Quality adjustments on manufactured homes

[Doug Wegener]

Ok.

All manufactured homes are not created equal. You may have sales in an area but one may be a redmond, and another a Fleetwood waverly crest. I have reviewed a few manufactured home appraisals in my time but rarely
have seen adjustments for quality. Clearly, they are sometimes needed.

If you make them, how do you do it. Many times differences in acreage,outbuildings etc. make it difficult to extract the amount of the quality difference. Sometimes there are few sales anyway.

Do you NADA book value as a basis for the quality difference? If so, do you make the full difference in quality as determined by NADA as the adjustment or only a portion of it.

Or do you use some other method?

Or do you ignore the quality of the manufactured home altogether?

 

[Tim Hicks (Texas)]

Collect the data and make the appropriate adjustment. In CA, that is probably a big deal. Here in TX, they seem to only buy the low to average quality home. However, there have been times that the manufactured home is higher quality than that of the typical home. That is when paired sales and extraction come into play. This why you get paid the big bucks or it seems the small bucks in recent history.

 

[Colorado Guy]

Hey Doug

I do manufactured homes in two counties, including some rural counties. I understand what your are saying in regards to quaility and I do see in new sales. However, once the home is 2+ years old, the market does not seem to recognize any difference - and HUD is a HUD is a HUD. Well - I least that has been my experience.

 

[CANative]

It's a tough call because out here the tail is not wagging the dog. Land values are high and the difference in initial pricing between quality ranges is small (by comparison) And as pointed out by Bob as the house ages the difference in quality makes less and less difference. There is also the fact that agents barely know to list the house as a manufactured house let alone list the manufacturer and the model (if they even know to look at the data plate or what one is)

If it's a close call I won't make an adjustment. If I have to use sales of homes where there is a glaring and obvious difference just by looking at them from the street, I'll make an adjustment at an amount reasonable enough to prevent someone from having a serious argument with me.

 

[Sherrie]

When using the NADA guide, by selecting the correct model/trade name, you would not need to make adjustments for quality.

However, when using the SVS you would make a choice of quality based on what you've inspected of the subject home.

 

[CANative]

Sherrie,

I think the poster was referring to making adjustments for differences between the original quality of the subject and the comparable sales.

 

[Mr Rex]

Greg, I think she's talking about the "NADA way" (using the Comparative Analysis Stacking Form) of doing the grid on the 1004C where you know the make and model of the comps etc. Only problems are

1) Almost impossible to find out the make/model and upgrades in comparables
2) In my market, buyers do not recognize the differences in quality in direct correlation to the NADA numbers.

I know, I tried doing it the "NADA way" back when the new forms came out. Market data proved their way did not correspond to the market.

 

[Doug Wegener]

Good agents know the make & model. Also the county frequently has that data.

What I was referring to using NADA for quality is this.

If your subject is say a 1990 Fleetwood Waverly crest and one of the comparables is a 1990 Redmond of similar size, they would have different book values. Not making adjustments for that would be similar to comparing a Cadillac to a Ford and not making an adjustment if you get my drift. And buyers recognize the quality difference.

When I lived in Oregon there was a manufactured home with a big sign out in front of it, put there by the owner for the whole world to see. It said:

"I bought a Redmond home, never again"

 

[CANative]

Mike,

Sherrie ended the statement with...

you would not need to make adjustments for quality.

Also, buyers may not know anything about NADA but they will recognize a quality difference. There can be a detectable difference in sales price between a 4 sided Standard quality home and a Deluxe quality off-set model with built in covered porches or hinged roofs with extended eaves, etc. You can use NADA to get an idea of the difference in resale prices and use that as a basis for a defensible adjustment.

 

[Mr Rex]

Doug, what you describe is addressed via NADA's "Comparative Analysis Stacking Form". I have a copy of the NADA Appraisal System, Fannie Mae 1004C, Freddie Mac 70B Tutorial from a manufactured class I took. Light blue cover, might call NADA and get a copy or better yet take the class.

As I said above, the market data did not support doing the appraisals using NADA's method in my market. YMMV.