Shop Around For Manufactured Homes, Financing
by Broderick Perkins
Shop more than three manufactured home dealers for the same model and you'll save about 9 percent on the cost of a home. Secure your own financing, rather than take the manufactured home dealer's loan and you'll save almost 11 percent. Before you go shopping take the time to learn about buying a manufactured home -- or take an existing manufactured home owner shopping with you -- and you'll save more than 8 percent. Consumers Union, virtually the only independent consumer advocacy group that stays on top of manufactured home products, practices and its industry, says manufactured home buyers can save $10,000 or more on the cost of a new home. That's if consumers do what's necessary to lift the shroud of price uncertainty draped over the value of each home so they don't pay more than necessary. "If you overpay for your house or its financing, often you'll be left owing more on the loan than the home is worth. This raises the likelihood of the foreclosure and repossession of your home," says Suzanne Henry, a policy associate with CU's Manufactured Housing Project. Reports of market conditions that can cause consumers to pay more than necessary join other CU manufactured housing reports that describe an industry struggling with service and sales issues. CU, publisher of Consumer Reports, an independent, nonprofit testing and information organization and monthly magazine, says the highest manufactured home prices are paid by consumers who shop at three or fewer dealers, those who finance their homes through the dealer and by those who are first-time buyers unfamiliar with the market. The report reveals that a buyer in Dallas County, Texas paid $42,000 for a newly constructed "Alamo by Clayton" 16 x 76 single-wide home, but two hours east in Franklin County an identical home sold for $33,800, an $8,200 difference. CU says the practices affect not only consumers but the industry itself. "Hundreds of thousands of families have seen their manufactured homes repossessed in the last decade alone, contributing to a widespread downturn in the industry, the report said. Only a handful of major lenders active in the manufactured housing boom of the late 90's remain active today," the report says. U.S. Commerce Department statistics show that while the average manufactured home price has risen from $35,000 in 1995 to nearly $62,000 in December 2004, placements peaked nationwide at 373,700 units in 1998 and have been falling ever since to about 120,000 placements in 2004. The CU survey polled consumers who bought manufactured homes in the past two years and compared the prices they paid with others who bought identical homes. A traditional manufactured home purchase includes a 5 percent down payment, but the survey found that 24 percent of those surveyed paid a price that was more than 5 percent higher than the average pricing, which wiped out the equity provided by the down payment. That forces buyers to move in with negative equity. Henry said, "The good news is that the industry can take steps to improve both its image and its long-term financial viability..." CU recommends: - Sticker prices -- Just like automobiles, all manufactured homes should be required to have a posted price that includes the invoice price as well as the recommended dealer markup and any specifications and options included.
- Appraisals -- Many manufactured home transactions are still considered personal property buys. Because, like auto dealers, manufactured housing dealers retain close ties to specific lenders, few manufactured home purchases are independently appraised. Appraisals, tied to independent financing, are a fundamental solution to stabilizing the industry.
- Independent financing -- Too often dealers, manufacturers and lenders are the same company. Independent lenders have more incentive to make sure the transaction occurs at a fair price. Consumers should bring their own lender to the deal.
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