SELL YOUR MOBILE PARK DIRECT
Having been in the mobile home park business for 25 years, I know why people want to sell.

How to Sell Your Mobile Home Park in Oregon and Washington

I’ve been in the mobile home park business for more than 25 years and I love owning parks. But, occasionally, a park owner doesn’t share my passion and decides they want out. Then they find that getting rid of their park feels like it’s twice as complicated as owning it. Laws for selling a mobile park in Washington and Oregon can delay you if you’re one of those owners ready to sell, and maintenance issues can reduce its value.

I’ve never sold a park, but I’ve bought plenty of them, which gives me a bit of perspective to share with sellers. I know what I look for when I buy a park, and I’ve worked with every kind of seller. The most successful ones know their options, understand the steps involved, and can work around issues that reduce a park’s value.

While no guide can cover all the nitty gritty of selling a mobile home park, I’m here to give you some of my insights from 25 years of experience buying parks Oregon and Washington parks.

Prepping Your Park for a Sale

If you were going to sell your car, you’d wash it. So, if you’re going to sell your park, clean it up. You don’t have to put in $40,000 of updates, but you do want to invest in a fresh coat of paint and make sure maintenance issues are under control. Do a quick audit of your park and check the following:

  • Make sure tenant properties meet the lease standards: Are tenants keeping their properties up in accordance with their lease agreements? If not, send reminders to those who aren’t.
  • Take an inventory of outstanding legal issues: Check out any current liabilities you have, whether you’re evicting a tenant or getting sued for a slip and fall in the parking lot.
  • Fix up your common areas: If you can afford to fix it, fix it. A buyer with a good eye is going to look for small maintenance issues, and will reduce their offer if they see any.

Navigating the Three Sales Channels

Once you have your park looking its best, there are three different routes you can take to sell it. Depending on how involved you want to be in the sale, you can sell it yourself, list it with a broker, or try to sell to an investor. If you’re a rookie, your best bet is probably going to be working with an industry insider. But, before you choose, look at how each option will cut into your bottom line.

Option #1 – Listing with a Broker

Listing your park with a broker is like selling it on autopilot. Your broker handles the sale on your behalf and is paid on a commission basis. It’s a seamless option, but it can also be a costly one—especially if you hire the wrong broker.

The Advantages of a Broker Listing

  • Industry connections: Brokers tend to have more industry connections, offering direct access to certain buyers the seller wouldn’t meet otherwise.
  • A seamless selling process: They act as the middleman in the sale, finding the buyers and negotiating the price. They pretty much do all the work for you.
  • Potential bidding wars: As brokers market your park to multiple buyers, they can leverage the competition to get you the highest offer possible.
  • Negotiable pricing: Brokers are paid on commission, but that commission may be negotiable, especially if you have a potential buyer on the hook before you get in touch with them.

The Disadvantages of a Broker Listing

  • Double dealing: Your biggest problem with brokers is going to be with the guys who want to take a bite out of both ends. They represent buyers andsellers so, as a result, have an inherent conflict of interest. How’s a broker going to negotiate the best price for you if they’re also trying to negotiate a good deal for the guy they’re selling it to? Watch out for brokers who do this.
  • Poor service for one-off clients: Brokers can be dismissive of sellers who aren’t returning clients. The brokerage community is dependent on people who buy and sell continuously, i.e. serial buyers. Those are the two players who mean the most to brokers. Other one-off clients might not get as much attention because the broker’s more worried about return business.
  • High cost: Finally, brokers get expensive, usually wanting about 4% off the proceeds, sometimes more.

If all this information about brokerage firms is putting you off, then you might consider option two—doing it yourself.

Option #2 – For Sale by Owner

There are some people who try to do everything themselves. If you’re one of those people, then you might be considering selling your park directly by listing it online or in local publications. But it’s not as simple as it seems. You may find the disadvantages far outweigh the benefits.

The Advantages of Sale by Owner

  • No sales fees: When you sell yourself, you don’t have to pay a commission or a fee, which, for a big park, can amount to a lot of money.
  • Flexible timeline: You don’t have to worry about expirations or deadlines when you’re the one controlling the listing.
  • The option for an ‘as is’ sale: If you have a park with a lot of maintenance issues, then it’s going to be hard to get brokers or investors interested. If you want to sell your park ‘as is,’ you might have to do it yourself.
  • Total control: You take in the bids and decide what price is right for you.

The Disadvantage of Sale by Owner

  • Extreme learning curve: If you can sell by yourself, you’re probably already a licensed broker. That’s because selling your entire park is much more difficult than selling a home.
  • Potential legal pitfalls: In both Oregon and Washington, you’ll have to abide by certain notice requirements. Failing to do that due to a lack of knowledge can cause a sale to fall apart.
  • The risk of getting lowballed: If you’re an inexperienced seller, then you need to know how to spot a fair price for your park—and when someone is trying to undercut you.

