Manufactured Homes and Cost Approach

[Appraisal Time]

Since the cost approach is not normally required, are you completing it for your manufactured homes or are you typically leaving it blank? If so, what cost service are you using? And are you finding that clients are requiring it to even be completed?

Thanks Everybody.

 

[Terrel L. Shields]

NADA on line...

You can check local Retail prices and use the NADA to help estimate the current value. NBC however, often estimates a value so high as to be unreasonable. Sales tell me (in my region) that the things devalue like a car...rapidly. Haven't used M & S in years, but it used to be closer to local new unit pricing.

Site cost and site prep are big big issues...if you don't get that number "right", then you will have a problem estimating func. obsol/econ. obsol accurately.

 

[Appraisal Time]

NADA on line...

You can check local Retail prices and use the NADA to help estimate the current value. NBC however, often estimates a value so high as to be unreasonable. Sales tell me (in my region) that the things devalue like a car...rapidly. Haven't used M & S in years, but it used to be closer to local new unit pricing.

Site cost and site prep are big big issues...if you don't get that number "right", then you will have a problem estimating func. obsol/econ. obsol accurately.

Do you find that for some clients you don't even complete the cost approach?

 

[Mr Rex]

The HUD code market around here is so dominated by REOs that arms length sales are selling @ just over 50% of Replacement Cost and Land less physical depreciation. REOs are in the 20-35% range. Hardly seems worth the effort, other than to keep an eye on the % of external depreciation.

 

[stefan olafson]

The cost approach should be completed when necessary to support the opinion of value you arrived at.

 

[Rich Heyn]

Fannie and Freddie require a cost approach on every MH appraisal.

 

[Mr Rex]

Yeah, and they allow it in the alloted space on the 1004c. A requirement and sad joke at the same time. From meaningless to misleading at best, or vice versa. What a load of hooya.

 

[Bob Ipock]

The HUD code market around here is so dominated by REOs that arms length sales are selling @ just over 50% of Replacement Cost and Land less physical depreciation. REOs are in the 20-35% range. Hardly seems worth the effort, other than to keep an eye on the % of external depreciation.

Same here.

So which cost approach do we want to use. The bad credit, we finance anyone "cost" the dealer claimed.....or maybe the "cost" = how stupid the buyer is method.

The cost approach is meaningless on a manufactured home. Cost is simply the maximum amount a dealer can screw the buyer out of. Cost of the product varies so greatly from one end of the quality range to the other......it is a moving target.

In the western half of NC close to 50% of the manufacturing plants have closed and WAY over 50% of the dealers have closed ....except near military bases. They used to be seen everyday transported.....a very rare thing these days.

It has been even worse for modular homes. We used to have at least 20 manufactured/modular dealer lots in my county....there is ONE left. We used to have two LARGE plants in my county....both long closed and out of business.


I will never, ever appraise another new manufactured home. In fact, I will never appraise an existing MH for anything other than an REO. A manufactured home sale here means there is a 50% chance of a foreclosure, make it "bad credit" financing and the chance get worse.




Interesting piece on deline of manufactured home:


http://blogs.cfed.org/cfed_news_clips/2011/04/americas-fastestdying-business.html

 

[CANative]

What's the problem? Cost - Market = Obsolesence.

 

[Terrel L. Shields]

I would never attempt one without a cost approach. If you have the model and manf. and year of manufacturer, then NADA provides you with written solid support of the contributory "value" of the unit - and that "value" is based on polling of dealers. Since MHs are far more uniform than stick built, at the very least the CA with NADA gives you a value that would be hard to refute in court. The fact there is generally an element of external obsolescence is what appraisers do, isn't it?