Mobile home with no value or ID Conv. not FHA

[WadeKoutnik]

You have to solve the highest and best use problem first.

In my area a 1960's mobile home in poor condition and where the depreciated retail book value might be less than the cost to dismantle it and dispose of it will nevertheless continue to contribute value to the land because investors will buy the property and put in a renter. Renters love these because the get a relatively large house for very, very low rent which is usually subsidized by government programs such as HUD section 8. A lot worth $35,000 will sell for $65,000 to $75,000 if there is a "no value" mobile home on it.

In other areas where there is good demand for a new house it would make more sense to buy the property, remove the existing mobile home and redelope.

In your case it may make sense to leave it there because it will allow the entitlements to remain (no new fees for utility hookups, impact fees, etc, etc.) If someone is living there are they the owners or are they tenants paying rent? Is there a strong demand for cheap rental housing?

In any case, you can't simply try to do a land appraisal on this property without discussing this with you client. You'll need to arm yourself with more information and thought on this and then call the client and figure out how to deal with this together.

I spoke with the client who simply said to do "whatever". This home is only 600sf and some change. There are mostly SFR's surrounding it on similar acreage. I think an investor or buyer would come in, remove it and build a SFR.

I am just wondering if I should find some "handyman specials" on MLS for comps or if I should just figure out the value of the land.

It is owner occupied.

I guess I can make the client decide.

I think the lack of labels or even any proof that the MH exisits (according to the borrowers) compounds the problem and makes me think a land appraisal would be appropriate.

 

[Walter Kirk]

Does the fact that a moble home is located on the land have any effect on value? If the moble home were removed could another unit be placed there without government permission?

 

[PropertyEconomics]

No matter what your client says .. its a highest and best use issue and should be measured from the market. You client cant dictate a value that isnt there and as the appraiser you should make the call based upon MARKET EVIDENCE.

 

[Couch Potato]

Does the fact that a moble home is located on the land have any effect on value? If the moble home were removed could another unit be placed there without government permission?

Walter is hitting a key point. The mobile home may indeed contribute substantial value to the land in the form of exemptions to impact fees for new construction. This was very apparent back in 2004/2005. A lot where the old mobile home was "cleared" by one of the hurricanes was worth thousands more than a seemingly identical lot which never had improvements.