RV Park Mastery: Episode 62

What To Do When The Asking Price Is Just Fine

Typically the RV park seller asks more than the property is worth. That’s the American tradition of negotiation. But what do you do when the price is just fine – or even lower than it should be? That’s the focus of this RV Park Mastery podcast in which we’ll review the negotiation playbook when there’s nothing to negotiate.

Episode 62: What To Do When The Asking Price Is Just Fine Transcript

Sellers typically ask more than the property is worth, but what do you do when they don't? This is Frank Rolfe of the RV Park Mastery Podcast. We're gonna talk about those rare cases in which the asking price of the RV park is at or lower than the price that you thought would be a great deal. Now, first of all, why would this ever happen? Why would an RV park seller suddenly throw a price out to you that is lower than what the market would bear? And that simply comes from the magic of older moms and pops selling properties where they really don't know the current valuations, or they don't really know how to assess the value of what they have. Most RV park owners only sell their property one time. They aren't really that learned in this little niche.

So basically, they don't have a wide range of expertise. All they know is they kinda sorta heard when an RV park sells, it sells based on some kinda multiple of something, and they often just throw out a number, and while it's typically higher than what things are worth, sometimes it comes in far lower. I'll give you the first example I ever had of this. I was looking at a property and I fully got with the seller, I met with him personally, one-on-one. He hadn't given me a price, he told me he might sell. And then I said, "Well, do you have a price in mind?" To which he said, "I would have to get one... " And I thought he was gonna say one million. Then he said, "I would have to get $190,000."

I was stunned. I thought, "Wait a minute. This guy is crazy. This is the sweetest deal of all time." But now I don't wanna blow it. It's kinda like if you're out fishing and you have this giant catfish that is bought onto your hook. You're now terrified you're gonna blow the deal, you're gonna pull up too hard on that catfish and it's gonna pull loose off the hook. So I didn't know what to do. And you can sometimes find yourself in this predicament. It doesn't happen all the time, but when it does happen, you're sure don't wanna blow it. So here are some thoughts on what you do when the RV park price comes in a lot lower than you expected. The first thing is you never wanna suddenly scream, "I'll take it," because you're gonna scare the seller to death. Because if you seem like, "Oh my gosh, that's stupid low," what is the signal that they receive? 

They receive a signal that basically says, "Wait a minute here, I've under-priced it. I've gotta get myself out of this transaction." So they might say, "Yeah, well, of course, that price doesn't include the roads or the office." They're trying to then back pedal away and now they don't even wanna talk to you any further. They wanna basically go back, re-price it, take it out to market again and leave you out in the cold. So never act excited about the price. That is literally the kiss of death. Instead, you have to always act like it's still over-priced, even if in that case, I thought it would be maybe a million which would be over-priced, and then the guy says, "I want 190,000." I still have to act stunned like, "Oh no, that's too much." So I'd have to wins and go, "Oh, okay. Oh gosh, alright." Because the minute you seem excited on the price, it's okay to be enthusiastic on the RV park, but the minute you're over-enthusiastic on the price, you're sending a very serious and deadly signal back to the seller.

Next thing you wanna do is when they're asking too little is to still go through your typical negotiation posture of, "Well, gosh, that still sounds a little high. What would I have to do to get this deal under contract?" You still wanna go straight into that typical dance of negotiation that we all know where the seller is high and then you offer a lower number and then you keep going bantering back and forth till you settle somewhere in the middle. You don't wanna get out of that mode, people like to negotiate. And if you suddenly seem too quick, just, "Okay, let's sign it up," it sends a signal to them that they haven't been a very good negotiator.

And that will again make them feel bad and wanna retract from the deal and re-price and come back again later. So you've still gotta go through the regular motions of negotiation, even though on the inside internally, you're saying, "Oh my gosh, what a crazy number. I can't wait to get this thing tied up." You also have to seem constantly beaten down by the seller. Sellers are never really happy unless they feel they really traded a hard bargain. If you ever watch those shows like American Pickers where they're out there in a barn trying to buy things from a farmer who's got an old Coca-Cola sign, they'll always try and compliment by saying things like, "Boy, you drive a hard bargain." "Man, you are a hard negotiator," because in America, that is deemed to be a really, really good quality. So people like to feel, they feel at a compliment if they are a tough negotiator. So don't deprive your seller of that opportunity. Make it still seem like they're a tough negotiator.

