One of the significant differences between mobile homes and traditional houses is that mobile homes depreciate. This fact is a headache for many new and existing owners. It is especially relevant whenever you’re trying to buy or sell a new property.
But few people know why this happens. We are going to answer the common question why do mobile homes depreciate?
What is depreciation?
Depreciation is an accounting term that refers to how much of an asset has been used up. Therefore, it is a method of allocating the cost of a tangible or physical asset over its lifetime.
Taking this into account can help businesses by allowing them to earn revenue from an asset while expensing a portion of its cost each year – something that factors into tax deductions when tax season rolls around.
However, the effects are quite different for personal property like a mobile home. Mobile homes are not considered real property because they aren’t tied to the land. So they fall under the category of vehicles and chattel property. (Note that not all mobile homes are personal property. Sometimes, mobile homes can indeed be real property, but that’s a topic for another article).
Mostly, this idea of depreciation means that your mobile home won’t be able to sell for as much money as you spent when you first bought it.
But it usually isn’t a straightforward calculation. The actual rate depends on several factors, including the type of depreciation. There are four main types, namely:
- Double declining balance
- Units of production
In general, accountants tend to use the straight-line method for these assets. To get a rough estimate of how much your mobile home has depreciated, we recommend that you use a calculator like one of these.
The salvage value is the money that you can expect to get when you sell an asset that has depreciated. You can work this out by subtracting the amount the mobile home is likely to depreciate over time from its initial price.
Do manufactured homes hold value?
We’ll start with this backward by first answering the question, “can manufactured homes appreciate?” After answering that, we’ll move on to “do manufactured homes hold value?” Appreciation is a hotly debated topic, with few definite answers, but there is good news. With a few tweaks, it’s possible for your mobile home to appreciate like a stick-built home! Let’s take a look.
Ordinarily, when you hear the word appreciation related to mobile homes, we aren’t talking about how much you love your mobile home. Though you might be very devoted to your living space, we’re actually talking about a different concept — one that’s a bit more technical. And for technical things, there’s nothing like a good old dictionary definition. Dictionary.com offers this as one meaning of the word:
“Appreciation – an increase or rise in the value of property, goods, etc.”
So, that helps us see how appreciation could be related to mobile homes. If you purchase a mobile home and you want to know if its value could increase, you may be wondering about appreciation.
As an example, in a recent article by urban.org, they go over the evidence that shows that manufactured home can appreciate just as well as site-built homes. How do you know if this can be your home? Let’s talk about a few ways to help ensure the appreciation of your manufactured home.
We’ve all heard the age-old realtors’ mantra, “location, location, location.” While you roll your eyes at this, you may be pushing aside one of the most important aspects of mobile home appreciation, and value. What exactly does that saying mean though? In essence, it means that based solely on location, homes can experience huge increases or decreases in value.
For instance, if your manufactured home sits on land that you own, that’s likely to turn out better for you. Leasing or renting property is just another expense that has to come out of your pocket on a monthly basis. Additionally, the $300 that you would be spending every month to keep your house where it is can be saved, or put towards other important things, such as the upkeep of your home.
As we mentioned in the previous paragraph, by owning the property your mobile home sits on, you can use what would have been rental money, to keep your house in good condition. A manufactured home in good condition will significantly up the value, which we’ll talk about in a moment.
Obviously, every house is going to experience problems as it gets older. That’s why regular maintenance will keep your house worth more. Incidentally, frequently checking on common problems, and fixing them right away will always be good. Simple renovations include plumbing, electricity, foundation, and numerous other areas of your mobile home that may be subject to damage. Your mobile home has probably served you well, and if the walls could speak, no doubt they would loudly protest you letting your house fall into shambles.
Now let’s take a look the question, “do manufactured homes hold value?”
A manufactured home in good condition does hold value and will continue to hold value if maintained properly. Thus, it’s important to keep up with house repairs, and also to keep an eye on your land. The aesthetics of any home, manufactured or not, are extremely important, not only to your neighbors but to any prospective buyers, if you plan on selling one day.
The age of your home is an important factor in the value of your home. As mentioned in this article about value on our blog, because of a HUD code instated in the United States that was meant to regulate the safety and overall quality of mobile homes, houses built after 1976 “will definitely be valued higher than manufactured houses that were made before this date.”
Obviously, though, nothing can compare to the sentimental value that you attach to your manufactured home. For a single person, this is where you took your first footsteps in becoming independent. To parents, this is where you raised and are raising your kids. For the elderly, this is where your whole life happened. Therefore, don’t underestimate the amount of value that your home has to you, more so than anyone else.
Why do mobile homes depreciate?
So, why do mobile homes depreciate?
There are several possible reasons for this, and each of them can affect different properties to different degrees.
