No mfg home sales to support contract

[caleb1004]

we just got an order for a MFG home , NEW construction sale in a VERY rural area. within 8 miles radius (16 miles diameter) there were NO prior NEW construction mfg home sales.

contract price is $350k !!! (are you kidding me??)

highest mfg home sale in the nbd is 210k..... built 2011....

range of ages in this data set is 1995 to 2011....

my question: i know going into this that this appraisal will NEVER come close to the contract price. Do i inform the lender what the data is showing on my radar screen, or do i just accept the order and turn this in , and wait for the wrath that will follow??

I know we are not supposed to indicate value ranges before an appraisal is complete (against USPAP, ethics...etc etc), however, this is a case where the data is obvious.....and im not too keen on being the brunt of the lenders wrath when this doesn't even come close....

thoughts?

give the lender a heads up without indicating a value range? decline the order ?

send the lender the raw data so they can see what i see?

thanks all!

 

[Terrel L. Shields]

Do a very good land appraisal to support the land value
Add the cost to set the unit and allowance for site improvements
Use the NADA print out to value the unit (costs about $30 for one time use.)
For in house bank use, the cost approach is adequate - especially on new construction.
BUT
If a secondary market appraisal, turn it down. It isn't worth the effort. You would have be go miles and miles to find a semi-new unit - maybe a couple of counties. And then it is ugly. Most "new" sales of MHs are going to be a new unit on YOUR land so that's a FNMA/USPAP no no. Can't add the two estates up to get the total.

 

[J Grant]

we just got an order for a MFG home , NEW construction sale in a VERY rural area. within 8 miles radius (16 miles diameter) there were NO prior NEW construction mfg home sales.

contract price is $350k !!! (are you kidding me??)

highest mfg home sale in the nbd is 210k..... built 2011....

range of ages in this data set is 1995 to 2011....

my question: i know going into this that this appraisal will NEVER come close to the contract price. Do i inform the lender what the data is showing on my radar screen, or do i just accept the order and turn this in , and wait for the wrath that will follow??

I know we are not supposed to indicate value ranges before an appraisal is complete (against USPAP, ethics...etc etc), however, this is a case where the data is obvious.....and im not too keen on being the brunt of the lenders wrath when this doesn't even come close....

thoughts?

give the lender a heads up without indicating a value range? decline the order ?

send the lender the raw data so they can see what i see?

thanks all!

Do the appraisal and let the result speak for itself. If the opinion of market value is below the SC price, so be it.

we do not do appraisals to support a sale contract price - a bad habit to think like that even if i tis a figure of speech.

DO NOT give the lender a "heads up" -

 

[Dublin ohio]

If a secondary market appraisal, turn it down. It isn't worth the effort. You would have be go miles and miles to find a semi-new unit - maybe a couple of counties. And then it is ugly. Most "new" sales of MHs are going to be a new unit on YOUR land so that's a FNMA/USPAP no no. Can't add the two estates up to get the total.

There you go^^^^^

Would be easy to decline. You just tell them you have no new construction data at all. Hard to determine the value of new construction without any new construction data.

 

[Terrel L. Shields]

Hard to determine the value of new construction without any new construction data.

The NADA book and other sources are available to determine the RCN of a MH. No brainer. The problem is there will be no new construction sales usually.

 

[Dublin ohio]

The NADA book and other sources are available to determine the RCN of a MH. No brainer. The problem is there will be no new construction sales usually.

I realize that. But I was posting in response to the secondary market aspect you posted. Secondary market will not accept cost approach as primary indicator of value

 

[TerryRohrer]

I would not give the lenders a heads-up. Either decline the assignment or complete it, but don't inadvertently provide them with a noose to hang you with if you don't make it work. Imagine their interpretation of your conversation to be, "They called and told us the data was poor but led us to believe they could make it work." Then spend a few minutes imagining your defense to that.

Should you decide to complete it, I would search the entire area for which you have data. If there are any new or recently constructed manufactured homes in that area, you can develop an adjustment for differences between manufactured homes and site-built homes and use site-built comps and/or develop adjustments for differences in location, market conditions, etc. The easiest way to develop those adjustments would be with regression analysis, but if you are not currently relying on that methodology, there is a learning curve and this would be a tough one to learn on. And your turn time would not be quick if you do it right. With the relative lack of sales and your initial hunch that data won't support the contract price, I would not rely on the cost approach even a little bit in reaching your conclusions. That there are few sales of newer manufactured homes is data...it suggests there is limited demand for this type of property.

 

[Mark K]

For in house bank use, the cost approach is adequate - especially on new construction.

No local bank in this area will accept a CA only for the appraised value of a new home or modular/DW, etc. They want MV, i.e., sales comps for support.

To the OP, I'd turn it down. Not worth the effort, especially when you know that the appraised value will be FAR below the cost. The MFG sellers in this area jack up the prices on all of the other costs like foundation, septic, well, drive, porch, detached garages, etc. to the point where a new home 'package' that costs $350K will sell for $275 or less in a few years. These things depreciate as fast as a new car.

 

[caleb1004]

Thanks all for the good responses. I'm feeling the hair on the back of my neck start to stand up on this one....time to decline the assignment..... painful when there are so few of them currently ! But experience tells me to let this one go...
appreciate you all and the excellent responses. thank you!

 

[J Grant]

What apparisal schools are out tehre or tehticc courses being taught idk- who [[ra

Thanks all for the good responses. I'm feeling the hair on the back of my neck start to stand up on this one....time to decline the assignment..... painful when there are so few of them currently ! But experience tells me to let this one go...
appreciate you all and the excellent responses. thank you!

. We are not RE agents out to flatter people and make them happy - if it makes an appraiser so uncomfortable to come in under a SC price idk why they are doing this.

None of us like it btw, I would rather see a SC price made too but I don't turn down assignments based on it - unless it is a bad client and those are not worth working for anyway

A better reason to turn it down is lack of competence or comps regardless of teh value