Say things constantly even as you're bantering back and forth on a price that you know is already too low, say things like, "Oh gosh, wow. That's more than I had hoped to spend. You really are a hard negotiator. Okay." Because they like that. It strokes their ego, it makes them happy. And why not do it, it doesn't cost you any money to say those kinds of things. So throw out the compliments quickly and tell them what a strong negotiator they are.

Also, you've gotta move fast. That's the other problem when you have someone who throws out a price that's ridiculously low. You wanna negotiate it because you don't want them to think that they under-priced it, but you also don't want it to get away. You know that the next person who calls and they through out the price, they're gonna be all over that person trying to tie it up. So you really don't wanna leave until you get it under contract. One of my favorite routes, shortcuts to get to that moment is simply say, "Okay. Well, what would it take to get this under contract? Let's spare each other the back and forth. You can say one number, I'll say a lower and we'll just go back and forth and back and forth, splitting the difference nearly every time. Everyone knows the drill."

If they would say, "I want 500,000," and I say, "No, how about 400?" And they say, "Well, how about 450?" And you say, "Well, how about 430?" And then maybe we end up at 440. Okay, great, but that takes time. They may wanna think about that overnight, talk to their wife, their son, their accountant, you don't have that kinda time because the next person in line that hears that price, they're gonna whip out the checkbook. So cut through all that. Give it a little bit at the front when they throw out the price, "Oh gosh, it's more than I wanted to pay. Could you go with the lower number? How about 300 and something," and they say, "Oh no, I gotta get X." Well then just don't do the next three maneuver steps of back and forth and back and forth, and back and forth. Just go straight to the kill and say, "Alright, well, what would it take to get this under contract?"

That cuts through all that time wasting back and forth, which although some people enjoy that form of negotiation, and that's okay if it was priced high where you have more time, in this case, you can't let it get away. You gotta get it signed up. You don't wanna leave and have it still hanging that they're still pondering the final number. You need to get that thing done. And to get that done, it's also extremely important in those types of deals to really focus on bonding. Because if you can't get that thing bought today, if you can't get them to sign the contract, if they say, "Well, I gotta run it by my accountant. I gotta think about it. I gotta run it by another family member." The problem is, every second someone else may contact them, or equally importantly, somebody else may say, "No way. You way under priced that that's stupid." And the best way to get deals done with any RV park seller is through bonding. You've gotta bond with them. And what is bonding? Bonding is this magical force where the buyer and the seller like each other, and as a result, the seller really wants to help you out. They feel the commitment.

And if they said they're gonna sell it to you, by heavens, they have to sell it to you 'cause they committed to you that they would sell it to you. Now, how do you get bonding going? Well, bonding really comes a lot from listening, and one of my favorite questions to a seller would be, "So how did you come to own this RV park?" And the answer will be very long winded, who knows how long it'll go on for. You'll learn a lot from it. You'll learn a lot about the seller, you'll learn a lot about the seller's thoughts on this property, but you gotta get them to talk. They don't bond when you talk and they just listen, that doesn't do any good. You gotta talk and they gotta talk and you have to listen. That's how you really get bonding. Beyond that, bonding pretty much comes from the simple fact that we all tend to bond with other people that we have empathy for, that we understand, that we'd like to associate with. So part of it is magical, there's not a lot you can do, but I found the biggest part of bonding is really just to be a good listener. Listen to what they have to say. Form that relationship.

That's what's gonna fend off the next person who calls. The next person who calls they're gonna say, "Oh well, I already agreed to sell this other person. I'm sorry. I'll call you if that doesn't go through." You've gotta try and get that kind of relationship tied up, because when the thing is priced low, you know that the next person on the door is gonna be as excited as you are to try and get it and to dislodge you as the buyer, and the bonding is what will save you. The bottom line is that it's not all the time that RV park owners under-price their assets, but it does happen more times than you would imagine. And when it does occur, make sure you don't mess it up. Pretend like it's still at a high price. Give them the ability to beat you down in negotiating, but strike a deal quick and use as much bonding as you can to secure that transaction.

This is Frank Rolfe, RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.