Motel Sale Questions

Motel Mingle Forums Motel Valuations Motel Sale Questions

This topic contains 6 replies, has 4 voices, and was last updated by Busybees Busybees 11 months, 2 weeks ago.

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    Topic
  • #4901
    Busybees
    Busybees
    Participant

    Ok guys,

    Can someone tell me when selling is it best to???
    a) put all your eggs in the one basket… and have an exclusive broker OR
    b) spread it out there among many.

    We have been having a discussion with another motel (not on mingle silly person) and i said that i would put it out there for general discussion.
    Any answers would be greatly appreciated!
    cheers.

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  • #8642

    MVM
    Participant
    • Topics Started 10
    • Replies 53

    What sort of commission do these brokers tend to charge?

  • #5071
    image
    Ballina Colonial Motel
    Participant
    • Topics Started 10
    • Replies 87

    A time I have been dreading for some time, but am now well into the process of selling the motel.

    Many people sell their business, but few sell their home as well, but that is what we are faced with. Now this raises an interesting point, because any agreement ‘Sole, Exclusive, Joint’ that you make with a broker, is only to sell the business, not the land.

    Which brings me on to brokers. I have yet to meet a good one and personally rank them along with car sale people. They really do not want to have to work very hard for the extortionate amount of commission they will earn. If they can push the value of your beloved asset down, by talking about ‘bank’ expectations, and show a high return, they get an easy ride with the purchaser and the financial institutions.

    We interviewed four brokers last week, to find out how they proposed to market and sell our business. Only one came to the table, the other three wanted to sell cheap and provided us with zero confidence. Two thought that we were going to sign up with them then and there and used the old trick of having somebody on their books that was already interested in the motel.

    Now one of the questions we fired at them was ‘exclusive’ or ‘joint’, to see how the commission rate varied. Three kept the rate the same, but one wanted an extra 1%. The danger of going ‘joint’, is how hard will they work for you, given any number of others are in the game and they will have to put money up for marketing maybe for nothing?
    If you also want the opportunity to sell by ‘private treaty’, then you need a ‘sole’ agreement. Again, the brokers don’t like this one. You can do this within the ‘exclusive’, but you must specifically name the individuals you potentially might sell too.

    Yes, this is a mind field and you should always let your solicitor have a look over any agency agreement you intend to sign. This is particularly relevant to the circumstances under which the broker will be paid. The fine print. For example you will have to pay the commission if the purchaser pulls out of the deal under contract. So make sure the non-returnable deposit paid is in excess of the broker commission.

    Now I have a story to tell about the fifth broker we invited, but I will leave that to a later blog!

    • #8645
      Busybees
      Busybees
      Participant
      • Topics Started 22
      • Replies 231

      Anywhere between 5-14% and some have a minimum of $22k!!

  • #4933
    Busybees
    Busybees
    Participant
    • Topics Started 22
    • Replies 231

    Thanks guys for your replies

  • #4927
    Motel Mingle
    Motel Mingle
    Keymaster
    • Topics Started 37
    • Replies 63

    Hi BusyBees, we did advertise with quite a few brokers as well as advertise privately on another website I had back then. We were lucky enough to sell privately and saved a heap on commission.
    More and more people are searching Google now and it is a lot easier now a days to sell privately. Why don’t you give Motel Mingle a go under Motels for Sale as I am sure you will get plenty of exposure.

    Finding answers.        Sharing ideas.        Solving problems.

  • #4923

    MVM
    Participant
    • Topics Started 10
    • Replies 53

    Hi there,

    From a buyers point of view, I know when we were looking to buy that we looked and subscribed to all the brokers. We never limited ourselves to looking at the one. So i don’t think it would matter if you just went with 1 or all of them because if the buyer is serious they’ll see your motel even if it’s with only one broker…. If that makes sense.

    Cheers
    Marty

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