How Do We Determine an Offering Price?

How do we determine our offering price and terms when we purchase a park?   Here are some thoughts and guidelines we use to navigate the process!

  • Generally, if the park is all buffed-up for top $, the seller has signed a listing agreement with a broker and it’s all about price, we don’t look too closely.
  • We want a fair price, a good transaction (win-win) and no surprises after the close.  If we “drive a hard bargain” and save $100K but the septic system fails in the first year, did we really get a deal?
  • Before writing an offer, we talk with the seller and ask a lot of questions: what are your  goals, why do you want to sell, what do you plan to do with the proceeds, when do you want to close, how did you determine the price,  etc…
  • This is a business transaction but many sellers have owned and sometimes built these parks and they want to leave them in good hands.  As buyers, we want to perpetuate this legacy, be good owners and successfully operate the park for the next 5 to 10 years.
  • Net/net, we use what we learned to write a compelling offer, something that aligns with the sellers goals and meets as many of their selling criteria as possible.

If all goes well and we have a “meeting of the minds” we get a deal done.  If the negotiation is difficult, lengthy and stressful, the deal probably shouldn’t close and usually, thankfully, it doesn’t.

About John Vashon

I own a family business that invests in and manages our own portfolio of mobile home parks.
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