Welcome to the RV Park Mastery Podcast, where you will learn the correct way to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate RV parks. Your host is the 5th largest owner of RV and mobile home parks in the United States, Frank Rolfe.
So you've negotiated with the seller, you've gotten the contract signed up, it's in the title company, you've got your earnest money and you imagine you're over that hump. However, it doesn't always go that smoothly because sometimes the seller of the RV Park wants out of the contract.
This is Frank Rolfe for the RV Park Mastery Podcast. We're gonna talk about what you do, when the seller wants to cancel your deal. Now, why would a seller wanna do that? After you've gone through all the labor and the discussion and the bonding and everything else and you finally hammered out a deal, which they found satisfactory and they've signed it up and put it in the title company, then why would anyone ever want out of a deal? It makes no sense, right? Why would the seller agreeably do something and want out? Well, it's typically called seller's remorse. Now, why would a seller have remorse? Well, various reasons. One reason would be more money. Maybe since you put it under contract, somebody else came to them and offered them more money. So they feel remorseful because, gosh, darn it, they wished they had more money for selling that property. Or maybe it's because they've suddenly realized that if they sell the RV Park, they'll lose their meaning to life, because that's all they've done with their life and now they suddenly have realized that they can't bear the thought of not showing up at the office of the RV Park the day after closing.
Sometimes it's through nostalgia, because they think about the fact that their daughter planted the tree at the entrance, and the son put in hole number one on the miniature golf course, and that starts to make them sad thinking they're giving up their heritage. Another time, a family members said, "Wait a minute, you didn't sell the RV Park, right? 'Cause I wanted it." What if it's their son who says, "Dad, you promised I would get the RV Park some day. You've totally let me down." All of these things can lead to what is called the seller's remorse and at that point, the seller wants out. So they'll often go to you and say, "Hey, I know I signed the contract and everything, but things have changed a little. I don't wanna sell it anymore." What do you do? Well, here are some options when that should occur.
Number one, let's get to the root of the cause of what is the seller's remorse. And you need to do this in a fair manner, but it has to be fair on the part of the seller, too. So if the seller remorse is that he got offered more money, no, that's not fair. That's not a fair reason to cancel the deal, simply because they suddenly got a better offer. You can't do that on a car, you can't do that on a business and you can't do it on an RV Park. So if that's the reasoning that that's what's going on, then I would say, "No, that doesn't count. That's not a reasonable reason to cancel, because you've got another offer." But what if it's one of the other items? Then what do you do? What if it's the fact that they promised the son or they get all nostalgic? Well, you got a couple of options. I mean, you can say, "Well, alright, I'll let you out of the contract." That'll be option number one. Option number two is say, "No. No, I won't let you out of the contract." Option number three, we'd offer them more money. Now, let's break those options down.
Now, if you tell them, "Okay, I'll let you out of the contract." Then what about you? What about your fairness? You put this whole deal together, you're gonna be changing the direction of your financial future, if you let them out of the contract. So that's probably not the fair answer, just because they suddenly wax nostalgic. Then you have the issue of should you just say a cold no? Well, that is actually the correct thing from a legal perspective. When you have a signed contract, it doesn't have any out clause for suddenly having second thoughts. Unlike the due diligence clause and the financing cause, there is no seller's remorse clause in the agreement. So "no" is pretty much, at least from a black-and-white arena, that's pretty much a correct response.
And then you have the one about giving more money, assuming they have a better offer and assuming that they're now very, very mad, you would have the option, maybe, to match that offer, if that's what you wanna do. But is that, again, fair to you? And the answer, of course, is not really. That's not how life goes, you can't go to the car dealer after you've already signed the agreement to buy the car and say, "Wait a minute, I got offered another car at less money, let me out of my agreement so I can buy from that other dealer." The car dealer would say, "No way, that's not how the American system works, you can't do that." So the bottom line to it all is that most of the time, the correct answer when they say that is "no." That's where you need to head. "No" is the only fair and equitable remedy but instead, you need to additionally try and bond more with the seller because oftentimes, when they're waxing nostalgic, it's because they're feeling lonely. And often, you can get around that, if you bond with them, so that they are losing one element of their life, but they're gaining another.
I once had a seller who was very, very upset later that they were selling their property. And I talked to them and I found out, really, they just wanted to have someone to talk to. They wanted to have the right to come out and visit the property. I told them, "Hey, come out and visit the property as much as you want. In fact, I'll tell you what. Let's go... Let's have lunch together on a regular basis out at the property, we'll go somewhere." Now, you know where that went. After a short while, I never heard about it again. They came by for lunch a couple of times, that was the end of it, because just as they waxed nostalgic suddenly and had that sudden remorse, it goes away.
A lot of times when we make choices in life, what happens is we make the choice and then we feel bad about it. And then it just evaporates, because none of us really like change, and that's what really everything ties to. When someone's owned something from a long period of time or if they self-manage the RV Park, they've been managing it a long time, changing their routine, it's shocking. It's striking. And after they make that commitment, 'cause they know it's the right thing to do, it still makes them unhappy. But unhappiness doesn't stick long-term, it's kind of temporary and they move on to new interests, new hobbies, new people.
Look at Dave Thomas, the founder of Wendy's, what did he do before Wendy's? Kentucky Fried Chicken, he was one of the most successful franchisees of Kentucky Fried Chicken. And then he sold the Kentucky Fried Chicken chain off, that he'd built, and he was very sad. He found himself at that point just playing golf all the time at a country club. Didn't feel like he had any meaning to his life at all. And then someone said to him, "Gosh, Dave, maybe you could try to figure out how to build a better fast food hamburger." And that's where Wendy's came from. That's who people are, they transition from one thing to the next, but there is that brief moment during the transition, where it makes them sad, makes them unhappy. They don't like the change, they don't like the uncertainty, but it doesn't mean you should cancel your deal over it.
So when the seller comes to you and says, "Hey, I'm sad. I'm lonely. I wanna cancel. I've got seller's remorse." Don't do it. Say, "Seller, we have a deal. I'm super enthusiastic about the deal. Let's talk more in depth of what the problem is." And often with bonding and just open discussion, you can help make them feel better about the transition, because letting people out of contracts is not going to get you anywhere as far as your RV Park ownership goal, and it's also just not the right thing. In fact, sometimes not dropping the contract is almost a form of tough love, because the person really does need to sell. And just because they have second thoughts later, scientifically, they knew when they signed the agreement, that it was, in fact, the right thing for them to do at that time. And you gotta hold them to that bigger, more macro item, which was correct and not let seller's remorse come in and poison that for both the seller and yourself. This is Frank Rolfe for the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.