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by Shawn P. Mullins

Shawn Mullins photoEvery so often I am reminded of the story of the monkey who reaches into a jar for a shiny object. The monkey picks up this object and in doing so makes a fist with his hand. The only problem is that the monkey cannot get his hand out of the jar when making a fist. Now in the mind of the monkey, the only solution to the problem is to let go of the shiny object and thereby forfeit his reward in exchange for getting his hand out of the jar. Although there is a better solution – turn the jar over and let the shiny object fall out – all he knows is that the shiny object is in his hand and he isn't going to let go of it, regardless of what other options exist. In the end, he gets neither his desired reward, nor any lessons learned.

So it is with this concept in mind that I wonder, are we perhaps forcing our buyers into a similar mindset and no-win scenario? Most buyers have a budget for what to spend on their home and this budget is partly a result of what they can qualify for on the loan. Sounds like a reasonable enough scenario. Where it gets difficult however, is when the buyer's list of options exceeds their qualification criteria. The result is a buyer who feels forced to choose between the flash, bells and whistles of granite countertops, tile floor or other décor amenities vs. nuts and bolts options such as 2x6 walls, higher grade insulation, better windows, high efficiency HVAC, etc.

Our reality is that most customers, when they can't see, touch, feel and become visually aroused over a product, are much more willing to exchange that product for one that does excite them visually. It is this mentality that creates scenarios where customers buy inferior performing products simply on the bases of the flash and sparkle these products display on the outside. As a retailer, are you so anxious to get the contract signed that you miss the opportunities to show your customer how they can have both the flash and the substance? Consider yourselves for a minute. If I were to show you how you could buy a $100,000 home with the exact same down payment, loan ratio qualifications and net PITI + operating expenses as say a $90,000 home, wouldn't you want to know how? Wouldn't you want to take advantage of what that extra $10,000 could buy you in upgrades?

This is possible through an instrument commonly referred to as an Energy Mortgage (http://www.resnet.us/mortgages). There are basically two types of Energy Mortgages, Energy Efficiency Mortgage (EEM) for new construction and Energy Improvement Mortgage (EIM) for existing properties needing energy efficiency upgrades. Most major lending and underwriting institutions offer these types of mortgages, including: HUD, VA, Freddie Mac and Fannie Mae. These mortgages take advantage of a process that does the following:

  1. Isolates energy efficiency features that are above minimum current code.
  2. Models a home's energy use with and without these features.
  3. Quantifies the dollar value in terms of energy/utility dollars (per geographic region) of having or not having these energy efficiency features installed.
  4. Certifies that the cost to install such energy efficient upgrades, including interest and the time value of money is less than the annual and monthly net savings to a homeowner in their energy bills.

Because of this detailed process and third-party certification, lenders offering EEMs and EIMs will waive the effect of any additional down payment or qualifying ratio that would normally be imposed by adding these options into the price of a home. Therefore, while it is true that a homeowner's monthly payment will increase because of the higher principal balance, their total house payment plus energy use costs will be equal to or less than if they had not installed the energy upgrades. In my experience, it is almost always a "less than" scenario, which means the buyer is actually making money on the deal.

Part of the qualification process does involve a third-party HERS rater (Home Efficiency Rating Systems rater) in order to qualify the improvements. Depending on your region, the size of the home and how competitive your market is, the cost for this rating will typically fall between $300 and $600. I would expect most manufactured housing product ratings would easily fall below the $500 mark. This is especially true if you can develop a relationship with a particular HERS rater and thereby get some preferred pricing. It is important to know that the cost for the HERS rating can also be rolled into the mortgage. Being a HERS rater myself and having worked with several such EIM transactions, I can tell you that they are a very under-utilized product. Most people aren't even aware of them. Once they see how easy it can be to "have their cake and eat it, too," they are easy converts.

From a practical perspective, I see these loans as a significant retail opportunity. There is no reason that a retailer could not take any new home, of any specification and any price point and separate out the basic home from the upgraded home. With this approach, the retailer now has the tiered pricing and options necessary for the HERS rater to model the energy efficient upgrades. Over time you may very well find a model of home that sells well and consistently qualifies for the EEM with a given set of upgrades. Now how easy would that be to turn?

So the next time a potential buyer walks into your store, you can hold back these costs from their loan pre-approval amount and let the buyer spend this money on granite countertops, wood floors, upgraded lighting, furniture packages or even just to upgrade to a bigger home. The 2x6 walls, upgraded insulation, upgraded HVAC, upgraded Energy Star appliances, etc. are now tacked on top of everything else in a sort of VIP package.

