Manufactured home new construction External Obsolescence

[Bluewater65]

I have an assignment for a proposed construction of a manufactured home on a small parcel, where the home is being bought from a local retailer and the land is bought from the land owner not the retailer. My issue is that within 2 feet of the property line on an adjoining parcel there is a old mobile home frame and debris. I'm looking at this as if it is an external obsolescence and it not only effects the value of the land being purchased but it would also effect the value of the home after completion if the debris still remains. Huge eye sore along with safety issues for the adjoining land owner. However I'm not sure how to support an adjustment for this. Of Course it's also an FHA loan. Thoughts???

 

[Tawfik Ahdab]

Did the borrower perhaps pay less for the site then he would for another without exposure to the adverse externality?

I would start by researching vacant site/land sales at the time the borrower purchased his parcel and see they were any higher in price, all or most else being equal.

If they were higher, you could attribute the difference in price to the externality and apply a percentage adjustment to the current site value, or even to the property as a whole, depending on what makes sense in your situation.

If you can’t obtain such market evidence, you can always reach a value conclusion at the lowermost end of the adjusted sale price range to reflect that influence.

Just one suggestion.

 

[Bluewater65]

No the price of the site is probably just about equal to some vacant site sales in the market. Due to location it may be a little high without the external issue. Yea I see the thought about lowermost end of range.

Thanks

 

[glenn walker]

I try to look through the eyes of the buyer , he/she obviously knows whats located next door, and so its already baked into the cake. External obsolescence, in cases like this is almost impossible to extract and in your case its "curable" and not like sitting adjacent factory. Personally, I would poke around, and ask a few people if they adjacent site is going to be cleaned up. Anyways since your manufactured is going to be brand new, I would take into account what if any effect the next door junk really had on the site value. It sounds crazy but, in lower end communities, or some areas I used to work , things like this have no effect on value. Anyway its kinda hard to be at the lower end of the value range when you have a brand new home, and I assume your comparables may be older units. I would take the issue into considerateness in my final reconciliation, but I would not go down the trail of external obsolescence, especially on a FHA, because you are leading yourself down a trail in which you cannot prove your adjustment, its at best just a big guess. you may want to put on your Red-Neck Hat, and think like the folks that live in that neighborhood : )

 

[Jerry Bone Jr]

I have an assignment for a proposed construction of a manufactured home on a small parcel, where the home is being bought from a local retailer and the land is bought from the land owner not the retailer. My issue is that within 2 feet of the property line on an adjoining parcel there is a old mobile home frame and debris. I'm looking at this as if it is an external obsolescence and it not only effects the value of the land being purchased but it would also effect the value of the home after completion if the debris still remains. Huge eye sore along with safety issues for the adjoining land owner. However I'm not sure how to support an adjustment for this. Of Course it's also an FHA loan. Thoughts???

If you can't support an adjustment, there is no obsolescence.

 

[Terrel L. Shields]

If you can't support an adjustment, there is no obsolescence.

Most occupants of MHing are less concerned about such externalities as they are simply finding a place to live that they can afford. What they paid for the property suggests that they don't see an issue. Ex Ob that is environmental tends to be applicable to both land and the improvements. Therefore since the land apparently isn't much impacted, I doubt the improvements will be either.

 

[glenn walker]

Most occupants of MHing are less concerned about such externalities as they are simply finding a place to live that they can afford. What they paid for the property suggests that they don't see an issue. Ex Ob that is environmental tends to be applicable to both land and the improvements. Therefore since the land apparently isn't much impacted, I doubt the improvements will be either.

Agree, that has usually been my experience.

 

[Carnivore]

I agree with Terrel... Affordable Housing is a real problem in our country... I recently had an assignment offer for a New Manuf. Home on some acreage. The location is what is commonly referred to around here as "The Slide" This area is where someone's backyard Ammo dump Blew Up and everybody heard it for miles around. this area has a Bad Rep... Yet, the guy agreed to buy the Manufactured Home in this Hood. Total Package was almost 200K i declined ... That Price point can still buy you a nice Stick built House in the Country with no existing externalities... So they are buying Square Footage also... Frankly some people like living in areas like that..