There’s no question the MH industry has some amazing service providers, but what about brokers? DO YOU NEED A BROKER? It’s a great question that many community owners have whether they will admit it to me or not. Unfortunately, most don’t learn the answer until it’s too late.

Hi, I am James Cook, founder and national director of sales for Yale Advisors, a nationwide sales and financing brokerage specializing in Manufactured Housing and RV Parks. I took my first listing on a mobile home park in 2005, started focusing exclusively on this asset class in 2007, and launched Yale Advisors in 2012. Over the past decade, Yale has grown into one of the top firms in the U.S. specializing in our niche. Most of our client relationships start with an owner that has two common opinions: 1) they don’t trust brokers, and 2) they don’t believe they need one when they decide to sell.

To the first opinion, I would say they have great instincts. Brokers have earned a level of trust with the public somewhere between an attorney and car salesman. Hard earned distrust to say the least. While it’s unlikely to earn trust from this article alone, I can tell you I didn’t work at the mill shops that train you to “say whatever necessary” to close or lie to either party. Yale was built as the antithesis of a typical brokerage. We believe haste makes waste, and sellers that sell direct are significantly more likely to get jerked around, renegotiated, and end up netting 10-15% less than they would have with proper representation. As for the second opinion, let’s discuss when and why you should or shouldn’t hire a broker.

When to Hire a Broker

So, you own an MHC, and you get calls, mailers, emails, and other forms of solicitations weekly. There are so many groups contacting you and telling you how much they love your property and why you should sell it to them. They tell you they will pay “top dollar” and you won’t even have to pay a pesky broker fee, so of course this seems like a no-brainer. It is so much easier to hear them out than put the property on the market where your employees or residents might find out. As the great Lee Corso would say, “Not so fast, my friend.”

Let’s walk through this from the owner’s point of view. How could it be possible that every buyer can pay top dollar? More than anyone else? Someone must be lying! Maybe I will go back to them all and ask them to submit an offer then sell it to the highest bid!

You take the highest offer, now what? Do you know they are actually the highest offer or best buyer for your property for sure? What other terms are reasonable? What is reasonable in terms of representations and warranties, due diligence items, deposits, timelines? These are all questions that should come to mind and help you arrive at the answer to the question “Do I Need a Broker?”

If you haven’t found the answer, I have a few questions that may help.

Question #1: What percentage of the real buyers actively solicit sellers directly? Answer — roughly 30%. So, when you “go back to them all,” it is less than one-third of the real buyers.

Question #2: Why do buyers have an acquisitions team that contacts to you get directly? Answer— simply, to get a better price and better terms for themselves. It’s not for you! This is a basic business principle. Why would a buyer ever pay you more than they absolutely have to?

Question #3: How do I know which buyer is the best if I haven’t sold more than 2-3 parks in the last 10 years, or possibly ever? Answer — you don’t!

You may have caught on by now, but there are many benefits to hiring a reputable broker. We are now selling and financing close to 100 parks each year, so if you own your park for another five years before you’re ready to sell, we will have transacted on another 500 parks by then. When you hire a broker, you gain the same level of experience that they have, so choosing the right broker is just as important. You want someone to guide you through all of the questions above and more.

Now, if you are a buyer and you’re wondering why you should buy through a broker, it is simple – better matches, less wasted time, real sellers. As a buyer, you waste so much time trying to find direct deals, instead of focusing on running your properties, hiring the right people, fixing underlying issues with the property, filling spaces, etc. When a seller agrees to be represented, and oftentimes, to a “call for offers process”, you know they are serious and are going to take the best overall offer. It isn’t even always just price, but a combination of price, deposit, inspection period, hard money at signing etc. This process allows you the four to five weeks needed to ask questions and thoroughly review the underwriting, financials, rent rolls etc. and anticipate issues or surprise. Then, you are asked to submit an initial indication of interest, and if you are in the top three or four, you will be invited to a second round where you get even more serious and put all your cards on the table. The bid process takes a little more than a week, and you know if you won or not. Pretty clean, straightforward process, right?

Well, the reality is sellers will continue to think they know better than specialists (and they probably do know more than many brokers) and continue to sell directly at a rate of probably 50-70% of all transactions. Meanwhile, sellers that want to close the first time they enter contract, with no games or re-trades, will hire an experienced, highly referenced, and honest broker, to run a true arm’s-length process. We close dozens of sales every year, without alerting the residents or employees until a winner has been selected and a contract signed. Usually, by the time surveying and environmental reports are being performed you will start having residents or employees get curious and start asking questions, but there is little chance of the deal falling apart at that point if you’ve run the proper process.

The moral of the story for sellers is you could get lucky, but more often than not, you will net less and be tied up for much longer when you sell direct. As the old saying goes “Pioneers take arrows.” I get calls almost every week from sellers that have wasted 60-90 days in contract with a direct buyer. The buyer has already been granted two extensions to due diligence and has now started asking for price reductions. Usually, they have also pushed for access to the staff and let the word out about sale, so the seller feels compromised and is more likely to take the discounted price. Meanwhile, the issues the buyer is bringing up are things we would have fully disclosed in a proper process and had priced in and acknowledged by every buyer submitting an offer.

So, do you need a broker?

Well, it depends. Hire the wrong broker and you’ll be worse off than having no broker. But hire the right broker and you will sell to the best buyer for your property at the highest price and close in a timely manner. Get the name and number for each of the brokers’ last 10 sales and choose wisely.