BEST ANSWER
Hi, Shirley:
Here are a few things to keep in mind if you are considering a mobile home on its own land.
FINANCING: Know where you are going to get any money you need and what it will cost before you shop. I am hearing from lenders who specialize in mobile homes that downpayment are going up above 10% and terms for loans are getting shorter than 20 years now. That said, you may (?) be able to find a property that qualifies for FHA financing, but if so, you will need to be sure the property can meet the criteria before you lay out money for an appraisal, inspections, etc. There are also limits on the age of the property that you can get financing on, so be sure you understand that before you shop.
FOUNDATION: The key to FHA financing of a mobile home is the foundation certification done by a professional engineer. I spoke to a couple recently who said, "It's a crime that a lot of homes were installed without the proper foundation requirements and now the owners cannot sell them." So, get that foundation certification from the seller BEFORE you spend a dime. You may have to wait some time for a certified inspector to come out. Then when you have the document, have your lender review it BEFORE you make an offer. Yes, you will have to wait, but those properties are not flying off the shelf.
APPRAISAL: Speaking of appraisals, you will want to be sure that the property appraises. If you are laying out $350 to $450 for an appraisal and may have it come in for less than the agreed selling price, you might want to ask the seller to put that amount in escrow with the explicit provision that the ESCROW AGENT distributes the money to you if the deal does not go forward (and the parties should agree to this instruction in advance so that no further releases are needed to get your money). If the deal does go through, your payment for the appraisal would stand. A year ago, double wides were appraising for $120 per sq. ft. of living area or so here in the Lakes Region, but there are darn few recent sales and the data suggest that these properties would appraise for $75-80 per sq. ft or so here now, perhaps some of the newest ones (2-4 years old) would be a bit higher. May be different situation closer to where you want to buy, but it is hard to satisfy underwriters who want sales data within eight miles radius and the last three months when it comes to manufactured housing. Be sure your offer has a failure to appraise clause with teeth.
ENERGY: Oh, we just learned how to spell that again. Be sure to get an Energy Star Rated manufactured home. Get the certification documents and check them out to understand what they really mean. Be sure you understand how the critical utilities, if any, under the unit are protected from freezing, etc. Pay attention to issues such as where the cold winds come from and where the hot sun beats down. Shade in the summer and warmth (relatively) in the winter are keys to saving money. Exposure, orientation of the home, slope of land, etc. are key.
SITE IMPROVEMENTS: Be sure to get a property with a state approved septic system design with DES approval number. A three bedroom design is better than two bedrooms. You or your buyers agent can check this at the DES website. If it is pre-1986 think about moving on. That driveway and site grading should be appropriate, not steep or washed out. If it is a private water supply, look for a drilled well and be sure to get all of the well data.
THINK RESALE: Technically, a manufactured housing unit is a rapidly depreciating asset so keep that in mind and be sure that the underlying land is fully worth it. A manufactured housing unit on a charming, unique piece of property that has appropriate site improvements (and all of the data in hand) should hold its value and offer a chance for a future upgrade for you or the next owner. So look at the predominant values in the area where the property is located. It is better to be the tug boat in the cruiser neighborhood, than the Queen Mary in a tug boat neighborhood. What are the trends that you foresee.
TRANSACTION: It will take a buyer's agent with a lot of know how and attention-to-detail to keep a prudent purchase of a manufactured home together today, so choose your buyer's agent carefully, then put her/him to work. The requirements to complete a sale in 2009 are much tougher than even last year.
Hope this is helpful. Let me know if I can answer any questions.
Best Regards, Chuck Braxton, REALTOR
603/677-2154
cbraxton@metrocast.net
Thu Aug 6 2009, 19:52
Fair Housing and Equal Opportunity