The main causes of depreciation are:
- Wear and tear of the asset
- Usage right expiration
- Natural resource usage
But not all of these are applicable to mobile homes. In this case, the main concerns are wear and tear of the asset and obsolescence.
Wear and tear of the asset
Almost everything will experience some degree of wear and tear over its lifetime. The effect is usually much worse on any asset that you can move around. Eventually, the damage will become so significant that you can no longer repair the object.
Once this happens, it might no longer be usable and has to be scrapped or discarded. Typically, the manufacturers give an expected life span based on the usual rate of decline.
According to the U.S. Department of Housing and Urban Development (HUD), the expected lifetime of mobile homes is 30 to 55 years.
In this case, wear and tear could refer to:
- Plumbing that is beginning to leak
- Worn siding
- Damaged fixtures
- Scuffed floors
That’s one reason why regular and thorough maintenance is so important. You can possibly slow the rate of depreciation due to this cause with repairs and upgrades.
Accountants use depreciation to account for this decline in the quality and condition of the asset. And the potential expenses faced by the new owners to cover repairs.
Obsolescence and inefficiency
One more critical cause of depreciation is the obsolete nature of some assets. Unfortunately, the novelty of everything wears off at some point. Manufacturers develop newer products, materials, and methods all the time.
These new developments render previous ones inefficient and often completely obsolete.
There are several ways this can affect mobile homes:
- Older techniques or materials used by manufacturers might no longer be deemed safe or reliable.
- Designers create multiple new models each year. Over time people will no longer want to buy older ones.
- Improvements in the construction of mobile homes mean that the quality of newer models far outshines that of their predecessors.
- The architectural style or decor style might have become too outdated for modern tastes.
An example of this on a wide scale happened when HUD first released construction and safety standards for mobile homes. Afterward, models that were built before this date fell out of favor, and their value decreased significantly.
What else impacts your mobile home value?
The above are the most significant reasons why mobile homes lose value over time. But they aren’t the only reasons.
Rates of depreciation and changes in value are also affected by:
- Inflation rates
- The state of the relevant housing market
- Initial price paid
- Availability and demand for the specific model
- Whether the owner will sell it with a lot or not
- The community in which the owner has parked the home
Therefore, if your house is in a very favorable location, it could slightly increase in overall value. You can also keep the rate of decline steady or reverse it by renovating or adding additions to the home.
MOBILE HOME VALUES: WHOLESALE VS. RETAIL
SELLING YOUR MOBILE HOME & HOW TO GET THE BEST PRICE
Selling a mobile home might seem easier than selling a house but with little information available and almost no data transparency for the market, it can be extremely difficult for owners to find mobile home values quickly, accurately and easily. Despite that, thousands of mobile home owners must either guess the value of their home or pay high valuation fees to get a better estimate of the final sale price.
It’s important to note, mobile home pricing isn’t standardized and even new models can be priced differently depending on the sales lot. And, while you can do research to find list values for similar homes to your own, this takes time and effort to search for valuable data, not to mention the market changes radically from state to state.
This means that as a mobile home owner, you must be able to research and make the best decision for your needs in order to walk away with the highest profit from the sale. Your primary options are to sell via the traditional retail market, which functions similarly to selling a home, or to sell through the wholesale market, where a broker will directly purchase your home for a wholesale price. Each opportunity has its own pros and cons and it is important for you to understand the distinctions and opportunities of each to make a good decision.
Because selling is often more cost effective than choosing to move your mobile home, it is crucial that you be able to earn the maximum profit when you sell your home. This guide will help you to understand different valuation methods and markets so that you can make the right choice for your home.
So many specific things about your mobile home influence its market value. But while the home can influence the market value, it can be the other way around – the market can impact the home’s value. Your local mobile home and real estate market can greatly influence your mobile home’s worth. Before you start looking for ways to add value to your mobile home, we encourage you to get to know your local market’s current climate and learn how it changes throughout the year.
HOW TO DISCOVER YOUR HOME’S MARKET VALUE
To understand your local market, do some amateur market analysis. Compare listings on real estate websites or other sites like Craigslist. What is the average price for a mobile home? Which homes are selling for more than the average price? How long are the mobile homes sitting on the market? (It could be a week, a day, a month, two days – get an idea of how fast mobile homes are selling.)
This info will tell you several different things, such as whether your market is a buyer’s or a seller’s market. If there is high demand for homes in your area, and they’re selling like hotcakes, then you’re in a market that’s favorable to sellers like you. Analyzing the market can also tell you which neighborhoods are seeing a lot of new people moving in and which are seeing a decline in residents.
We compile reports for a quick snapshot national and state markets, which take similar homes to yours and provide you with valuable pricing information, saving you time and possibly, a lot of money. Get your report now!
