Selling Or Buying A Mobile Home

By Chelle Cordero

May 29, 2015 5 min read

By definition, a mobile home is generally considered "a large house trailer that is parked in one particular place and used as a permanent living accommodation." Wikipedia defines it further as "a mobile home (also trailer, trailer home, static caravan, caravan) (that) is a prefabricated structure, built in a factory on a permanently attached chassis before being transported to site (either by being towed or on a trailer). Used as permanent homes, for holiday or temporary accommodation, they are left often permanently or semi-permanently in one place but can be moved and may be required to move from time to time for legal reasons."

Many people confuse the difference between modular, manufactured and mobile homes. All three are pre-fabricated homes, built elsewhere and transported to a site for (semi) permanent residence. Present-day manufactured homes are built according to regulations from the U.S. Department of Housing and Urban Development and/or The Federal Housing Administration. There are marked differences regarding the foundations, floor space and type of construction and materials. In order for a homebuyer to apply for FHA mortgage insurance, the manufactured home must be built after June 1976, with floor space at least 400 square feet, set on a permanent foundation, utilized as a "full-time" dwelling and must be classified as real estate. A manufactured or mobile home used as a vacation site would be listed as property (akin to vehicles) for tax purposes.

According to the U.S. Department of Housing and Urban Development, "the most common method of financing a manufactured home is through a retail installment contract, available through your retailer." A growing number of lending institutions are making conventional and government-insured financing plans available on mobile/manufactured homes. Manufactured homes are eligible for government-insured loans offered by the Federal Housing Administration, the Veterans Administration and the Rural Housing Services.

Bob Willett, a senior loan officer at American Pacific Mortgage, explained that value is based more on the land on which a home sits rather than the structure, so it makes a big difference in price and loans if the mobile home is sitting on permanent and privately owned-land or on a rented space such as in a mobile-home park. "A mobile home is considered personal property unless land is part of the deal. Land value goes up faster than the value of the structure decreases." He also explained the major differences between the types of homes: "A mobile home is a trailer, dependent on the lot you are paying rent on. A modular home is based on local standards. A manufactured home built to HUD standards is transported on wheels for one trip. And the traditional home purchased nowadays is fixed construction, also called site-built because it is completely built on the site."

In order to sell a mobile home, sellers will need to provide title and certificate of occupancy (as per local ordinances). If a home is located in a mobile park on rented land, the seller needs to ensure that all rules the park imposes have been abided by. If the unit is going to be moved after sale, both the seller and buyer need to coordinate transportation. Selling and buying a mobile home in many states is similar to selling or buying a vehicle, there is no need for title insurance, closing fees or surveys. The transaction can take place in a mobile home park office, and money is saved that would normally be spent on a closing at a title company or attorney office.

In 2012, the baby boomers started reaching retirement age, although many are continuing to work out of financial necessity. The desire to downsize and the need for economical housing have made mobile and manufactured homes more feasible. However, rental plots are becoming fewer.

Manufactured homes reach final construction on site; when local ordinances allow, a manufactured home on family property is becoming a viable option for aging parents. The demand for mobile homes is increasing, but regular mobile-park owners are not opening new sites. According to the 2012 Market Facts report from Foremost Insurance Co., "41 percent of mobile home units were purchased for under $20,000, representing a 6 percent increase from 2008."

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