Listing a Motel for Sale

Type of Sale:

Private Sale:

This is when you decide to sell the motel yourself through various methods one of the most common these days being Trade me. Most vendors see the advantage of this is that they are in control of the situation and they can also save the commission price. This in reality is often a misconception though. Firstly how do you price your business? The advertised prices of other complexes cannot be used as this is often not what they sell for. Neither can the local motel grapevine information be relied upon as this too is often incorrect. Next when a potential buyer first contacts you it can sometimes be difficult to ask the hard personal questions. How do you ask someone how much money they have or what they have done in the past or how much they intend to borrow? How do you know if they are telling the truth? The next step if you can get past this beginning process of qualifying the buyer is to convince them that your motel is the one for them to buy. This can be equally difficult. How much information do you give them? How much is not enough so they are not convinced and how much is too much so it scares them off? Lastly, if you get past the first two hurdles, is negotiating for the price. This can become very difficult when your emotions kick in and you are no longer a neutral negotiator. How do you reach an agreement on price when you have decided that you really don’t like this person due to your relationship up to this point? It is not about liking someone it is about selling your motel for the best price. Mistakes during the selling process will affect the eventual price and can even derail a sale completely.

Sale by agent:

This is when you engage a real estate salesperson to facilitate the sale of your motel. Just as all moteliers are not created equal so to not all real estate sales people are created equal. There are a large number of sales people who are residential sales people and do not know the first thing about selling a business, there are business salespeople who have operated a business and then turned to business sales but who know very little about motels, there are moteliers who have owned a motel and then turned to selling motels and then there are specialist brokers who have completed years of further study to gain a National Diploma in Real Estate specialising in business sales, some of these have motel experience and some do not. I always use the analogy of going to a GP. They are fine for everyday ailments but I certainly wouldn’t use them to perform heart surgery on me. Likewise I would use a specialist to sell one of my largest assets. Just as a surgeon has spent years learning the skills to get the best possible outcome, so has a specialist motel broker. This knowledge and skill set enables them to achieve an outcome which reflects the maximum potential rather than trying to attempt the process with a private sale and usually results in a sale price which is high enough to more than cover the commission.

Listing Process:

When using an agent the process is governed by the ethics and procedures of that company and also by the Real Estate Agents act 2008. One of the criteria of this Act is that the agent must provide a written appraisal of your business. This must be completed for you to see and must contain a comparison with other similar properties. As specialist motel brokers involved in the sale and purchase of motels these statistics are readily available through various means and most specialist brokers will have a good relationship with valuers involved in motels and this adds further to the available information. A specialist motel broker will provide you with an accurate market appraisal which will reflect the situation of your complex in the current market.
Different companies have different policies and you should ensure you are happy with the one you choose. Do you incur any cost for advertising? If so does the real estate company receive a commission on this advertising? What are the real estate company’s expectations of you? How will they market your property? Will they be present when a potential purchaser completes an inspection of your property?
Most importantly you need to feel comfortable with the Motel Broker. What are their qualifications? Are they a specialist motel broker? Are you comfortable discussing things with them or do you feel pressured? Do you like them? how long have they been a motel broker?

Type of agency:

An agency is a legal contract which outlines the terms of the broker facilitating the sale of your motel. This is binding on both parties and enforceable by law. There are different types of agencies but the two most common are sole and general.
Sole agency: This is where you give the exclusive right to facilitate the sale of your business to one agent. Many companies seek this type of agency and some state they will not act for you unless you sign a sole agency agreement with them. This obviously is very good for the broker
General agency: This is where you give authority to an agent to facilitate the sale of your business but it is not exclusive so you can also give the authority to other agents at the same time.
Remember the choice of the type of agency is yours. You are in effect employing the agent to work for you and you can determine the terms. Most agents will state that even if you sign a sole agency they will work with all the other agents which is correct, but the real issue is other agents working with them. As a specialist motel broker I am employed by a number of people who have listed their business or property with me. It is to these people that I owe my loyalty and these are the motels which I will try my hardest to sell. I am also able to facilitate these sales under my own company ethics and guidelines which I am comfortable with. If I sold a motel under another company’s sole agency I am not sure if their ethics would be the same. In my eyes the contract and payment are no different if I sell your property under my own general agency or sole agency so why would I treat them any differently. A broker asking you to commit to a sole agency otherwise they will not accept the listing is equivalent to you telling a customer that they can only stay with you if they guarantee not to go to any other motel. I guess my old days of being a motelier still linger in my head and I know it is not binding contracts which build your business but the service and satisfaction you provide which gives you the loyal customers. This is one of the reasons I work for John as it is these guidelines which are the basis for the company ethics of using general agencies and not asking for sole agencies.

Factors to be aware of:

• Cancellation clauses: What is the ability to cancel the contract and how much notice do you have to give.
• If the motel is sold by another agent whilst under sole agency the agency still exists and commission is due to the first agent under the sole agency. If the second seller is also due a commission due to a direct contract with you as the vendor then you could be liable for two commissions.
• The information you provide for sale purposes must be accurate and if you know of any defects or happenings which could affect the motel it is your duty to disclose them to a prospective purchaser. If you know of a defect and tell the Broker but then say they can’t pass it on to a prospective purchaser the broker must legally decline the agency.
• Commission rates vary. The commission amount must be stated on the agency agreement for both the appraised sale price and the marketed sale price.
• Rebates, discounts and other payments for services provided to the client must be disclosed on the agency agreement.
• As the vendor you must have authority to sign on behalf of the legal entity which owns the motel.