This brings us to our next factor: location. They say that “location is everything.” While that’s not entirely true, location may still be the most important way to determine your mobile home’s value, especially in certain markets.
There’s not much you can do about location unless you decide to move your mobile home to a nicer area. For most homeowners, however, that is far too expensive and won’t be an option. Instead, do a realistic assessment of your home’s current location. Is it near nice schools and shopping areas? Is it in a pleasant mobile home community or out in the country by itself? If you live in a neighborhood, is it a peaceful place with no loud neighbors and low crime rates?
A mobile home that is near impoverished communities or crime hot spots won’t have the same value as a home in a good neighborhood. Also, if you live in an area where good schools, stores, and recreation areas aren’t easily accessible, this will bring down your home’s value.
REAL ESTATE VS. PERSONAL PROPERTY
From the moment they’re manufactured, mobile homes are, well, mobile. They have the same type of title deed that a vehicle would have. This makes them what is technically known as personal property. Stick-built homes, on the other hand, are real property. Otherwise known as real estate.
Basically, anything you can move around with your hands (or with a truck, in this case) is personal property. Land obviously cannot be moved. Therefore, if a stick-built home is built on a piece of land it becomes part of the land and can’t be moved. It becomes real estate.
UPGRADING TO REAL ESTATE
By now you’re probably wondering how you could possibly change your mobile home from personal to real property. It’s fairly simple: affix (via a concrete foundation) your home to a piece of property that you own. Register it as real estate, and you’re done!
Obviously, it’s a little more involved than that, but you get the idea. This is a great way to add value if your mobile home is still mobile and sitting on a piece of property you already own. By converting it to real estate, its value will increase significantly. Real estate is always more valuable than personal property so take advantage of that if you can.
Before you decide on your home’s market value, you must take into account any upgrades you’ve made while living there. Upgrades can include new or better appliances, new sheetrock, new flooring, a fireplace, or a porch. Anything that you’ve replaced with something better adds a little to your home’s value.
Obviously, since mobile homes are manufactured factory-style, the materials used are low-grade compared to a stick-built home. If you recently ripped out all of the wall panels in your home and replaced them with sturdy drywall, that’s something your buyer will appreciate. A porch or deck is also a huge plus, provided it doesn’t inhibit the buyer from moving the home if they need to.
CURB APPEAL AND AESTHETICS
Just like upgrades inside your home, curb appeal is a major selling point to most buyers. If your mobile home sports nice skirting, a trendy siding color, and a roof that’s in good shape, that automatically puts new value into your home. You’ll improve the home even further if you tear off that classic vertical mobile home siding and invest in stick-built grade siding.
Inside your home, paint is the number one way to instantly freshen up the space. Installing better molding, creating an accent wall, and installing better windows are also great ways to put a new spin on the traditional mobile home. Anything you can do to make it seem a little bit more special and unique is good. Buyers don’t want a home that looks like every other mobile home in the park. They’re looking for a mobile home with character, just like buyers of stick-built homes are.
Also, here’s a pro tip: it’s been proven that staging a home helps it sell faster, so you may also want to keep that in mind as you get closer to listing it for sale.
Getting the best deal
Now that you the answer to “why do mobile homes depreciate,” you need to know why this matters. The main reason you should take depreciation into account is to make sure you get the best deal if you’re trying to sell or buy a second property.
To find out more about the value of mobile homes – and what affects it – take a look at does mobile home value change throughout the year?
WHY SHOULD I KNOW ABOUT MOBILE HOME VALUE?
Part of being financially responsible is being aware of your financial position as influenced by your fixed assets like your manufactured home. Many people make the mistake of assuming that the value of their mobile home stays the same as it was when they bought it.
Unfortunately, this isn’t the case! The value of your mobile home changes over time. It can be increased or decreased through changes that you make or purely through the passage of time itself.
So, you should already see that there are a number of different factors that can influence the value of your mobile home. This makes it complicated to estimate or calculate the value of your home. In addition, the different aspects can either add up or can cancel each other out.
Certain factors play a more prominent role in influencing the monetary worth of your home than others. These factors could also be either positive or negative. If you want to see how much a mobile home might cost you, we encourage you to read this article on our blog.
The value of your mobile home will be greatly influenced by its size. There are three main size categories into which manufactured homes can be organized. These different sizes come in their own price ranges.
Just like other types of property, the cost of the property is partly based on the square foot of your home as well as the number of rooms it has. In general, people also often prefer bigger houses and therefore these houses will often be valued more because of their size.
Single-wide manufactured homes are the smallest type of units. Homes in this category are up to 18 feet wide and are up to 90 feet in length. In square feet, they normally range between 600 – 1300. Because of this size, they are popular for couples or a single person.
