Mobile home appraisals are carried out in accordance with a variety of rules and regulations. The results are then written up in order to provide an overview of the mobile home for the potential customer.
There are a number of steps to go through when carrying out mobile home appraisals, including visually inspecting the surroundings of and condition of the mobile home in question. If the comparable sales approach is to be used, the appraiser should also obtain comparable sales figures for recently sold properties.
How then should you choose an appropriate method for carrying out mobile home appraisals?
As mobile home appraisals need to provide an unbiased estimate of the value of the property, the absorption rate is especially important. The absorption rate is the length of time needed to sell houses in any given locality. An absorption rate of more than six months indicates an oversupply of houses in an area and will reduce the value of the home being appraised.
The comparable sales approach to mobile home appraisals also takes into account the price of recently sold comparable properties. Comparable properties are also sometimes called bench marked properties. The price of the property being appraised will be the same as the approximate average of the prices of these bench marked properties. Since no two properties are alike, however, the appraiser will need to make adjustments as appropriate in order to arrive at a fair market value.
Another method of doing mobile home appraisals is the cost approach. This is suitable for homes where the owners own the land on which it stands as well as the house itself. The cost of the land is estimated using the comparable sales approach with the mobile home considered as an improvement made to the land. The cost of depreciation of the mobile home is subtracted and the resulting figure is then added to the cost of the land.
Income capitalisation for mobile homes is equal to the net operating income divided by the capitalisation rate and is calculated as follows: NOI = Gross Rent – Vacancy Charges – Operating Expenses + Operating Income.