The Danger Of Selling Your Mobile Home Park To A Wholesaler
This video is going to talk about the danger of going under contract with a real estate wholesaler.
If you’re not familiar with the term ‘wholesaling’ and what that means, a Wholesaler is an individual that will “tie up” a property under contract, meaning get it under contract. And a lot of times, they’re not very transparent about what their intention is. So what is their intention? Typically, their intention is to get your property under contract and go out and sell that contract for more money than they have it under contract for. They may sell your contract for ten thousand dollars more or a hundred thousand dollars more than they have it under contract.
So a couple of things – number one, there’s nothing illegal about this act of selling a contract for more money in most states. HOWEVER, there are actually some states that have begun to outlaw wholesaling properties for example, Illinois comes to mind. There’s a lot of other states that are in the process of outlawing wholesaling as well– why is that?
Many states are beginning to outlaw wholesaling because a lot of times these wholesalers, after they get the property under contract, they do not have the ability to purchase the property. They don’t have the capital, they don’t have the wherewithal to raise the capital to to acquire your property.
This means the wholesalers are basically working and going out and hustling to find a buyer to buy the contract BUT WHAT IF they are not able to find a buyer for your property???
Well, then whenever it comes to the actual closing date, many of these wholesalers will unfortunately leave the sellers ‘high and dry’ and not show up to closing so the seller is back at square one of selling their property.
So how do you safeguard yourself if you are considering working with a wholesaler to sell your property? So number one, typically when they fill out a contract, in the buyer section of the contract, they’ll put in their name, the name of their company, and they’ll typically add some type of verbiage along the lines of “and/or assigns” – meaning they have the ability to buy the property and/or assign that contract to somebody else. So that’s one way to determine if they may be looking to wholesale your property in case they weren’t upfront about it from the beginning. Number two is just to ask them if they plan to purchase your property or wholesale.
In my opinion, this is something they should disclose from the very start and if they haven’t done so by the time you are reviewing a contract, that should be a cause for concern.
So, to this point, I understand that I’ve mainly cast a negative light on wholesalers and the industry in general, but that’s not a fair forecast to many wholesalers in the industry. The truth of the matter is that there are also a lot of wholesalers that are very honest, ethical, good business people and they do help a lot of sellers and bring a lot of value to the marketplace. And they’re very upfront about what their intention is sellers.
My recommendation, just ask anyone that you’re talking to – “Hey, are you gonna buy my property or are you just looking to wholesale this contract?” Because if they’re giving you the price that you’re happy with, there’s nothing wrong with that as long as they have the ability to do what they said they’re gonna do which is to get the deal closed.
Another way that you can often times tell a wholesaler if they’re looking to wholesale is they will have an incredibly low earnest money amount. Sometimes as little as $10, so you’ll want to make sure that they are putting some more substantial money down, we refer to this as ‘putting some skin in the game’ so to speak. Basically that they’re showing invested interest in your property and putting their money where their mouth is. So that’s another little signal, or a sign that you can verify, you know what their intention is, how committed they are to buying your property.
So these are just some signs for you to look out for as a mobile home park owner when you are going into the process of selling your property, or considering selling your property. Make sure that you understand what that process of wholesaling looks like and how to safeguard yourself from some of the pitfalls in the event you decide to go this route.
My name is Brant Phillips, and I’m with Mobile Home Park Instant Offer and I hope you found this informational in regards to potentially selling your mobile home park. I’m a mobile home park owner. I own multiple parks and I spend a lot of my time talking to sellers and helping them through the questions they have. We of course are a park buyer so we would love to talk to you if you have a park that you are considering selling.
I always like to say, ‘we can’t buy every park but we try to help everybody who reaches out’ and that’s how most of the calls and conversations go with people who reach out to us. So consider us as a free resource to ask any questions you may have about selling your mobile home park. We’re always here to help if you have questions about selling your mobile home park.
Call us at 866-871-4229 or visit us at mobilehomeparkinstantoffer.