As they are more compact, these homes typically have no more than four rooms. They usually have only one or two bedrooms. In addition to this, they have a bathroom and a kitchen or a combined kitchen and living room.
Due to their smaller size and difficulty in obtaining financing, they are normally valued far less than other types of manufactured homes. New single wides cost about $ 50,000 which is significantly less than the bigger types.
Double-wide manufactured homes are quite a bit larger than single-wides. They consist of two parts which are put together on site. In total, they have about 2000-2500 square feet and are up to 20 feet in width and 90 feet in length.
As a result of their size, the way in which space is used opens up more possibilities which makes them very popular. Their bigger size also comes with a bigger price as a new one costs between $70,000 and $80,000.
Unlike the other categories, there isn’t a specific size range for triple-wide manufactured homes. Their size and shape are widely customizable which means their size varies considerably. They can be up to double the size of double-wide homes at around 4000 square feet.
Like their size, their pice can also be double that of other homes. The price for new triple-wides sits at about $100,000.
Looking back on the prices of new mobile homes you can see that there is a huge difference in the values of the different sized homes. This will need to be factored in when you try to estimate the value of your house.
As you can see a larger home is normally worth more. People often prefer bigger houses and will pay more for them. Bigger houses give you more space to live your lifestyle out the way you desire and this makes double-wide and triple-wide more popular.
The age of your manufactured home is definitely a crucial factor in determining how much your home is worth. This is partly due to the actual effect of time as well as the way in which an older home is perceived.
Keep in mind that according to national regulations, mobile homes are usually considered to be habitable for 55.8 years more or less.
Unfortunately, if your mobile home was built before 1976, this could be a dealbreaker regarding its value. Why, you might ask? In 1976, the HUD code was instated in the United States. The code sets out standards that are aimed at regulating the safety and build quality of manufactured homes.
Since then the term manufactured homes came in use to distinguish between these homes and other types of “mobile homes” like RV’s.
Homes that were built after this were made to meet these new criteria. They will definitely be valued higher than manufactured houses that were made before this date.You should also be aware that revisions to the code were made in 1997 and 1999. So if your home was built before then, you should check to see whether it is still compliant.
One important reason why newer manufactured homes will be valued higher is that it’s easier to get financing for them. It’s very difficult to get financing for mobile homes that don’t comply with the HUD code.
If you have bought or sold any private property like a car you would have probably heard about the dreaded concept of depreciation. This is a common problem with many types of property. Depreciation is a decrease in the monetary value of the property based on expected wear and tear to an asset during its lifetime.
Unlike “built” homes or real estate, mobile homes depreciate in value similar to other types of private property. This is largely because of the way in which they are constructed and their mobility.
A certain decrease in valuation due to depreciation is inevitable. This begins to apply as soon as you buy your home. In general, mobile homes depreciate at about 3-3.5% a year. Working out how much your manufactured house has depreciated can help you to fairly accurately determine the current value of your home.
For example, a home that originally cost $50,000 will be worth $ 41,000 after six years.
Just remember that there are things that can cancel out the decrease in value caused by the age of your house, such as upgrades, appreciation of the land, or increasing property value in the area.
LOOKING MORE OUTDATED OR MODERN
No matter the actual age of your mobile home, if it looks outdated or has outdated features it will probably be valued less. In the eyes of potential buyers (or a professional who can evaluate the worth of your home), appearance is taken into account.
Mobile homes that look outdated will probably be less desirable for many people. People want new and shiny things and often believe that they are better, even though this isn’t always true. When things look old it will raise concerns
This means most people will pay more for a home that looks more modern.
Things that might make your home look outdated are:
- The materials used.
- The color of your walls and how your home is painted.
- Fixtures like faucets and handles.
As suggested above, the curb appeal of your mobile home will certainly affect its value. This is as true for manufactured homes as it is for real estate. A more attractive appearance will probably increase the value of your manufactured home.
The appearance of your home’s exterior includes how well it’s maintained. The better the level of upkeep of your home the higher its value. Another reason why maintenance is important is that it can determine how long the home will last and whether prospective buyers will need to work on the home themselves.
Here are some features where maintenance can affect a mobile home’s value:
- Roof: As with other types of real estate, your home’s roof should be regularly resealed or recoated. Events like storms can also cause more severe damage.
- Walls: The upkeep of your walls (paint, wallpaper or panels) is essential to the way in which your home is perceived.
- Level: The leveling of your mobile home can also affect the value. This should be checked annually. Importantly, if your home isn’t leveled, it can cause other problems like cracks in the walls and can prevent your doors and windows from closing properly.
If you have made additions to your home, you could be in luck. Many additions can increase the value of your house. These could be features like replacing window frames or door frames with higher quality ones or adding fixtures like beautiful trims, eaves or awnings.
