Proper sales for manufactured homes

[Tim Hicks (Texas)]

Jo Anne, could you please explain proper comp selection for land/manufuactured home sales?


Just kidding. I know you have answered that question at least a thousand times. I think Wayne picked the ultimate moderator for this forum.
Just remember, I've got your back on any sneak attacks.

 

[Jo Ann Meyer Stratton]

Yes, I am hoping that you, Richard C. and Rich H. and others keep a close watch on me and keep me on the straight and narrow!

 

[Pamela Crowley (Florida)]

Tim, I agree!!! Jo Ann is perfect for this! I doubt there is anyone better!!!

Since you posted this question, I figured I'd revise an earlier post in the General forum with an answer.

What I consider a qualified sale of a new manufactured house (These are practically non-existent):

Manufactured Home Dealer owns vacant lots with 'For Sale with manufactured home of your choice' signs on them and houses to choose from - [or new manufactured homes already on dealer owned lots]. Buyer chooses a lot and a house, choose options, etc. Dealer puts the house on the lot that the builder owns. Construction is complete, closing takes place transferring the completed new house on the lot from the builder into the name of the buyer/new owner and new owner can move in that same day of that closing. Deed is recorded with the full combined price of the land and house.

What is not a qualified dealer sale of a new manufactured house:

Buyer wants a new manufactured house. Finds a lot (even if it's dealer owned) and purchases the vacant lot. Contracts the dealer to put a new manufactured house on that lot. Deed transfered the vacant land.
This is NOT a qualified comparable sale.

I've been using only re-sales as comps for a few years now (since I learned!).

Another scenario that is NOT a qualified comparable sale that I just ran into a couple months ago:

Buyer finds a lot in a manufactured home subdivision and wants a land/home package. Talks to seller of land and MH dealer. The MH dealer and land owner/seller get together to attempt to fool Appraisers. The dealer gets the buyers down payment money and purchases the vacant lot from the subdivision developer. Puts the new MH on it and completes this transaction within 3 weeks by deeding the whole (grossly inflated) package to the buyer. Local DUMB appraisers are using this as a comp. The developer could hardly wait to tell me about this one so I could use and told me that ALL the local Appraisers were using it. This 'package' was only put together for that particular buyer and was never offered on the open market. The dealer and developer got together to do this only AFTER the buyer found this lot and talked to the developer who then made the offer to the dealer to do it this way in order to attempt to have a high dollar land/home package to use as a comp in order to sell more lots at inflated prices. As more local Appraisers learn not to use the inflated land/home packages that were deeded as a vacant lot then combined with the MH package price, this developer though he'd found a way around it.

Just remember that the dealer needs to own the lots and have them offered on the open market as a package deal as any other conventional builder does. They can't just buy the lot after the purchaser is found.

Be careful out there. As things tighten up, there will always be someone out there trying to find new ways to fool us. Same as what we are seeing in the investor flip arena.

 

[Mike Garrett RAA]

Here we go round the mulberry bush, the mulberry bush, the mulberry bush!

All hail the queen of manufactured homes! Personally, I wish they would all go away but that ain't going to happen.

 

[Jo Ann Meyer Stratton]

Discovered a site the other day that has some interesting statistics on manufactured housing.

http://www.census.gov/const/www/mhsindex.html

Placements of New Manufactured Homes by Region and Size of Home
Nationwide in 1994: 290,900, 1995-319,400, 1996-337,700, 1997-336,300, 1998-373,700, 1999-338,300, 2000-280,600, 2001-192,000

So, you might be getting your wish Mike G., the numbers are dropping. The Northeast states in 2001 had 12,200, Midwest 37,600, South 112.600 (NC had 15,200 and FL 11,700, TX 20,500), West 29,500 (CO 3,900, AZ 5,900), Pacific 12,300. They seem to be most popular in NC, FL and TX.

There are of lot of other interesting statistics in that section. Even some statistics on how many were in parks, outside of parks, personal property, real estate, foundation types, etc in each region.

 

[Mike Garrett RAA]

Thanks for the info!

 

[Tim Hicks (Texas)]

20,500 for TX shows that we have a major problem here. It is not the homes themselves. It the dealers, developers and uninformed/unconcerned appraisers. All the announcements and advertisements about land/home pachages by the TALCB is falling on deaf ears.

 

[Jo Ann Meyer Stratton]

Based on the numbers in the Census Bureau report--appraisers in NC, Fl and TX need to become very informed regarding manufactured homes and REO appraisal skills. That will be big business in the future in those areas.

 

[Dale Smalley]

I am supprised S Carolina is not on the list. This is whereour highest number of MH REOs are. and of course the highest devaluation. TX is second.

 

[Jo Ann Meyer Stratton]

SC had 7,300 new manufactured homes in 2001. I only posted a few of the states that looked interesting.