I'm sure any other HERS raters out there will be quick to point out that what I have described herein is a very simplified perspective of the process. That is exactly the point. From a consumer or retailer point of view, this is not all that cumbersome. The rating itself is a technical and involved process, but that is specifically what the rater is getting paid for. A good rater will know what is a reasonable cost for a specific energy efficiency upgrade and what the likelihood is that such an upgrade will result in a positive impact on the rating. If for some reason the rating doesn't calculate out the first time, the rater can combine different elements until it does. If you need help finding a rater in your area, go to http://www.resnet.us/trade/find-raters-auditors.

As to my final point of today's discussion – start this process early! As soon as your buyer is confident on their model selection and specifications, and you have some type of a pre-approval, you want to get your HERS rater involved. He or she can do a preliminary rating off of floor plans and building specifications, thus allowing time to tweak the home's configuration if necessary. If you wait until the end of the process when the home is about to be delivered, you very well may have turned an opportunity into a liability. With just a little forethought we can all be green and make some green in the process – legitimately!

###

Shawn P. Mullins has worked in the manufactured buildings industry for over 22 years. Over the course of his career, he has held various leadership posts including: Engineering support and management, Estimating Management, and Operational support positions. His product experience covers a wide spectrum including: HUD, IRC, international and man camps, ANSI, light commercial, etc. Mr. Mullins currently holds a BSBA/Operations Management degree and is currently pursuing a MBA with a focus in Project Management. Industry-held positions include Board of Directors, and Government Relations & Zoning Committee membership for the Arizona Housing Association. Other industry-related pursuits include Owner & Principal Managing Member of Earthwise Engineering LLC, an energy-efficient design, consulting, and HERS-rating company. Mr. Mullins welcomes comments, feedback to his articles and industry connections via This e-mail address is being protected from spambots. You need JavaScript enabled to view it or www.earthwise-engineering.com

Daily Business News Briefs

Work Stops on Massive Modular Housing Project in Big Apple; Ratner, Skanska…

Work Stops on Massive Modular Housing Project in Big Apple; Ratner, Skanska at Odds

Following a series of stories MHProNews  posted regarding the development of the 32-story, modular housing project by Forest City Ratner and construction partner Skanska intended for Brooklyn’s Barclay Center, work has come to a halt in a bitter dispute over tens of millions of dollars in cost overruns. Skanska idled 157 workers in the ...

02 Sep 2014

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Michigan MH Residents Prepare for Summer Storms

Michigan MH Residents Prepare for Summer Storms

The Michigan Manufactured Housing Association (MMHA) reminds occupants of system-built homes that potentially damaging summer wind and rain storms are at their peak and residents should ensure that roofs are in good condition and rainwater is directed away from the foundations. While manufactured homes (MH) are built to strict federal standards...

02 Sep 2014

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New Home Sales Fall Second Consecutive Month

New Home Sales Fall Second Consecutive Month

According to numbers released by the U. S. Department of Housing and Urban Development (HUD) and the U. S. Census Bureau, sales of newly-built single-family homes dropped 2.4 percent to a seasonally-adjusted annual rate of 412,000 units in July. Initially, according to the National Association of Home builders (NAHB), sales fell 8.1 percent in...

02 Sep 2014

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Modular Multifamily to Rise in Michigan

Modular Multifamily to Rise in Michigan

The Lansing (Mich.) City Council has approved plans for developer Harry Hepler to build 200 modular apartments on the city’s northside, as lansingstatejournal.com informs MHProNews. Summit Street Development LLC has received a conditional use permit to build housing on the property that is zoned heavy industrial. Mr. Hepler says Metro Flats...

02 Sep 2014

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Modular Workforce Housing Planned in Mississippi

Modular Workforce Housing Planned in Mississippi

The possibility of up to seven billion barrels of oil in the Tuscaloosa Marine Shale formation in southwest Mississippi and central Louisiana has led the McComb (Miss.) Board of Selectmen to vote in favor of annexing 40 acres for the construction of a 535-unit modular workforce community. Shale Lodge will include a cafeteria, laundry and […]...

01 Sep 2014

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Hoarding along with dozens of cats found at home in MHC

Hoarding along with dozens of cats found at home in MHC

“Is there an unwritten rule that every third MHCommunity has someone who hoards and/or has a bunch of cats?” quipped manufactured home industry consultant and publisher, L. A. “Tony” Kovach. The comment flowed from the discovery of dozens of cats seized from the Niagara Mobile Home Park in Newfane, NY. “The stench coming from a […]...

01 Sep 2014

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Manufactured Housing’s Labor Day 2014

Manufactured Housing’s Labor Day 2014

Wikipedia says: “Labor Day in the United States is a holiday celebrated on the first Monday in September. It is a celebration of the American labor movement and is dedicated to the social and economic achievements of workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and […]...