You will have more options with regards to this if your manufactured home is fixed to the lot in some way or if you own both the lot and the home. Something like a lovely and usable porch can definitely up the value of the house.
Not only could these high-quality additions add to the aesthetics of your home, they can also add to its utility. So the time and effort you put in will finally pay off.
Do not forget the interior of your home when you appraise the value of your home. It can be equally important in deciding what your home is worth. This will mostly apply to fixed features and fixtures in your home.
A kitchen is often seen as the heart of a home. This means that it’s an important factor in picking a home for most people as they will spend a lot of time here. Having a modern, functional, and appealing kitchen can be a big selling point.
Kitchen cabinets, islands, and counters are all fixed features in a house. The more modern and luxurious they look, the better. There are also many built-in kitchen appliances that can do the same if they are in a good working condition.
Cupboards and cabinets in other rooms of your house can also lead to an increase in value. If you have ever had to look for a new home you know how scarce adequate cupboard space is.
Many of the same aspects that are important outside your home, like the trim and paneling, are also significant here. The interior of your home should be well maintained, especially the bathroom and kitchen drains, the floors, ceiling, and any wooden surfaces.
APPLIANCES OR SYSTEMS
Another thing that can negatively or positively affect the value of your manufactured home is the systems or appliances that are installed. This refers to fixtures like an air conditioning system, central heating, and the water heater. If these are missing or not well maintained it will cause your home’s value to take a slight hit.
Fixtures like plumbing need to be taken into account. It should be functioning as expected and all visible parts of it should be in good condition.
The energy-efficiency of your home will definitely play a role in determining its worth. The more energy-efficient a home is, the more it will increase its value.
Many prospective buyers will prefer this as it’s more eco-friendly and it will save them money in the future. This can significantly affect the way in which people view a property.
In terms of energy-efficiency, little things like having insulated doors or windows, properly installed insulation, and a roof membrane add up.
MOBILE HOME PARK
The mobile home park in which your house is situated could impact its individual value. If you own a lot in the park or your home is fixed to a lot the impact of this will be magnified.
Perceptions about the neighborhood in which a mobile home is placed is a key factor in this regard. Is it safe? Is it a desirable area to live in?
Whether or not the park has extra amenities like a pool can add value.
If you own a mobile home as well as the lot it stands on, the value of your home will be higher. While your manufactured home’s value can depreciate, land usually appreciates. Thereby an increase in the value of the lot itself can help to cancel out any loss of value or even lead to a slight total increase.
Features like the size of the lot influence its value and therefore indirectly the value of your mobile home. The location of the lot could make a world of difference as it does with real estate. As with your manufactured home itself, upkeep and appearance of the lot are also important.
THE VALUE OF YOUR MOBILE HOME
Mobile homes sell for various prices which are affected by the mobile home itself, the lot, the condition, the park, the community, original manufacturing standards, the size, category, and even whether you’re including furniture in the sale. Because there are so many variables, most online quotes are an estimate and won’t reflect the full actual cost of sale. However, you can check the value to decide how much you can sell it for using one of two methods; market value and appraisal.
MARKET ANALYSIS FOR MOBILE HOME VALUES
We provide a retail market analysis for only $24 and we’ll give you the wholesale as a bonus, for free. This analysis is generated based on our extensive database of mobile homes for sale around the country. We use this information to compare the year, condition, size, and demand in the area to create a comprehensive value range that is similar to a bluebook value, but not as model specific. All Market Analysis’ are:
- Lifetime – You’ll never need to purchase another report
- Live data – We update your report in live time, as new homes go on the market
- Printable – Print a PDF of your report for flyers or open houses
- Sharable via web link – Post the link with other web listings you have so buyers can see your report
- Visualized via graphics – Easy to understand bar graphs to visualize the data
A Market Analysis is the way you support your asking price when negotiating a sale with potential buyers.
How do they work?
We receive information on thousands of homes for sale each year from all across the country. We’ll collect basic information on your home and match it up with the many homes in our database, zeroing in on only those that are similar to yours, and report back to you what the asking prices to these homes are. This gives you the necessary information needed to set your asking price with confidence. In the end, it doesn’t matter what someone (or some company) tells you what your home is worth. In the end, it’s only worth what someone is willing to pay for it, and making sure your home isn’t over or under priced, in comparison with other homes on the market, will keep you in the running with buyers in your area!
A full appraisal will give you a much better idea of what your mobile home is worth on the retail market, but it will not be cheap. Most appraisals cost between $250 and $400 and include a full inspection where the appraiser will examine the square footage of the home, the condition, the park, the heating and cooling, and details about the park, and other factors to create a detailed report that reflects repairs, issues, and a general overview of the retail value. Real-property mobile homes are appraised using the Uniform Residential Appraisal Report, Form 1004C. However, if you rent a lot at a mobile home park, there is no standardized form for appraisal. There is always things you can do to protect yourself from low ball appraisals.
