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Gee.....any stress in the mnf'd / modular arena ?

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Ross (CO)

Thread Starter
Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Wonder if any others are sensing that manufactured sales are under stress and closer scrutiny lately ? Received a call today from dealer in such homes who needed a rush appraisal on a "package" deal of land and home within very, very close proximity to where so many acres haved been recently burned out. The scenario was...There is a site out there with an old mobile on it, which will get taken off, then we are going to put a new single-wide manufactured on it....and don't worry, it will be put on a permanent foundation....and I'll need about $120,000 in your value to help these folks get established.......(Pause, while I think about what you just said)......Dealer says she will fax me the specs on the house, and just how soon can you start this report ?......I asked where the site was, but did not learn how much land it was. I asked when the new home was to be set on that foundation so I could see it. It won't be set up soon enough for you to see it. I calmly said it seemed quite awkward that you are insisting I provide you a $120K value....today....for a property which does not yet exist....and within an area which right now is experiencing the challenges of natures fury. I am not so sure that I am going to be able to help you on this one. Within 7/10's of a second from saying that I heard a hard slam of the phone on other end, and that conversation was over. Never clear who the client was really going to be or for what purpose my appraisal would serve. Wow.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Your caller was slow to slam the phone down compared to the calls I have been receiving for years! When I start to explain that I will not use site built homes or land/home packages (Fannie Mae's created sales) except as maybe a 4th comparable or higher and that based on the resale market the value is not there--I am now deaf in my left ear from years of phone slams. Interesting orders several weeks ago. Got two orders from an AMC for two 2055s, couldn't find out any info through normal channels. Finally discover pending manufactured home installation permits and a pending split of 12 acres into five parcels (maximum that can be done in Arizona without subdividing). The estimates of value were totally out of range of any resales. One was an 3 year old home just installed, the other a brand new home not installed. Finally after several weeks, the second one got installed. So did the second driveby. Contract from dealer was provided to me, dealer was to provide about $5,000 second mortgage. My opinions of value in both cases was about $20,000 less than the estimate on the used home and also on the the dealer's invoice for the new one. The AMC provided me with the first page of a URAR with the appraiser's name blacked out (but they forgot to black out his office address from 100 miles away). Just checked recorded deeds of trust yesterday for the new home. Conventional mortgage with a nation wide lender for $15,000 more than my appraised value plus a second lien for $7,500 from the dealer for the balance! So what did they do with my two drive bys? At least the lender was different than the client the AMC had listed. So guess they went shopping until they found another lender that would accept the first URAR appraisal without questioning. Talked to a local dealer earlier this week that I use to do a lot of appraisal orders for. They had changed to a new lender, the new lender has an appraiser from about 100 miles away do their appraisals, the dealer didn't even know the appraiser's name or what town he was from. But I have an idea of who it is. The Arizona state board is already receiving complaints from lenders about appraisers using "created sales" as comparables. So I am guessing they might be having a new hearing in for another one before long. A sales manager for a nation wide manufacturer told me months ago that the manufactured housing industry nation wide has had a big drop in production because financing is becoming very difficult to arrange. In other words lenders were becoming aware of the problem even before Fannie Mae's new guidelines regarding created sales went into effect this spring.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
All you have to do is see the number of REO's from this type of business to see why Fannie is suspicious. Then, if no re-sales support these prices, why would anybody want to buy one? Simple answer, nobody would! It is not a case of depreciation, it is a case of over pricing. It is amazing how cheap you can get a DW manufactured home if you are cash buyer and have your own land. The Tin Salesmen of the 1960's moved into the MH business in the early 1990's. It has taken this long for their results to catch up with them. I apologize, this subject really gets under my collar because the people getting fleeced can not afford to get fleeced. Ah, the free enterprise system at work in America!
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Yes, that is what is sad about the whole situation. The manufactured homes being built today are nice and well constructed (except for the Yugo style models, but the Ford and Chevy style models are good) and are a very good substitution for lower priced homes. Problem is that a dealer thinks they need to sell a home to every person that walks on the lot, even if they can't hold a job or balance their checkbook or pay the rent. Although I am very much in favor of everyone that is possible owning their own home, there are some people that are totally unsuited for home ownership (have a daughter and son in law that would never be able to handle home ownership). So if applicants were screened more carefully from the financing stand point, manufactured housing could be a very viable route to ownership.
 

