Turning to Lemons Into Lemonade: Profiting from the New Manufactured Home Appraisal Rules

Turning Lemons Into Lemonade

Profiting from the New Appraisal Rules

Darren KrolewskiExecutive Vice

President, Marketing & Business Development


Datacomp Background• Founded in 1987.

• Largest independent, national provider of market-based manufactured home appraisals.

• Over 38K communities, 4M homesites and 1.2M comps in database.

• Founded MHVillage.com in 2004 – largest website in the industry with 16M+ visitors annually.

• Acquired JLT & Associates in 2014, publisher of rent and occupancy reports for 80+ manufactured home community markets nationwide. 2


New Appraisal Rules In EffectAs of July 18, 2015 for MOST Financed

Manufactured Home TransactionsThese Are the “Lemons”

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• Both new and pre-owned homes

• Higher Priced Mortgage Loans (HPML)

• 1.5% Above APOR (Average Prime Offer Rate)

• Most manufactured home loans are HPML


Where Do the Rules Apply?

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• Home only (chattel) and land/home financing

• Loan value over $25,000

• Qualified Mortages (QM) are exempt


Where Do the Rules Apply?

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What Are the Rules?Land/home manufactured home transactions (both new and pre-owned) now require a full USPAP real estate appraisal just like a site-built home.

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What Are the Rules?Home-only manufactured home transactions (new and pre-owned) are exempt from the USPAP appraisal if the lender provides the borrower one of the following three types of information three days prior to closing:

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Options for Home Only• Manufacturer’s invoice.

• Cost-based valuation (NADA Guide).

• Market-based valuation (Datacomp).

• Provided to the borrower three days prior to closing by the LENDER.

(Until now, the industry has never had to provide a new home valuation to the borrower for home only transactions.)

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Options for Home Only (Pre-Owned)

• May continue to use current NADA Cost Guide.

• May continue to use current Datacomp market-based appraisal.

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Options for Home Only (New)

• Have generally used lender Advance Formula.

• NADA new home cost guide tool.

• Datacomp Market-Suggested Retail Value, or MSRV service.

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What Is the Datacomp MSRV?

“Market-Suggested Retail Value”

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Why MSRV?• Everyone familiar with MSRP.

• No one wants to pay MORE than MSRP.

• It is thought of as the highest retail price.

• Pay less than MSRP – it’s a DEAL!

• Pay more than MSRP – you’re paying too much!

• Datacomp’s MSRV sets an independent, local, retail value based on actual market sales.

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The Datacomp MSRV• Designed for financed, new home sales (chattel).

• Uses a market approach based on comparable new home sales transactions.

• Data provided by major lenders as well as cash and in-house financed transactions.

• Highly automated for speed and to keep cost low.

• Dramatically lower price than a USPAP appraisal.13


The Datacomp MSRV Report• Web-based service designed for multiple devices and

ease of order entry.

• Takes just 5-7 minutes to order a valuation for a stock or custom home with no knowledge of industry jargon.

• Appraiser-reviewed for accuracy and reliability.

• Simple, easy-to-read, valuation report.

• Priced at $49 and completed in less than 24 hours.

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The Datacomp MSRV Report

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The Datacomp MSRV• The official Datacomp MSRV Report will be

ordered by the lender and will be provided to the borrower three days prior to closing.

BUT…

• There has been a lot of interest from communities and retailers to obtain their own valuation in advance of submitting a deal to a lender.

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The Datacomp Pre-Sale MSRV Certificate

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Turning Lemons Into Lemonade!• MSRV valuation pre-sale

Certificate designed as a sales tool for retailers and communities.

• Displayed in the home to show value to the customer.

• Establishes an Independent Retail Price to give buyers confidence in the selling price of the home.

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Turning Lemons Into Lemonade!

• The same market-based valuation approach, appraiser review, and ease of use.

• Simple, easy-to-read, independent valuation certificate.

• Introduces the concept of a valuation that will be received from the lender, so it is a non-event when it happens!

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Turning Lemons Into Lemonade!

• It’s a competitive advantage at the point of sale.

• Provides insight into the value that the buyer will receive from the lender.

• Results in more sales at higher margins.

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Turning Lemons Into Lemonade!• Pre-Sale Certificates available now.

• Priced at $39 through at least the end of the year.

• Same valuation process as official MSRV that is ordered by the lender.

• Go to orders.datacompusa.com, login, enter payment, enter subject home data, done!

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Datacomp MSRV: Select Type of MSRV

Datacomp MSRV: Order Entry

Datacomp MSRV: Order Entry

Datacomp MSRV: Upload Documents

The Datacomp Pre-Sale MSRV Certificate

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Why a Pre-Sale Valuation?• Gives the retailer insight on how a new home is

going to value BEFORE the sale.

• Introduces the valuation requirement to the buyer BEFORE they get it from the lender.

• Same new home valuation the lenders are using.

• It’s an inexpensive “insurance” policy.

• Buyers are saying “Let Me See the MSRV”27


What If A Home Won’t Value?

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If a Home Won’t Value...• The lender can still finance it based on their

advance formula.

• The customer can still go forward with the purchase.

• Worse case scenario: you might need a standard Datacomp appraisal.

• Standard appraisal uses more comprehensive research by an experienced appraiser.

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How Are Things Going So Far?• Datacomp has valued over $80 million worth of new

homes to date using the MSRV service.

• Client feedback on ease of use and the quality of valuations has been extremely positive.

• Over 25% of MSRVs are pre-sale certificates being ordered by retailers.

• Turning around most orders within 4 hours vs the 24 hour turnaround originally promised.

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The Importance of Comps


The Importance of Comps• Help us ensure a robust database of comparable

new home transactions for each market.

• Report cash sales, in-house financed transactions and deals NOT financed by one of the 4 national lenders that are already providing data.

• Submission form setup at the MHICAS.org website or download a spreadsheet template to submit data in bulk.

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MHICAS: Instructions for New Home Sales Entry

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MHICAS: “Report a New Home Sale” Page


Questions?or email them to [email protected]

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mailto:[email protected]


Don’t Forget to Complete the Conference Survey

Include your name on the survey for a chance to win the Grand Prize!

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Turning Lemons Into Lemonade


Real Estate

Turning to Lemons Into Lemonade: Profiting from the New Manufactured Home Appraisal Rules