No matter what your market value or appraisal, you should be cautious about setting your asking rate. The actual sales value for mobile homes can vary a great deal and can range from as little as a few hundred for very old homes that cost owners too much in monthly rental fees to over $250,000 for triple wide or larger homes on owned property. (You have to take these factors into account when comparing your home with another. Our reports simplify this for you by only comparing your home to homes similar to yours. We match your home up with similar homes, in your market, so you can be confident that you’re not selling yourself short.)
Final sales prices typically range between $5,000 and $15,000, the exact rate will change a great deal depending on your specific home, your local market, the park, and other details. Used double and triple wide homes can sell for significantly more, as they hold their value better, but are often more difficult to sell because the asking price is higher.
However, no matter what your situation, your final price will ultimately depend on your market and how you choose to sell your home. One of your most important decisions will be whether to sell retail and list the home yourself or sell directly to a broker for a wholesale price, and each option has its own pros and cons for costs.
RETAIL MOBILE HOME VALUES
Selling a mobile home yourself means either connecting with a real estate agent or listing the home yourself, marketing, showing the home, handling paperwork, getting permission from the park, and if you’re moving away before the sale, continuing to pay rent and fees for the home. Just like with selling a house, you set a price, accept bids from interested buyers, and eventually make a deal to sell the mobile home. You keep all the profit, and you get the maximum sale price for the home.
Just like with selling a house, you set a price, accept bids from interested buyers, and eventually make a deal to sell the mobile home. You keep all the profit, and you get the maximum sale price for the home.
However, while this option is outwardly advantageous, retail sale has a number of disadvantages that you should be aware of before you choose to sell your mobile home in this way.
Most people choose to do a significant amount of comparison research online to see what they can sell their mobile home for. Chances are, you’ve already looked around to see what mobile homes are selling for and may even have an idea of what your home may be worth.
Unfortunately, this kind of sales comparison won’t always work. First, you have to factor in homes that are in similar condition, with similar upgrades and size. Typically, unless the home is in the same mobile home park, from the same year, with the same upgrades or modifications, a single online listing won’t accurately reflect the sales value of your home. You need to compare with several homes in order to get an average asking price range. The more homes you can compare the better.
You can use these listings to get a ballpark figure of the asking price you may want to try when listing your home for sale. It’s also important to remember that your manufactured home may not sell for the asking price you set. However, you’ll have a much better chance if your price range is competitive.
Market Demand – If you’re in an area with a high volume of mobile homes on the market, you have a much smaller chance of getting your asking price if it’s higher than others in the area. In most areas in the United States, the number of used mobile homes outstrips the market, meaning that there are more sellers than buyers, which also means that you might have to reduce your price a great deal to make a sale. On the other hand, if there are only a few other sellers, your chances of getting your asking price are much higher. Performing the necessary due diligence will limit the chances of under pricing your home.
The primary benefit of using the retail market is that you can potentially earn more money by getting the full retail price. However, it is not guaranteed, and you have to consider the factors that affect the pricing to see your actual profits.
- Age: Older homes lose value, are more difficult to finance, and typically sell for much less.
- Make and Model – Some brands are more desirable than others. If you are going through a real estate agent, your mobile home will be assigned to First Tier or Second Tier for pricing based on the make, model, and manufacturer.
- Size – The size, number of bathrooms, bedrooms, etc., will affect the sales price.
- Condition – The better the interior and exterior condition of your home, the higher the value.
- Improvements – Have you factored any improvements or upgrades into the cost.
- Problems – Are there any issues or problems? Old appliances, leaks, loose boards, and damage all lower the sale price of the home.
- Park Rental – The park rental fee will affect your ability to sell. Check with the park manager to see if there will be a fee increase for the new owner, and factor that into your sales price.
- Community – A quality community will raise the asking price for your home, so be sure to factor in amenities and services offered by the park.
- Time to Sell – Your mobile home may take anywhere from a few months to over a year to sell. Most buyers will consider all of their options, including regular homes, before purchasing a mobile home, and you will likely have to sit through several house showings, several inspections, and multiple price negotiations before making a sale. Most interested buyers will hire an inspector to review the home and use that inspection to place their bid. In most cases, it is very difficult to obtain financing for a used manufactured home, especially on a park lot, so most banks won’t help your buyers to make the purchase. This can considerably slow down your time to sale, simply because buyers must either take out a high-interest loan or come up with the capital in cash in advance. This difficulty stems from the fact that mobile homes are considered property and typically registered as motor vehicles, even though most of them are never moved.
