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Economic Life - Appraisal

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Zandes

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Feb 20, 2017
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General Public
State
Pennsylvania
Purchased a manufactured home in 2012 that was built in 2003 (which is secured to a poured concrete basement). At that time, the appraisal came back and under Economic Life, it was listed at 60 years.

Fast forward to today, 5 years later, we have gone under agreement on selling the home, and the buyer is going through VA lending. The VA appraisal value came back fine, but the Economic Life is now listed at 25 years.

We live in PA, have had no claims/damage to the home, if anything we've done nothing but updates to the exterior & interior.

How can the economic life be THAT far off between appraisals? More importantly, the VA won't approve the loan unless the Economic Life is at least 30 years. What can I do?
 

Michigan CG

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Certified General Appraiser
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Michigan
Determining economic life is actually something that can be market supported but few appraisers actually go through the process and I wold guess many do not know how to do it. I would go through your lender and ask them to have the appraiser state what his/her process was for estimating economic life.
 

Zandes

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Feb 20, 2017
Professional Status
General Public
State
Pennsylvania
Determining economic life is actually something that can be market supported but few appraisers actually go through the process and I wold guess many do not know how to do it. I would go through your lender and ask them to have the appraiser state what his/her process was for estimating economic life.

Thank you for the response ---- should I go through my lender? Or do you mean the buyer go through his lender since this is technically 'his' appraiser?

To be brutally honest, I'm questioning if the appraiser knew what they were doing. I don't think she ever appraised a manufactured home before. After she left, she emailed my agent asking where the HUD plates were located & if we could send over pictures. To me, that's day 1 stuff.

Scary that someone who to me doesn't know what they are doing may kill this entire transaction.
 

NORTON

Senior Member
Joined
Oct 10, 2007
Professional Status
Certified Residential Appraiser
State
California
There are some appraisers who believe that a MH has only 30 year REL on the day it is born / mounted at site.
Everyday after that is the home's biological clock ticking away.
Your appraiser may be one who subscribes to such philosophy.
 

Zandes

Freshman Member
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Feb 20, 2017
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Pennsylvania
There are some appraisers who believe that a MH has only 30 year REL on the day it is born / mounted at site.
Everyday after that is the home's biological clock ticking away.
Your appraiser may be one who subscribes to such philosophy.

Thanks for responding --- shouldn't something that serious be a 'set in stone' type decision? If something like Economic Life can just be picked out of the air, it seems to me that is a wild wild west type mentality between every different appraiser.

Essentially, we just caught a bad luck draw if that is this appraisers mentality, which would be a really tough pill to swallow if that is the case. No consistency makes very little sense.
 

Michael S

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Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
Marshall Valuation Services is a cost manual that is a common source used for determining economic life. They have tables of life expectancy for various building types as well as tables for determining depreciation.

A typical single family home with frame construction ranges from 45 years for "low cost" to 55 years for "average" and 60 years for "excellent and high-value"

Manufactured homes on the other hand range from 25 years for "low and average" multi-section to 30 years for "average", 35 years for "good" and 45 years for "excellent". Single section manufactured homes are 5 years less across the board.

I've dealt with manufactured homes on commercial properties a few times and after 20-30 years the value has usually diminished greatly. A 30-year old manufacture home that might have cost $80,000 new might be down to $10,000.

If the appraisal says the remaining economic life is 25 years that might be reasonable as it is already 14 years old (for a total economic life of 39 years). If they're saying the total economic life is only 25 years then that's probably not right as even a low end manufactured home can be expected to last longer than that with even basic maintenance and upkeep. There's plenty of manufactured homes built in the 1980s still around, even some from the 1970s (albeit those are usually in pretty bad shape and almost worthless).
 
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NORTON

Senior Member
Joined
Oct 10, 2007
Professional Status
Certified Residential Appraiser
State
California
Thanks for responding --- shouldn't something that serious be a 'set in stone' type decision? If something like Economic Life can just be picked out of the air, it seems to me that is a wild wild west type mentality between every different appraiser.

Essentially, we just caught a bad luck draw if that is this appraisers mentality, which would be a really tough pill to swallow if that is the case. No consistency makes very little sense.


Well on the other hand, how many MH's - mobiles do u find from 1970 still standing and without substantial structural concerns....supposedly the first appraiser thought an 8 year old home still hand 60 years REL.

Unfortunately, there isn't a right answer here thus hard to prove what's "wrong" as well, therefore there will never be a "set in stone" decision making process. If there was, then why would anybody's opinion matter at all, we would just refer to the "book that's written in stone".

On a side note, I can't recall seeing any appraisals that have shown a 60 year REL for a used MH, and I review appraisals all day, everyday..
 

Zandes

Freshman Member
Joined
Feb 20, 2017
Professional Status
General Public
State
Pennsylvania
Marshall Valuation Services is a cost manual that is a common source used for determining economic life. They have tables of life expectancy for various building types.

A typical single family home with frame construction ranges from 45 years for "low cost" to 55 years for "average" and 60 years for "excellent and high-value"

Manufactured homes on the other hand range from 25 years for "low and average" multi-section to 30 years for "average", 35 years for "good" and 45 years for "excellent".

I've dealt with manufactured homes on commercial properties a few times and after 20-30 years the value has usually diminished greatly. A 30-year old manufacture home that might have cost $80,000 new might be down to $10,000.

Thanks for responding ---- does the new appraiser take into consideration the previous Economic Life listed? The fact that just 5 years ago it was 60 should play a factor no?
 

Zandes

Freshman Member
Joined
Feb 20, 2017
Professional Status
General Public
State
Pennsylvania
Well on the other hand, how many MH's - mobiles do u find from 1970 still standing and without substantial structural concerns....supposedly the first appraiser thought an 8 year old home still hand 60 years REL.

Unfortunately, there isn't a right answer here thus hard to prove what's "wrong" as well, therefore there will never be a "set in stone" decision making process. If there was, then why would anybody's opinion matter at all, we would just refer to the "book that's written in stone".

On a side note, I can't recall seeing any appraisals that have shown a 60 year REL for a used MH, and I review appraisals all day, everyday..

This specific MH was built in 2003, which would mark it at 14 years currently. Buyer has VA loan, 30 years, so all we would need is the Economic Life to be 'bumped' from 25 to 30. Do you ever see that happen when brought to the appraisers attention?
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
VA appraiser probably made a typo error. See if buyer will ask the lender to ask the appraiser to revise the appraisal. Btw, who gave you a copy of the appraisal?
 
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