…hanging upside from the flagpole of their bank. - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on October 06, 2003 at 12:31:22:
There are two kinds of motivated sellers…one is ‘motivated’ to dump his problems on you and the other is ‘motivated’ to give you a good deal. This is the former. There is NO deal here.
Its free equity that you are looking for, not a mobile with a loan on it that far exceeds its wholesale value as is probably the case here. The seller finally figured out that he had a problem and he is looking for a buyer who is just as ignorant as he is (was). He is only motivated to help himself not you. This is NOT what we mean when we refer to finding a motivated seller.
Most mobile homes are like cars. When you drive them out of the dealer’s lot they lose 29% of their value on the first day. Mobilehomes tend to lose about 40%-50% of their cost when first sold. Note that I said ‘cost’ not ‘value’. I wonder why they call them ‘dealers’? You never get a deal from them.
When a new mobile home is manufactured and sold there are a number of costs that do not directly contribute to its value. The factory’s profit, the salesman’s profit (and costs), the mover’s transporttion fees and the setup costs are all costs that do not contribute to value. There are also loan fees, sometimes back interest and back space rent, etc, that do not add one valuable feature to the mobile home itself. This is how retail buyers get upside down on their loans. Naturally they want to unload their problems on someone else with offers like, “you can have it free, just take over the payments”. Big deal. Who wants a $15k mobile home with a $50k loan on it? These sellers aren’t true motivated sellers. If they were they would be willing to ‘pay down’ their loans to the true wholesale value. They rarely do. They are usually very indignant if you ask them to pay their loan down $20k-$40k to reach the fair marker wholesale value of their mobile home, so you can ‘just take it over’
You need to learn to distinguish between the putative motivated seller and the true motivated seller. The first one really isn’t motivated at all. They are just distressed and shocked to find themselves hanging upside down from the flagpole in front of their bank.
Bankers know all of this. Not to worry though. Many mobile home dealers lure lenders down this path with recourse loans. If the loan goes bad the dealer who may have had a 30% profit in the sale just eats the loss. With a decent downpayment there often isn’t much loss for the dealer anyway. He just has to forgo a profit that he hasn’t earned yet. That may be why so many lenders won’t finance older used mobile homes(Overpricing and non-recourse in the event of default).