- Costs – There are numerous costs associated with selling your mobile home and you should factor them into your final decision. You can typically choose to either sell the home yourself, which usually takes longer unless you have a friend or family member who is willing to buy it, or use a real estate agent, who will help you to prepare, photograph, and list your home to find buyers. Most realtors typically charge around 6% of the final sale value in fees. However, not all realtors are willing to work with mobile homes, so you may be forced to handle the sale on your own.
- Park Rental – If you are unable to live in the mobile home until the sale, you must factor direct park rental costs into your calculations. While you probably already know the rates you pay, the average park charges between $180 and $300 per month for the lot. This will add up significantly if you take a year or more to sell the home. You also have to factor in required repairs, any maintenance on the home during the period, whether or not you have to continue to pay for utilities, and any other demands (such as insurance) put on you by the park.
- Marketing – If you are selling the home yourself, you will have to pay for marketing out of pocket. While there are free and low-cost marketing resources, you should factor marketing in as a cost.
The most difficult step to selling a mobile home in the retail market is getting park approval to complete the sale. Most parks will deny your request to sell if the buyer has poor credit or a criminal background or if your home needs repairs. Parks often have a checklist of “fixes” that must be completed before they will approve a homeowner’s sale.
You should also consider that many mobile home parks have their own homes and developed units for sale. This means that your sale may be directly competing with the interests of the park and the manager may actually steer potential buyers away from your mobile home and towards a vacant home that they are selling themselves. This can greatly increase your sales period, especially considering that selling yourself means finding someone who wants to live in your park and competing in a market that is usually tilted towards the buyer and not the seller. Because there are more mobile home sellers than buyers, the process can take a long time, even without competition.
After the sale, you will still owe realtor fees (if applicable), possible attorney fees (for the paperwork), any taxes, any money that you still owe on the home, the cost of title work, and any repair costs or standing dues against the home.
When should you use the retail market? If you are confident in your ability to sell your home quickly, have a newer model home in a quality park, and can get permission from your park manager, you may be able to make a profit. However, it is important that you take the time to review your costs to ensure that retail will earn you the most money.
SELLING A MOBILE HOME WHOLESALE
Wholesale is the process of selling your mobile home to a broker who will move the home and then sell it to a buyer to be provided at a lot of their choice. This option is advantageous for a number of reasons and can be the better option for many mobile home owners. Like with retail, there are several considerations and drawbacks and you should take care to consider all of your options before you make a decision.
Wholesale allows you to sell quickly and without the hassle and additional costs of retail, but for a significantly lower price.
Most wholesalers will inspect your home and then make an offer based on the same conditional factors you would include during pricing a home for the retail market. However, this bid is usually significantly lower because of several factors. Most wholesalers must move your mobile home off of the lot in order to purchase it and sell it elsewhere, meaning that they must take on high moving costs for transportation, permits, licenses, unhooking utilities, and prepare a new lot in another location. These costs can be high, and they are all directly subtracted from the offer that the wholesale broker will make to you.
Most wholesale buyers also don’t pay retail price, which means that the final value will be lower than the retail, even for the wholesaler. While the price you are quoted will vary depending on the moving costs associated with your home, it will be lower than retail value. However, you can greatly benefit if you are living in a less than ideal area, as brokers do not factor in the condition of the park, amenities, or the community, only the mobile home itself.
IN HURRY TO SELL?
One of the largest benefits of wholesale is that you can sell your mobile home very quickly, sometimes even on the same day you receive the offer. This can be very advantageous if you need funds quickly to handle other financial issues or to put a down payment on your new home in another location. In some cases, brokers will be willing to purchase your mobile home upfront and allow you to move out at an agreed-upon date, which gives you the time to use the money to put a downpayment on your new home. When looking for a accurate mobile home values estimation, speed quickly changes the value based on how long you are willing to wait.
COMPARING THE SALES PROCESSES
Unlike with retail where you must market, show the home, and ask permission from the park, selling wholesale is fast and painless. The wholesaler will offer a rate and if you accept they will immediately close the deal. This sale will go through instantly and parks cannot stop the sale due to repairs needed and cannot deny the sale as the home will be moved off the lot. You also won’t need an attorney or park mediation, because it is a two-party sale between you and the broker. At times, parks will implement a First Right Of Refusal, where you are required to give the mobile home park the chance to match any purchase agreement you enter into. This is often misrepresented in order to make the homeowner believe they are not allowed to sell their home to a buyer who plans to move the home. If this is what you have been told, please contact us and we can help you navigate through the sale in a way that won’t get you into legal trouble.
