Appraising manufactured homes can be a daunting and seemingly complex task. In actuality, it is not that dissimilar from a site built house.
The appraiser must be able to recognize the needs of factory built housing and account for it accordingly. True, comparables may be a bit more difficult to find, but assessing quality of build, depreciation, and other key factors will be similar to site built housing assuming the appraiser is familiar with the unique features of a manufactured home. The most difficult part for some may even be the reconciliation between the market approach and cost approach; which is a requirement for most manufactured home appraisals.
So what are some of the key items that the appraiser needs to know for an appraisal that differs from a site built home?
- Depending on who the client is, and ultimately where the loan will end up (i.e. secondary markets), the appraiser needs to know what form to use and what the requirements are for that form. As an example, the Fannie Mae requires the 1004C form be completed for all manufactured homes, and on-frame modular homes. This form is also utilized by Freddie Mac and the Department of Veteran Affairs. It should be noted that Freddie Mac calls the form “70B”. Additionally, as comparable sales are selected for use with this form, the appraiser may select a site built home of similar quality and utility as a comparable.
- The appraiser will need to know where to locate the unique documentation specific to manufactured homes. These include the serial number, data plate, and certification label. According to the HUD-code, these should be located on or near the main electrical breaker box. However, the manufacturers often put them under the kitchen cabinet, in a kitchen drawer, or in a bedroom closet.
- The data plate will contain information about the construction of the home; including the snow load zone, the wind zone, the thermal zone. It will even include serial numbers for all of the appliances original with the home. A wise appraiser once said, “Snap a photo of that, you never know when you will need that information!”
- Official documents for manufactured homes, data plates, certification labels, as well as other documents may not accurately list the size of the home. Often, official documentation will utilize the call-size. This is used primarily for transportation as the manufacturer must report the full transportable size of the home (including eaves and tow bar/hitch). In actuality the size of the home will be the floor size, which is the perimeter measurement of the home. An example would be an 18’ x 80’ home. The call size is 18’ x 80’ but the floor size is most likely 17’ x 76’ (minus 6 inches on each side for eaves, and minus four feet on the length for the tow bar and hitch).
- The appraiser needs to know what to do if they cannot locate the data plate or certification label. This is critical because in some cases the lender will not underwrite a loan without this documentation. It is recommended that the appraiser expressly note where they looked for the documents; some appraisers will even call the client from the field to notify them that neither can be found.
- When reviewing the purchase contract, it is important to note whether or not the axles and wheels are included in the purchase, or if they are rented for delivery. If they were purchased, and remain with the home, you will most likely find them stowed underneath the home, length-wise.
- Once a manufactured home, always a manufactured home. No matter what size room addition has been added to the home, the fact remains that the home is still a manufactured home. It will be extremely important to note that modifications to the home may invalidate HUD compliance.
- From public record data, the appraiser should pull any permits related to the installation on fee land or for room additions. As previously noted, the modification of the structure may affect the ability to occupy the structure. Check with your local code authority.
- Is the home titled or has the title been surrendered and the home deeded with the land?