Hi everyone. I have been talking with an owner about buying her park for some time now and before she is prepared to sell, she is convinced that she needs to get an appraisal done. She mentioned that she looked in the phone book and found a few appraisers, but when I look on their websites, none mention MHPs and most are residential appraisers with some commercial experience.
My question is, am I better off letting the owner use an inexperienced appraiser or should I introduce her to more experienced appraisers? Which is more likely to yield a lower value?
Some things to consider:
Park rent is about $200 higher than the other area parks, yet it is of a much higher quality and in a much better location than the other parks. So the rent is warranted in my opinion.
My very limited experience is appraisers tend to be sticklers on market rents. For one of my parks I’ve never had a home move out, and have enormous demand, yet when I went to refi the appraiser determined my lot rents were ‘too high’ relative to the market and reduced my lot rents by 15% while doing the appraisal.
A more experienced appraiser is probably more likely to reduce the park’s lot rent while doing the appraisal to ‘bring it to market’ so for that reason I’d lean toward someone more experienced.
That’s a tough one but I lean toward agreeing with @Noel_S. I just had an appraisal done by an experienced appraiser for a cash-out of a park. My rents are 20% or so higher than other parks in the area and the appraiser (almost apologetically) said he had to give a lower value to my park because nearby comparable rents were lower.
If there are recent sales comps for parks in your area that shift the purchase price in your favor, you should make sure that whoever appraises the park knows about them.
More often then not, the inexperienced appraiser will under value the park. They will take the expenses verbatim because they don’t know better. For example, the owner’s son being over paid for doing nothing, owner’s other personal expenses like vehicles, travel, life insurance, etc. Also, the cap rate will be completely made up. Good chance the owner’s appraiser will be a benefit to you.