Very similar to an automobile, almost every manufactured home ever built has an indexed value, as referenced in the current year’s NADA value book. In this article, we will be using the terms “NADA value“ and “Blue Book value“ interchangeably. These two companies are well known for providing basic car values for folks looking to purchase and resell their automobiles. These companies also release information and books yearly with regard to fair market prices concerning new and used manufactured homes.
Value is Subjective
The price and value of something will change depending on the motivation of the buyers and sellers.
It is important to understand that the value of something is subjective based upon the buyer and seller in the specific deal. A motivated seller may give away their property for a significantly reduced priced, whereas a greedy seller who is not motivated may be looking to get top dollar for his or her home. In similar fashion, buyers will pay a variety of prices for homes based on the size, condition, motivation, park features, location, time of year, and other personal and societal pressures. A home purchased for $3,500 in one area may be purchased for $9,000 just a few miles down the road.
Below is a short list of some common situations when verifying NADA value may or may not be required.
1. When Buying Insurance
When obtaining insurance for a used mobile home, your insurance planner/agent may consult the NADA value for the mobile home you are aiming to insure. The insurance company may only cover the mobile home for the amount the home is currently worth based on this generic index. In most cases the NADA value will be found and obtained by your insurance agent; this is not information you will need to provide.
2. When Obtaining Bank Financing
If you ever wish to borrow money against a used mobile home, the lending company will almost always wish to know the “value” of the used mobile home being borrowed against. Instead of sending an appraiser to the property, the insurer may only need to look at the stated value in the current year’s NADA guidebook. This valuation obviously does not take into account the full condition and economic climate of the home.
Depending on the condition and age of your home, the NADA value of your used mobile home may be much higher or lower than expected. In most cases the NADA value will be found and obtained by your banking loan agent; again, this is not information you will need to provide.
3. When Reselling
In general, the public does not care or use the NADA valuation system when purchasing and reselling mobile homes. While a seller may look at this index to gauge a starting value for his or her home, a buyer will not adhere to this blanket evaluation price.
Unlike automobiles, there are significantly fewer mobile homes around the country. It is partly for this reason that mobile homes do not follow the same valuation as traditional automobiles or single family homes. The general public has a high demand for affordable housing in the United States, and mobile homes can often fill that demand. Depending on the location, condition, and many other factors, one version of a 1985 Fleetwood single-wide mobile home may be purchased for ten times the amount of the exact same year/model home located next door.
Pro Tip: When selling a used mobile home inside of a park, base your selling numbers on local comparable sales within the park. (Comparable sales take into account the condition, age, and size of the homes.) If there have been three similar mobile homes sold for all cash in the last few months, then use these local comparable sales when evaluating the resale price local buyers may pay for a similar home in this same park during this time of year.
4. Out of Curiosity
If you are curious as to the NADA value of your used mobile home, you may always obtain the value yourself by going to the official NADA website. Please keep in mind that this valuation does not determine the price or terms local buyers will pay for any given home in your specific market.
In conclusion, do not be fearful or apprehensive when purchasing or reselling a used mobile home. If you will be purchasing this mobile home to live in, then simply aim to make a win-win purchase agreement that you are happy with and can easily afford. If you are purchasing a mobile home for investment purposes to quickly resell, then make sure you understand who your buyers are, how much money they have, how they are looking to buy, and their willingness to pull the trigger based on the age, condition, and size of your home.
If you’ve ever bought and sold mobile homes, how did you go about finding fair valuations for them?
Let me know with a comment!