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Monday, February 06, 2006

Passed On Mobile Home

Saturday afternoon, I went out to check the mobile home. It was quite a strange place. The unit was a singlewide and they took off one side and built on to basically make it the same width as a doublewide. The wood on the outside looked old and could have possibly had dry rot. A couple windows were broken and some of the light fixtures had broken inserts. The place was filled with boxes and the owner told me she had been packed since September. There was a storage shed outside and the backyard had two small trees - an orange tree and a lemon tree. The lemon tree was struck by lightning last year. The view from the backyard wasn't great - you got a nice view of the backyard of the adjacent property, which was filled with old toys, tires, and weeds. The front of the house looked nice, and there was a For Sale By Owner sign. The owner had both a cat and a dog.

In my conversations with the owner and based on what was written in the appraisal, I discovered she had been trying to sell the place since September. She originally tried to sell it for $126,000 and in December, she sold it for $100,000. That sale fell however, because the bank required the seller to have 30% down. That could mean either the buyer had bad credit or, more likely, the bank didn't like the property. I tend to think it was the latter.

The property was in a large mobile home area. It's not really a mobile home park, but more of a part of town where people with mobile homes ended up. There is no monthly fee or any kind of neighborhood association. There were several other places for sale and I drove around checking comps. Doublewides were going from $95,000 to $139,000. Singlewides were for around $80,000 and lower. This particular property is strange in that technically it is a singlewide, but it was modified to be a doublewide. I think the appraisal from 2 months ago that came in at $108,000 is somewhat unrealistic. I feel the appraiser could have choosen whatever price he wanted, given the huge range of prices in the area. If you look at the properties selling for $100K and above, they were all much nicer than the property I was looking at.

So I ended up not buying this one. I'm of two minds on this decision. Part of me is worried that I'm rejecting it based on fear. Mobile homes are definitely outside my comfort zone. That's fine and I want to be able to move outside my comfort zone - that's the only way to learn and it's why I decided to look at this property in the first place. But everything else I was seeing just didn't add up. I couldn't see how the $108,000 price was justified. So I passed. I'm 90% sure it was the right move, but there is still that doubt that I chickened out. I keep thinking of that card in the Cashflow game that says "While you think about this property, the player to your right takes the deal." It's too bad this is a FSBO. It'd like to watch its progress on the MLS and see what it eventually sells for.

2 comments:

monarchcrest said...

I would have passed on it also. It always bugs me when someone has been trying to sell at what they perceive is market value, then they drop the price $25k and an investor thinks that they can buy it at $25k under and sell at that same perceived market value that the original seller was trying to sell for.

In this case, if she couldn't sell at $100k, you probably can't either. And if she can't sell at $75k, you probably can't again. But if she can sell at $70k, then you should be buying at $50k or lower.

savvy saver said...

In cases like these, I find it is important to trust your gut.

When my gut says "no", I run away.

Whem my gust says "yes", I put careful thought into something before jumping in.

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