What's it worth?

Murky pricing hurts consumers
in the manufactured housing industry

January 2005
PDF Format

Executive Summary
We Recommend

Report:
The problem with murky pricing
Manufactured Housing: The recent shakeout
Murky pricing - part of the problem
Long-term solutions
Sticker prices
Appraisals
Recommendations

Sidebars:
Deja-vu all over again
Fifty years of auto sticker pricing
Real estate: Appraisals are the norm
$42,000, $34,000, or $25,000?

Director
Reggie James

Author
Kevin Jewell

Editor
Kathy Mitchell

Design
Amanda Frayer

For more information, contact:
Suzanne Henry,
Policy Associate
512-477-4431 x121
shenry@consumer.org

Kevin Jewell,
Policy Associate
512-477-4431 x125
jeweke@consumer.org

Rafael Ayuso,
Media Director
512-477-4431 x114
ayusra@consumer.org

Click here to find out more about manufactured housing.

Executive Summary:

Murky pricing in the manufactured housing industry hurts consumers, lenders and communities. In this report we document these problems, and suggest solutions to the pricing
problem that have been adopted in the real estate and automotive markets.

Our survey of recent purchasers of manufactured homes found a high degree of variation in the prices paid for the same homes. Almost a quarter of respondents paid more than 5% above the average price paid for their model of home. With a 5% downpayment, this starts them underwater on the loan.

We also found:

• It's worth shopping around: Consumers who shopped at more than 3 dealerships paid 9.1% less than consumers who shopped at 3 or fewer.
• Independent financing pays: Consumers who financed their homes through the dealer paid 10.9% more for their home than consumers who bought the same model for cash or used an outside lender. On an average home ($47,037 in our survey), that is a $5,144 higher price.
• Knowledge is power: First time homebuyers paid 8.2% more on average than experienced homebuyers, while consumers who felt they knew "a lot" about manufactured homes paid 4.1% less than other homebuyers.

We recommend:

• Invoice based – sticker prices. Sticker prices make it easier to shop – and shopping around saves consumers' money. Seventy-two percent of survey respondants thought that sticker prices would make the purchase process easier, but only 26% saw prices posted when they shopped for a home.
• Independent financing – Corporate consolidation of sales and financing lead to higher prices. We recommend consumers shop for their loan separate from their home, and home ownership programs should require the use of independent lending companies.
• Appraisals – The conventional real estate housing market has realized for years that independent checks are needed on what is often a family's largest investment, the home. We recommend policies to encourage the use of appraisals in the manufactured housing market.

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