Selling yourself can be an excellent option—depending on your skillset. Problem is, having the right skillset is rare.

Option #3 – Selling to a Mobile Park Investor

A middle ground between selling your park yourself and listing it with a broker is working with a mobile park investor. They specifically purchase parks as investment properties with the intention of running them. The goal of investors is different than buyers looking to flip your park—they want to see their return through operation, so they’re in it for the long haul.

The Advantages of Selling to an Investor

  • Flexibility and efficiency: Investors have a lot of flexibility since they’re cash buyers. While it’s possible to make more when someone is taking a loan out from the bank, it’s also easier for the sale to fall apart. That’s why most park investors use cash to buy, so they can get it done quickly.
  • Legally compliant: You can get a quote on your park without having to notify residents that you’re considering selling, as this qualifies as an unsolicited offer that doesn’t need to be reported in Washington or Oregon.
  • Fair value offers: Investors aren’t focused on getting the lowest deal. They’re not planning on selling the park anytime in the future, so they can afford to pay a competitive price without it cutting into their profits.
  • Low closing costs: Park investors don’t typically charge commissions, at least I know I don’t. That means you get more of the proceeds straight into your pocket.

The Disadvantages of Selling to an Investor

  • Difficult for parks with issues: Park investors want a community that’s in good condition, with no major issues impacting occupancy. Brokers and a DIY sale will offer more options for ‘as-is’ parks. Generally, if your park has issues with maintenance, you’ll want to get that under control before selling it to an investor.
  • No competition: One thing that can drive up the price of a park is a bidding war. When you sell to an investor, you’re only getting one quote, so you should have a good idea of your park’s value ahead of time.

So, those are your three basic sales channels, but, sometimes, timeline is a driving factor and you want to sell out of your park as soon as possible. In that case, you’ll want to go over the steps to selling your park, taking note of things that may slow you down along the way.

The Step-By-Step Process of Selling Your Park

The process for selling your park is going to change depending on how you go about it. The longest and most complex is selling it yourself. There’s no way I can summarize that here. However, selling to an investor versus selling to a broker is going to drastically change your timeline. Here’s what you can expect in each case.

The Steps for Selling with a Broker

1

You sign a listing agreement with the broker.

This agreement will outline what the broker will do to sell your property, an asking price, commission rate, and all the other pertinent information. It will also cover the most important item, the exclusivity clause.

2

You give the broker 6 months with guaranteed commission.

That means the broker gets an exclusive right to sell your park for the next six months, i.e. that exclusivity clause I mentioned. If you sign the paperwork, then two hours later get an offer for a direct buy, the broker is still going to claim commission out of that.

3

The broker collects offers and negotiates.

This process is long and arduous. The broker will research the property and the price fluctuations that might affect the value. They’ll contact you with offers, negotiate sales, and try to close the deal before the listing expires.

4

The broker connects with the bank to close the deal.

If the buyer doesn’t have cash on hand, the broker is also going to have to work with the bank to finish out escrow on the deal.

All in all, a broker listing is pretty much a guaranteed six-month time commitment. You may find that you don’t get a lot of bites at first, but then there’s a flurry of activity towards the end. That’s because your broker may only be motivated to sell your park when the listing is going to expire. If that’s the case, then you might find you get a lower offer because of the rush. Remember to choose your broker carefully to avoid this, or go with an investor sale instead.

The Steps for Selling to an Investor

1

You contact the investor for a ballpark offer.

This process is streamlined because the investor isn’t selling the park for you. They’re buying it direct to run it.

2

You begin the contract process.

This is simply entering into the “intent to buy” part of the process where all the details of the deal will be worked out.

3

The buyer does a property inspection.

This part will involve someone coming to the property and verifying everything that was agreed to in the contract.

4

You both come to a final price agreement.

The investor and seller come to an agreed upon price, with a deadline for acceptance. Usually, I close within three weeks of coming to an agreement or move on. Either way, if they don’t accept my offer, they have a fair value assessment for their property.

Now as pointed out before, investors want parks that are in good working condition and have high occupancy rates. You might find there are some things that will stop you from selling, or at least cause your park to get a lower value.

