How to Determine the True Value of a Mobile Home
One of the best values in a home buyer’s market are mobile homes (MH) or manufactured homes. A MH is usually found anchored on a lot inside a mobile home park. The park usually has the same amenities as a resort and you pay a monthly lot fee, much like a HOA for a condominium. The same can be said of a manufactured home but these are not movable once on a foundation. These units are much like a real home one would buy and usually are perched upon land owned.
Mobile homes usually have a life span, structurally speaking, of 50-75 years, depending on location and environmental conditions. They can be comparable to a real home; some are 2000 square feet. It is really up to the owner. But, whatever is done inside, it is still a MH. Thus, when you buy one, the transaction is much like buying a car. There is no 30+ day escrow. You still have property taxes and lot fees, ranging from $300-800 per month.
The big difference is that MH values almost always depreciate, unlike real property that appreciates. That is because the MH owner does not own the land the unit sits on. Keep this in mind when you buy one. Be comfortable with breaking even or losing money if you need to sell. This will be the usual case; there are exceptions.
Florida is a state full of MH parks. They are either age restricted (55+) or not. If you want to live in the tropic-like area, on limited resources, this is the best way to go. Once you buy a MH, most owners are able to landscape around the home as they see fit.
The trick in buying a MH is to find one that does not look like a MH from the street. Nearly all will have a carport, not a garage. Most will have a screened or glassed-in patio area called a “Florida Room.” This can be as big as 200 square feet. It is good for storage or to watch passersby, but don’t consider it a bedroom or living space.
Location is important. Are the neighbors too close or is there ample space between units? Decent back yard and front yard? Close to a lake or a pond with view? These are the subjective items when determining overall value. How much more are they worth to you? They could add thousands to a selling price. Really nice landscaping is also important.
Determining the True Value
It can be said that most MH listings are overpriced, but again, location and market may dictate otherwise. Assuming the MH is in good shape, a ballpark reduction of 25% from the retail reflects the real value. But to get the real value, so you can make an offer with intelligence, obtain a NADA mobile home report from online sources (like insurance companies providing loans) or others. From the website, you enter the precise specs of the MH you are interested in.
For instance, a 1973, 1400-square-foot home, situated on a plot with nice side and back yard, in the Clearwater, Florida, area was selling for $36,000. The lot fee was $550 a month.
The NADA report on that MH stated:
- Basic Structure Value was $9400.00. Being in Florida increased the value to $9600. That was the retail value of the just the home.
- Since the home was in “good” condition, its value increased to $10,500.
- Remaining physical life of home was 43 years. The unit was in Pinellas Cascade Park MH, which is nice, maintained. NADA called it Standard. This increased the value to $12,000.
- Additional features or repairs were nil. Either would increase or decrease the base value.
- The final adjustment to this base amount was the Industry Standard of 1.5. When applied, the final overall value ended up at $18,000.
Clearly, when the agent determined the selling price, he simply doubled this amount for $36,000.
The only thing that would increase the value is the MH park the unit is in. A high-end park would increase the value, as would new cabinets, kitchen items, or whether it was sold “furnished,” but the effect is subjective. If this home was 10+ years younger (built in the '80s, '90s), the base value would be much higher.
This home, all things considered, could sell for $27-30,000, which would be a fair price given the market. If the home remains on the market for months, the seller is more apt to accept this amount since the monthly lot fees still have to be paid even if the unit is left vacant. Time is always on the side of the buyer.
But try to buy a MH built after 1976, when HUD mandated how construction was done.