Selling your mobile home directly to a broker allows you to make a sale quickly, avoid issues with the park, get money quickly, and move on with your life. While you will earn less money upfront, you won’t have to worry about additional fees, park issues, or waiting a year or more to sell your mobile home, and you might walk away with more profit. Direct sales are ideal if you can’t sell quickly, have high rental fees to consider, or need the money from the sale upfront to invest in a new home or opportunity.
A WORD ABOUT DEPRECATION
Deprecation is a combination of all of the other factors we’re talking about today. It includes everything from location and market to age and cosmetics. We’ve already touched on all of those, but since depreciation in mobile homes is such an important subject and has so much bearing on your mobile home’s value, it’s worth explaining.
Depreciation is the decline in value of an asset (like your mobile home) or a piece of real estate. You’ll hear the word “depreciation” all the time when researching your mobile home’s value. That’s because mobile homes depreciate much faster than stick-built homes, apartments, and other real estate. Whereas stick-built homes can last for many, many decades, mobile homes are only expected to last about 30 years.
IT’S NOT THE END
Combined with the other factors that influence your mobile home’s value, age can be a death-knell. And sadly, there’s not much you can do about it. Mobile homes are meant to be temporary. Time takes its toll. As we’ve seen today, however, there are ways to make up for it. By adding value, you can extend a mobile home’s lifespan of usefulness.
Even if a mobile home is getting older and depreciating quickly, it can still be a comfortable home for your future buyer. Used mobile homes are in high demand: they’re affordable, economical, and cozy. Many people need temporary homes when they move for jobs, school, or to be close to family. Instead of renting, purchasing their own little mobile home may be quite attractive.
NEW VS. USED
We would be remiss not to mention the difference between a used and a new mobile home. If you’ve lived in mobile homes for any amount of time, you know the difference. You may have firsthand experience with the depreciation rate of mobile homes.
If you bought your mobile home new and are now selling it used, it’s harder to make a profit with any amount of upgrading. Used mobile homes go for far less money on the market than new ones. Because of their shorter lifespan, mobile homes that are just five or ten years old have far less value than brand-new ones. For example, a new single-wide could sell for around $40,000 or $50,000 while a used single-wide can sell for only $10,000 or $25,000. You can see what a dramatic difference that is!
That’s the bad news. The good news is, if your mobile home was already used when you bought it, you stand a better chance of making a profit. Chances are, you have already made improvements. Or maybe you renovated it before you moved in. If so, you’re a step ahead.
The reason you’re here reading this article is that you want to make a profit when you sell your mobile home. You’re not here to listen to depressing definitions of depreciation! Thankfully, there are a few ways to make back your money (plus more, hopefully). We’ve talked about some of them today. Upgrading your mobile home to real estate. Upgrading in smaller ways to increase the functionality of the home. Cleaning up, painting, and adding curb appeal.
In real estate, value that is added to an asset is called appreciation. Sometimes mobile home owners accidentally hit the jackpot and move to a certain area of town before it’s trendy. Next thing they know, everyone is moving to that neighborhood and houses are simply flying off the market. That might happen to you, so it pays to do some market and location research.
In smaller ways, however, you can deliberately add value to your mobile home. Most people have to resort to this method because most don’t just “get lucky” as described above. So, if you have to put time and effort into increasing your home’s value, you’re not alone. Like other responsible homeowners, if you put in the work to make your home a comfortable and beautiful place, your mobile home will be worth every cent your buyer pays.
TAKING CONTROL OF YOUR HOME’S VALUE
Even though there are circumstances that are out of your hands – such as depreciation, the home buying market, and location – there’s still so much you can take control of when it comes to your mobile home’s value. If you care for your home, you’ll make it that much more attractive to a buyer. Be strategic, and you might just sell your mobile home with a tidy little profit besides.
There are so many factors that influence your mobile home’s value. It can be overwhelming. For that matter, selling your home can in itself be overwhelming! If that’s the case for you, check out these 12 ways to combat fear when selling your mobile home.
And if you’re looking for even more ways to make your mobile home an attractive buy, stand out from the competition by following these 11 tips. Don’t give your home a chance to depreciate! Take control of your mobile home’s value.
CHOOSING YOUR SALES PROCESS
Selling your mobile home means making key decisions regarding how, where, and how quickly you want to make the sale. If you want to make the most profit, you should sit down to consider your options, do the math, and make a decision that offers the most value to you. Because the average time to sale is 9-12 months and sometimes longer for a mobile home, you should calculate at least a year’s worth of park fees, any repairs that you might have to make, the cost of maintenance for the home over that period, advertising, marketing, and other details.
Hopefully, this helps equip you with the information needed for understanding the different markets assessing mobile home values. There are also professionals that can help you to figure out how much your home is worth. US Mobile Home Pros is committed to giving you the best resources so that you can make an informed decision.
We wish you all the best selling your mobile home.