Appraisals of Manufactured Homes Often off Base

The March 27 Webinar, Real Homes, Real Value: Improving Real Property Appraisals of Manufactured Homes sponsored by the Corporation for Enterprise Development (CFED), addressed the problems of getting accurate appraisals on manufactured homes across the country. Doug Ryan, Director of Affordable Homeownership Initiatives at the CFED, says the Innovations in Manufactured Homes (I’M Home) initiative is to make MH an appreciating asset, which requires long-term control over the land beneath one’s home, safe, high-quality mortgage products and equitable public policy. Many appraisers undervalue HUD Code homes because their modus operandi does not necessarily correspond to the reality of MH.

Peggy Hutchison, CEO of Prima Vera Foundation of Tuscon, Arizona is working in neighborhood revitalization in South Tuscon where 30 percent of the housing is distressed, siting Energy Star manufactured housing with water harvesting and stucco to blend with the neighborhood. She recounts the total cost of a new manufactured home was $110,639, but it was appraised at $43,000. Prima Vera is part of the NextStep network of non-profit factory-built housing providers across the country.

Mary Lou Affleck of NeighborWorks Montana said she spent six months to find an appraiser willing to evaluate a single-section home after being turned down nine times. A manufactured home may be the only one for 50 miles around, which make comparisons difficult at best, especially if you need two other comps from the area, as Fannie Mae requires.

Robin LeBaron, Deputy Director of Fair Mortgage Collaborative, a non-profit targeted to fair, safe lending, spoke with 20 industry players top to bottom, government and private. Noting too-low appraisals limit financing options, and serve as a disincentive in maintaining the asset, he said, “Often appraisers do not include energy efficiency because the market does not value energy efficiency, and that is in their report.” It is all based on what the market says, he adds. Sometimes a manufactured home is appraised on the basis of it being a manufactured home instead of the features it may contain.

Larry Disney, Exec. Dir. of Kentucky Real Estate Appraisers Board says years ago the board began a dialogue with state-credentialed appraisers, which includes a close association with the Kentucky Manufactured Housing Association (KMHA). As such, the board has offered numerous workshops and seminars to educate appraisers about appraising manufactured housing, emphasizing its similarity to site-built housing while noting the differences that affect the valuation. He also asks lenders if the appraisers they use have experience in manufactured housing appraisals, and encourages them to seek MH education for the appraisers they employ. The bottom line is appraisers need more education about manufactured homes in order to be truly accurate in their work. For a download of the entire webinar, click here.

(Image credit: theatlanticcities)

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