Ok Now I Have The Dealer's Invoice

[Blue1]

Doing a new (proposed) home. I have the dealer's invoice and purchase contract from dealer to buyer. There is a 30% markup. I included this markup on the 1004C form and identified it with the dealer.

Thing is.....Even with this outrageous markup, the comparables (all older manuf homes) more than support the value. Is anyone else seeing this type of thing?

OOPS! shoulda been 30% markup.

P.S. Greg, your advice has been much appreciated.

 

[Lobo Fan]

No, in my market the land/home packages exceed the existing MH homes by about 20-25%. I am at the point where I will not do a land/home package. These are the single largest source of complaints to the appraisal board and most of the complaints are coming from FHA.

You are lucky that there are comps for your deal that are not other land/home packages.

 

[CANative]

Blue... I assume you meant that you have the invoice from the MANUFACTURER to the DEALER. And that you also have the purchase agreement between the dealer and the buyer/borrower.

30% sounds right. I see 20% to 30%. This is also about what NADA shows for new MH's.

Don't "include the markup" on the 1004C. Use a published cost manual for the retail price of the unit. The invoices are for review to insure that the deailer is not padding things.

My sales data is usually higher than the cost data. If there is a large difference in values between conventional houses and manufactured houses and there is a good demand for lower cost housing and assuming that buyers of low cost housing lack the means and expertise to construct one themselves, then they will pay what the market demands. Hang the cost approach.

 

[deturner]

At this point in time, I am staying clear of the land/home packages.

The market here is mostly REO's and it is unbelievable what they are selling new packages for. It's hard for me to put $125K+ on a land/home package when REO's are numerous and selling for $40K. These are homes that have been barely lived in and seldom has the grass taken seed prior to the foreclosure. Investors have purchased most of the new/decent homes and tried to resell them immediately in the $70K-$80K range with marketing times exceeding 365 days.

I just can't do them right now.

It has always been hard doing land/home deals because the resales are not supporting the new home prices.

The thing I noticed recently is that these dealers are getting a little crafty by setting up one or two "spec homes" and getting RE agents to put the sales in the local MLS. The majority of the time, the RE agents do not bring the buyer but it still gets listed as a sale in the MLS. They are also getting them to put some in MLS with "0" days on the market and "for comp purposes only". I always toss out those immediately.

Land is also becoming an issue here. Zoning is getting tight on where they can go and how old the improvements can be to be moved to the sites.

DaveT in NC

 

[Blue1]

Yes Greg.....I have both. You are exactly right....site built homes sell for much more than the manufactured homes which (in my opinion) are quite high. Cost Approach is about 10% under existing comparable sales.

In this instance, the borrowers are living in an old mobile on the land and own the land. The company will remove the old mobile and place the new one on a concrete foundation.

 

[Restrain]

You generally will not find the fraud where there's already an existing home and the new one's a replacement.

The big fraud comes in the new land-home package. The $3-5K lot becomes $25K, setup jumps from $2500 to $7500, the mfg home cost jumps from about $30 per foot to $65 per foot.

There's currently one class-action lawsuit in Texas, and another is planned. In the active lawsuit, there's approximately 1000 plaintiffs.

 

[Lobo Fan]

My latest challenge with MH is people trying to pass them off as stick-built. They stucco over the HUD label, and think because it is on a permanent foundation that it should be treated the same as an SFR/stick built. One woman covered over the HUD labels and threw out the cabinets with the data plate. I guess one could get the serial number off the chassis and get it to HUD and they will look up the rest, allegedly.

Then I have skippies (see how fast I pick up the lingo) that actually appraise these things as SFR's. I went in behind a guy about 1-1/2 years later and I was having trouble with the estimated value as compared to a previous appraisal. I got to see the previous appraisal and it was shown as a stick built house even though it was a double-wide with a stick built 700 SF addition. I had been told that once a MH it is always a MH. /

 

[Rich Heyn]

Blue1,

I included this markup on the 1004C form and identified it with the dealer.

If by that you mean that you have identifyed the amount of the markup in the report in such a way that the homebuyer will know just how much the dealer grossed on the deal, you may wish to reconsider doing that in the future.

You are required to analyze the invoice but you are not required to publish it or any part therof. Imagine the reaction of the buyers when they are provided a copy of your appraisal at closing and find out how much the dealer grossed. If it were to cause the deal to blow up at the closing table, in might not be the best thing for client relations.

Not trying to be critical, just offering something for thought.

 

[Blue1]

Thanks Rich....Good point.