New mftr home - no comps

[Mark K]

What I have found in the past is that the MH company makes a LOT of $$ on the subcontractors that put in the foundation, well/septic,driveway, sidewalks, etc. They have costs for these items that are about 50% higher than normal. Sorta like an AMC...charge $15K for a foundation that costs them less than $10K, $20K for septic that costs maybe $10K, $10/sq.ft. for concrete that costs about $5-$6. The market does not recognize this drastic markup and my appraised value for a new MH was always less than the price paid. In many cases the MH final cost was roughly equal to the cost of a similar size, stick-built home, but the resale value is always a lot less.

SCA comps that were 5-10 yrs. old were always about 25% less than cost and there are very few of them around. Rapid depreciation.

If you live in an area where there are a lot of MH its likely different. I did a study of resales of MH vs. custom built resales and the value difference for otherwise-similar homes was about 15% but the cost new was very similar. People don't like MH in this area.

 

[redfish]

FNMA considers the cost approach important enough to alter the 1004C certification from the 1004 URAR certification

 

[TerryRohrer]

FNMA considers the cost approach important enough to alter the 1004C certification from the 1004 URAR certification

Although FNMA isn't much of a source for anything regarding sound appraisal practice!

 

[redfish]

Although FNMA isn't much of a source for anything regarding sound appraisal practice!

Yeah basically, I was saying if FNMA knows the CA is important for the development of the OMV for a MAN home than any idiot appraiser should.

 

[shrubberyvaluation]

Yeah basically, I was saying if FNMA knows the CA is important for the development of the OMV for a MAN home than any idiot appraiser should.

But is it always important?

 

[Terrel L. Shields]

In the rural areas that I have a lot of MHs - age does not matter. Single wides bring less per SF always. DWs depreciate rapidly for 10 years or so, then seem to plateau out if well maintained - So I see some 1990s MHs bring as much as 2010 homes. 2007 homes bring nigh what a 2016 home will - but the 2007 being well maintained. It really is more about condition. A trashed 30 year old unit is dozer bait. A well maintained one is going to sell fairly well.

I know in Yuma AZ, set up costs are insane for those 400 SF winter homes but in the Ozarks the set ups are pretty reasonable.

 

[Vermonter]

The market does not recognize this drastic markup and my appraised value for a new MH was always less than the price paid. In many cases the MH final cost was roughly equal to the cost of a similar size, stick-built home, but the resale value is always a lot less.

See this with one installer more than the others. Altho none are very reputable. I don't think I've ever talked to a purchaser that didn't have a laundry list of complaints. The package land/new MH dealers are the absolute worst, but they keep finding suckers to buy and are usually willing to supply the details on the other sales. Altho you do have to verify as I have had them try to make sales data up.

For new installs in my area, it's typically easier to look far and wide for recent market sales of new or newer MHs and extract out a location adjustment or dated sales and extract a time adjustment. The dealer comps can help you reconcile out the C1 vs C2 or C3, but market value rarely jives with invoice price here.

That being said I do see a dozen/year market sales of 1 or 2 year old MHs so that does help

 

[Ariba]

When - if EVER - would you consider the cost approach the main indicator of value for a brand new manufactured home? Any and all thoughts and experiences welcome! Thanks.

So you are saying that the manufactured home dealership sold only 1 manufactured home (subject) in the previous year. How do they remain in business?

 

[sputnam]

No comps... new or proposed. Sounds like a job for the Cost Approach.

 

[Tim Hicks (Texas)]

I would widen my MLS search for an entire county. A 0-2 year old manufactured home sale should be in like/new condition.

Be careful, I made a good living reviewing manufactured home appraisals for Fannie and Freddie in the early 2000's for all the land/home packages sold in the late 1990's. They were so overpriced that foreclosures were inevitable. I had to use the Marshall & Swift 1007 cost form to show how the appraisal cost approaches were inflated and most of the land sales were not arms length (owner financed, then flipped to refinance when the inflated manufactured home was placed on the lot) transactions (selling for more that lots for stick built homes). Then, using only MLS sales showed a much lower value for these homes. Back then, appraisers were combining separate land and home purchases to create on price (assemblage sale). I actually knew one appraiser that was going to different real estate offices giving classes on using the assemblage sale for manufactured homes. The result was the 1004C form to help prevent this in the future. Does history repeat itself regardless of measures put in to stop it? Absolutely.