Issues That Hinder a Mobile Park Sale

If I can fill a place, I’ll usually buy it. But there are some times when I just can’t. That’s usually because the owner has let something slide over time that I’m not sure I can fix. Usually, when I don’t buy a park, it’s because of environmental, maintenance, or legal issues.

oil-contamination

Environmental Issues

If the park is an environmental hazard, I can’t take it on until the issue is resolved. When you sell a park, you have an environmental study done. If that study comes back with issues, it’s going to stall the sale because whoever owns the property is responsible—including any lawsuits. No buyer wants to take on that risk. The most common environmental issues I see stall a sale are:

  • Oil contamination: You see this occasionally when a home has an oil tank that must be removed, and the oil seeped into the ground underneath. You’re going to have an environmental issue that most careful buyers won’t want to deal with, so you need to remove the tank and clean up the mess.
  • Septic contamination: The same issue goes if you have any underground septic systems that may be in disrepair with contents leaking out.
  • Water system contamination: If either oil or septic leakage leads to water contamination, then your park will be both an environmental hazard and a health one.

I will say that I’ve never seen an environmental issue that isn’t solvable. The problem is the time it takes to fix these problems. Keep in mind that if there’s bank lending involved, this will probably kill the sale. Most banks will walk away once the site has a level one environmental report on file—and that just means there’s a potential hazard. Your best bet if you have any environmental issues is to work with a cash buyer who’s willing to wait until you fix the problem.

damaged-driveway

Deferred Maintenance Issues

No park is perfect. I know that, so don’t mind paying full price even if there are minor issues. But that doesn’t mean I want to sink money into a park right after I buy it. When it comes to maintenance issues, the most common problems I see are:

  • Roads in disrepair: Severely damaged roads pose a safety hazard and could be a liability.
  • Utility hookup issues: Issues with connections for electricity, water, gas, and other necessities make a space unusable. Resolve any connection issues in advance.
  • Abandoned homes: These are both a legal and a financial pain to remove. Property buyers want full lots, or at least empty lots that are ready to use, so they can either operate the park, or flip it quickly.

Now keep in mind maintenance issues aren’t always deal breakers. In my experience, if I’m looking at a lot as a long term investment, I might be willing to take on some smaller problems. I’ll simply deduct the cost of the repairs out of my total offer for the park.

If you have maintenance issues, it’s best to have quotes on file for the actual repairs. That way, you can show the buyer how much it will cost and ensure they’re not unfairly undercutting the price due to the needed repairs.

legal-issues

Legal Issues

It might surprise you, but legal issues aren’t a deal breaker for me. That’s because I know they’re unavoidable. Any experienced park buyer is going to expect some legalities that are standard, like environmental reports and financial disclosures. But there are a couple that tend to concern me:

  • Legally required notices: The required notices are going to change based on whether the park is being sold to be closed, or if it’s being sold and will stay open. Here are the requirements in Oregon and Washington:
    • Keeping a park open in Oregon: Oregon has an “Opportunity to Purchase” rule that you need to know about. Simply put, if you’re selling your park, you must let tenants know so they can compete for the sale if they want to. While tenants rarely exercise this right, you must prove you gave them the appropriate notice anyway. The notice is required the second you consider an offer to buy the park.
    • Closing a park in Oregon: If you’re closing your park to sell it in Oregon, you’ll have to give your tenants a one year notice. In addition, you’ll have to pay them a fee to relocate based on how large their home is that can go as high as $9000. If your buyer wants to close your park, or convert it to another use, it’s highly advisable that you make them responsible for emptying it themselves.
  • Keeping a park open in Washington: You don’t need to give notice if you’re selling to someone who intends to keep the park open in Washington state. Also, unlike in Oregon, you don’t need to give the residents an opportunity to purchase the park.
  • Closing a park in Washington: If you’re selling your park to close it, then you have to give 12 months notice to Washington tenants. You must also post notices at all entrances that the park is closing. Many buyers won’t want to deal with this and will ask that you empty the park prior to the sale closing. Never agree to this, as it will be on you if the buyer pulls out of the deal.

In either case, it’s much more seamless to sell when your buyer intends to run the park, rather than flip it. Tenant notification laws change all the time, especially when it comes to closing parks down. As such, before you consider selling your park, check for any recent notice changes.

  • Pending lawsuits: You need to disclose any pending lawsuits against your property, as well as their status. Personally, I look at those on a case by case basis. If it probably won’t impact me, like a slip and fall from a few years ago, I don’t worry about it. If it’s a major ongoing environmental lawsuit, then I’m probably out.

It can be an exhaustive, and exhausting, process to sell a mobile home park, so most people want to find someone who’s willing to make it faster and easier. And mobile parks are communities. You want to make sure your tenants have a place to call home, but you still want to get the best price.

joe-tobin

If you’re interested in selling your park, contact me. Even if I don’t buy it, I can still offer you a fair valuation and all the advice you need to sell your mobile home park in Washington and Oregon.

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