Roger

Junior Member
Joined
Jan 24, 2002
Professional Status
Certified General Appraiser
State
Missouri
Seems to me that the Manufactured homes dealers have dug their own hole, and now they need to figure out a way to get out.

They have sold homes, and financed them thru lenders like Conseco and Greentree, often at rates 6-10 %points above above current rates, telling the buyer they can refinance in a year or two, at conventional rates.

Only thing is, now that so many cannot refi, they are walking away, depressing the market even further.


IMHO, mortgage brokers and MH Dealers fall into two very similar classes. Those that are honest, and attempt to provide a service to the public, and those that are not.
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Just had one dealer tell me that "other appraisers" use "created comparables" and they have some "comparables" for me. I gently told them that my comparables have to be existing manufactured homes on land that are re-sales. Quoted them the new Fannie Mae guidelines.....they claimed ignorance.
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Just had one dealer tell me that "other appraisers" use "created comparables" and they have some "comparables" for me. I gently told them that my comparables have to be existing manufactured homes on land that are re-sales. Quoted them the new Fannie Mae guidelines.....they claimed ignorance.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
You are all right, the sad part about all this is the victims. Seems like two things need to change in the manufactured home industry: the method of sale - stop treating them like used cars and more like homes; and, as Jo Ann said, better screening for potential buyers.

Was faxed a request last week for a manufactured home refinance. Folks bought the home new a year and half ago along with a quarter acre in a suburban area of mixed manufactured and site built homes. Our client wanted to help us out (think they knew we'd need it?) so they sent along the original appraisal. The contract price was $110,000 (large double-wide) but the appraised value was $99,000. Naturally, they're hoping to refi around $120,000. I know the area and knew I wouldn't accept this one. (Current resale activity for similar homes indicate a range of $70-80,000.) Did a quick bit of research and called my client back and suggested they call the appraiser that did the original and get him to do it. All three of the comparables he used have been foreclosed within the past six months. The market at the time of sale was not much different than it is today. It appears at least two of the comparable sales he used came from sales contract information, not public records. Maybe the state agencies can review the info I sent and eventually figure out a way to discourage unscrupulous sellers, lenders and appraisers from creating more victims.
 

JonB

Freshman Member
Joined
Jan 24, 2002
I agree with Jo Ann. I think that MH dealer would be a lot better off if they started acting like developers more. They all have subdivisions they have bought and split, take the homes of the dealer lot and put them on the land. Sell them together. That should do a few things.

1. Make the dealer realize the in and outs of selling Real Estate, the ups and downs of having a property on the market for a long time. The fact that sellling real estate is a matter of Time and Price. if you want the time lowered, lower the price.

2. As soon as they close one of those puppies. Instant comp. Now that is a REAL Sale.

3. I think it would really help the publics overall perception that MH are crappy. The way they are built now they are just like a site built almost.


Well thats my too cents. I think it going to get worse for the dealers before it gets better. Hopefully that will also take care of some of the poor/cheating appraisers out there. It has already killed off some lenders. CIT, Greenpoint, Superior Bank, etc.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
I disagree that manufactured homes are almost as good as site built homes. Maybe in your area, but not here. Here, 99% of site built homes are on concrete slabs and have attached garages. None of the manufactured homes in the area have attached garages and the foundations are concrete block with tie downs. Which would you want? As for exterior siding, 75% of site built homes are brick. Interior? Our site built homes don't have 1/8 inch sheetrock , low quality wood panel or vinyl walls. Yes, they can dress up the manufactured homes and they do on their models, but take it from an appraiser who does many REO MH appraisals, they are not selling the same quality as the models. They usually have masonite siding, vinyl walls low quality appliances and fixtures. Don't forget because of the hollow foundatons and thin flooring, you hear footsteps throughout the home which you don't get with a site built hoem on a slab. Too many appraisers have been convinced that the manufactured homes are equal to the site built. I have many, many instances where the 1,500 SF MH was appraised for more that a 1,500 SF brick 3/2/2 home in the same area. If you had the choice of a brick home with a full two car garage for less than a MH, what would you buy? Uninformed and railroaded buyers are the answer to the question in our area. Our lower end site built homes (KB, Fox & Jacob, Choice, Pulte) are inferior to many site built homes, but still superior to MH homes. It may be different in your area, but not here in northh central Texas.
 
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