Expert: Michael McClure - 3/9/2008

Question
Dear Mike,

My husband and I, native (coastal) Californians, made an ENORMOUS mistake and moved to the Phoenix area a year and a half ago. In realizing our mistake, my husband approached his employer who agreed to relocate us to the South Bay area of San Francisco (i.e. Santa Cruz County).

As it seems unlikely that we will be able to sell our home in Arizona quickly (a real-life 3000sf stick-home complete with pool), we are investigating the possibilities around purchasing a double-wide somewhere between Aptos and Scott's Valley to "tide us over" in this peculiar real estate market.

As is probably the case in Southern California, real estate values in Northern California are hard to compare in terms of the "real world" of the rest of the country. For instance there are mobile home parks here where a 1972 1400sf unit on leased land can be $400K with rents in the $400/mo range. Too, there are "co-op" parks and land-owned parks that further confuse first-time mobile home buyers.

My question is just as slippery as I feel the subject is, which is: How can you ascertain the value of a mobile home when you know the box itself is barely worth $18,000, yet it's placed in a leased park that somehow justifies their asking $289,000? What exactly are you paying for?

As with everything else, there's an element of "what the market will bare" flittering around in there somewhere, but when a lender leaps into the fray, how are they assessing its true value? In the instance I'm speaking of, the buyer's not purchasing land -- just a beat-up old mobile home for which there's a nominal rental fee.

Should we be asking how much the current owner paid for the home and calculate some standard yearly increase in value (even though the "box" itself has actually depreciated)?

Hope your answer is less wordy than my question!
Thanks,
Michele Hausman

Answer
Hi Michele,

Well, you are asking the "age-old" question regarding pricing on these homes.  It's not easy, and is predicated on a couple of things.
Space rent being the obvious one...another is where it is,(location, location, location)!  You will discover quite a few variables on this project....sounds like you have done some homework already.

The appraiser will use these facts to determine the value of the home.
There is also a service which gives the sales prices for all homes sold in the state!  This is what I usually show my potential listing sellers.  They too, are somewhat in the dark as to what to ask for there home. The lender will go by what the appraiser writes up on his job...the neighborhood OUTSIDE the park is important also.

I assume that this conversation will not be read by anyone else, so I will offer to look up some park sale figures if you have narrowed down your choices. Let me know...or you can call me at:
310 386 1061.  "~ M