life, not being enthusiastic is the right path to follow and then came Mobile Home Parks. In our industry, the seller reacts very positively when the buyer is enthusiastic about the property.
It's a compliment to them because it makes them feel they did a really good job of putting together a really nice Mobile Home Park. So when you're enthusiastic, that makes them happy. Secondly, enthusiasm is kind of contagious. When you're enthusiastic, it thrills other people. I'm sure you've been around a child who's all excited about Christmas, it makes Christmas more fun. People who aren't into Christmas, who aren't in the whole tradition of trees and gift giving, kind of sours the whole flavor doesn't really wanna make you participate, but when people are excited about something, generally, it makes others happy and they wanna push that forward, and that's how it is with most Mobile Home Park sellers. When you are very enthusiastic about their property, which let's be honest, most of the time, they lost their enthusiasm years ago, it makes them wanna sign your agreement. So another critical factor behind bonding is to be thrilled, enthusiastic, and to express that.
Enthusiasm also will filter into their psyche when it comes to their belief, you will close. If someone doesn't act totally thrilled with something. If you act disinterested, that tells the seller, it's possible that you're gonna drop that deal. You may find something in diligence and change your mind, the financing may not be exactly as you want it and you cancel the deal. So when you are enthusiastic, it tells them many many positive attributes about you and it comforts them you will close and that makes someone to sign more. But what else can you do besides that to try and get someone to sign the agreement? Well, again, the key is to appeal to their interest. Do not ever think you'll get anywhere from your perspective. You can't say things like, "I really need to get this thing closed because I really need to increase my additional side income." That doesn't do anything as far as getting them to move forward.
So here's an example of things you can do to try to appeal to their interest, to make them wanna sign up. One thing you can do is to tell them, "Hey, I've got a great relationship with a lender right now, and so I don't wanna wait too long in getting this before them 'cause I have them all excited about it." Now, that sounds quasi self-serving, but from the seller's perspective, it means, uh-oh, I better move quickly because, "Hey, I don't wanna miss out on this opportunity with this lender." Most Moms-and-pops, when they built the parks initially, and even all the way up through the 1990s found lending very, very difficult.
If there's one item that they can commensurate with its lending, they realize that banking is tough, or at least it was back then, so when you start throwing out stories about lending, that's a big turn on to them as far as getting them wanting to sign up. So one good one is just to say, "Hey, I've got a banker in position ready to do this deal, I think, but you know how bankers are here today, gone tomorrow, you never know what will happen," that's a good way to urge them to go forward. Another is to appeal to things going on from a timing perspective, which they're aware of in the news. For example, say, "Look, you know, there's all these pending tax laws that could hurt depreciation and could hurt the capital gains tax, and so I wanna get this thing closed quickly as do you, so that we get there before those things happen." Again, it's not self-serving, it's a win-win. It's mutually self-serving and it's a good motivator. You probably have seen all of the discussion in the news from Joe Biden about wanting to eliminate capital gains tax. Clearly, if you can eliminate capital gains tax, it's a real bad thing for anyone selling a Mobile Home Park.
So again, try to harness news items that typically relate to things such as taxes that you're racing to get in before that big boulder rolls in front of the entrance to the cave. Also, other timing items would be something like, you know, we're about to enter the prime selling season on the homes, and I really wanna start filling those lots. I've been talking to some manufacturers, there's a huge demand for affordable house, and I wanna get this thing signed as soon as we can because I don't wanna miss out, right now while there's so much demand. Again, it's a motivating factor for the seller, get us motivated you from your perspective, so once again, it drives them forward thinking, "Oh man, I don't wanna miss that on that timing. Yeah, let's get that going."
Finally, you have just the appeal of them having a new best friend, because many moms and pops are lacking one item, which is a lot of people that talk to. Sometimes what's happened is as they've aged, many of their best friends have died or they have no contact with them, and who doesn't wanna have a new buddy? Everybody does. So you can say things to the seller like, "Man, I can't wait to close on this, because I can't wait to be able to call you all the time with questions on how things work and what's going on." Now, you might say, "Well, the seller is gonna hate that line of discussion." No, they don't. You might, if it was you as a Baby Boomer or a Millennial who have a day job and other things going on, but to the typical mom and pop, it doesn't have a lot of action going on, having continual calls and questions is fun. Having somebody who calls you up and says, "Hey, on the Mobile Home Park now, there's this one blue spruce tree. What do you think about blue spruce trees. Should we plant some more?" That's fun to them. They like that perpetual contact.
I once did a deal where kind of one of the conditions of the deal was that I would have lunch with the seller at least once a month. Now, he was carrying the paper, and I think initially it started that that was the whole goal but really, he just wanted to have something to do. He wanted to have once a month, the ability to have lunch with somebody. So again, never forget the fact that bonding on the front end of the deal doesn't mean bonding has to end upon closing. And the fact that you reinforce the seller that you'll be there and you weren't just bonding with them just to get a deal under contract, but you want the continuity that can also be important. The key to remember when you're trying to get the seller to sell, to sign that agreement is, you got to appeal to them, you cannot push them, you cannot drag them, you've gotta go ahead and set in motion the conditions under which they wanna get out the old pen and sign. This is Frank Rolfe, the Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.