The Mobile Home Trade-in Process: How Does it Work?
Many homeowners across the country have envisioned trading in their existing mobile home or manufactured home (MFH) towards the purchase of a new, usually larger, modern manufactured home or modular home. However, most looking to upgrade are not sure it can be done, or, what the trade-in process might entail.
The Trade-in Process
By trading in an existing home, buyers can offset the total dollar amount needed to purchase their new manufactured home. Converting the value of their used home into a down payment or credit, buyers can cover or reduce the total amount of the required down payment.
While there are many manufactured home retailers that gladly take used mobile homes or manufactured homes as trade-ins, there are some that do not. Those that do take trades don’t necessarily estimate the value of trade-in allowances in the same manner. Typically, the dealer will use a combination of wholesale book value as determined by N.A.D.A., a national mobile home guide – as well as getting an inspection and appraisal. That said, the N.A.D.A guide does not publish values for mobile homes built prior to the 1976 HUD Code implementation.
The allowance you receive for a trade-in will be subject to a myriad of considerations. Based on variables like the age of the trade-in, existing site placement, the expense of removal from the existing site, and the balance owed on any existing mortgage, the perceived value can vary dramatically.
“In-place” value much greater than “pull-out” value
A mobile home sited in a manufactured home community will have greater value “in-place” than a home that must be removed (“pull-out”) from its current park space.
Unfortunately for many used homeowners, their desire to upgrade to a new manufactured home, which will be installed back into the same space, means a big portion of the perceived and actual value of the used home will be diminished. Because it’s all about location, a large percentage of the value is not the home alone, but the simple fact that it is placed on an existing site. New homebuyers can take solace in the fact that in-place value of the new manufactured home placed on the same site will inherit that in-place value.
In some instances, an older mobile home may have little or no trade-in value due to the cost of dismantling and transport from the site. Also, the retailer/dealer will need to account for the expense of taking the trade into inventory, getting the unit sold, transported and installed for a subsequent buyer. Often, pre-HUD homes will have to be sold as salvage. Sometimes the retailer will absorb the costs of a removing a “no value” trade-in as a means of securing the sale.
Purchasing New Manufactured Home subject to retail sale of used home
When purchasing a new home to be delivered to a new site, it could be beneficial to enter into a pending sales agreement with the retailer subject to the used home being sold in its existing location. The retailer may consider taking a listing or consignment on the in-place home as a means of facilitating the resale of the used manufactured home. Hopefully securing a retail price greater than the pull-out trade wholesale allowance.
Exploring these and other options with an experienced local retailer is strongly recommended.