01 Sep 2014

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William ‘Bill’ Steenberg, Award winning Steenberg Homes founder, Passage

William ‘Bill’ Steenberg, Award winning Steenberg Homes founder, Passage

William “Bill” Steenberg died Sunday, August 24, 2014, in Ft. Myers Beach, Florida, after a short, courageous battle with cancer. His fiance Wendy was by his side when he passed away. Bill’s children, Julie, Shelly, and Jeffrey and his granddaughter, Miranda, visited a couple weeks earlier in Florida.  Bill founded and owned ...

01 Sep 2014

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Equity LifeStyle’s stock hit record high as August ends

Equity LifeStyle’s stock hit record high as August ends

The glow of investors and commentary for Equity LifeStyle Properties Inc. (NYSE:ELS) hit a peak as August drew to a close. ELS witnessed the stock hitting a record high on Friday. The stock traded as high as $45.81, up 39 cents from yesterday’s record closing price of $45.42. The Street, Trade-Ideas  and Chicago Business  were among […]...

31 Aug 2014

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INC names mancamp provider Reliant Asset Management 3rd fastest growing pri…

INC names mancamp provider Reliant Asset Management 3rd fastest growing private business

Barry Roman is the co-founder of Reliant Asset Management, a provider of mancamps in ND, Texas, Canada and other high demand housing markets. Roman says his modular building company’s revenues rose 55,000 percent in three years, to just over $85 million. Inc Magazine named Reliant to their annual list of high flying companies. Reliant is ...

30 Aug 2014

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Manufactured Housing Stocks Rising before Labor Day Weekend

Manufactured Housing Stocks Rising before Labor Day Weekend

The Dow slipped, while other U.S. exchanges rose and most tracked stocks went up in advance of the Labor Day weekend. Dow 17,063.88 -15.69 (-0.09%). Nasdaq 4,572.95 +15.25 (+0.33%). S&P 500 1,999.93 +3.19 (+0.16%). Yahoo! Finance’s Manufactured Housing Composite Value: 831.1. Today’s Change: +0.12%. Affiliated Managers Group (AMG)...

29 Aug 2014

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Featured Articles and Reports - September 2014 Vol. 5 No. 12

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UnBranding - a Key to Unlocking the Door to more MH Sales?

UnBranding - a Key to Unlocking the Door to more MH Sales?

by L.A. "Tony" Kovach Years before Palm Harbor Homes went into bankruptcy and eventually ended up with Cavco Industries, Palm Harbor ran TV ads showing beautiful, “residential style” manufactured homes. Read more

MARKETING

“Should We Be a More Aggressive Breed?”

“Should We Be a More Aggressive Breed?”

by Nadeen Green, JD Many if not most manufactured housing folks truly make the effort to be compliant with the Fair Housing Act and are well aware of the need to... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

Earthquakes & Other Disasters: Are you Prepared?

Earthquakes & Other Disasters: Are you Prepared?

by C. William Dahlin, JD  As reported by major media outlets, a 6.0 earthquake hit Northern California  in late August on a Sunday. Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

Pool and Spa Safety

Pool and Spa Safety

by Kathleen Bianculli While the end of summer is drawing near and pools in some areas will be closed for the season, in many areas of the country the pool never... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

“How Sweet the Rose” - Senior Housing Communities - Advertising Do's and Do…

“How Sweet the Rose” - Senior Housing Communities - Advertising Do's and Don'ts

by Nadeen Green, JD While a rose may smell sweet no matter what it may be called, names are in fact labels. Using the wrong label when you market your senior... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

A Breakthrough in Manufactured Home Loan Financing! Discover the One Step P…

A Breakthrough in Manufactured Home Loan Financing! Discover the One Step Program!

by Jerry Bretton In our previous report on SUN, we mentioned that Mountainside Financial has been making loans on manufactured and mobile homes for 14 years. Read more

FINANCING

Are HUD Practices Making Manufactured Homes Less Affordable?

Are HUD Practices Making Manufactured Homes Less Affordable?

by Ron D'Ambra Let's start by saying that, from a business perspective, MORE government involvement is not always viewed as a good thing. Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

3rd Annual Open Space Pace - September 20th, 2014 – Freehold New Jersey

3rd Annual Open Space Pace - September 20th, 2014 – Freehold New Jersey

by Sam Landy Dear Friends, UMH Properties and Monmouth Real Estate Investment Corporation (MNR) sponsor The Open Space Pace at Freehold Raceway September 20, 2014. The event begins with a 10:00 am parade of... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

A Cup of Coffee with… Sheila Dey

A Cup of Coffee with… Sheila Dey

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GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

5 Reasons for MHPros to Attend the 2015 Louisville Manufactured Housing Sho…

5 Reasons for MHPros to Attend the 2015 Louisville Manufactured Housing Show

by Dennis Hill We could name more than 5 reasons why manufacturers and exhibiting companies as well 5 reasons why attendees from the ranks of retailers, communities, builder developers, installers and... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

The High Cost of Low Volume MH Sales for Retailers, Communities, Factories …

The High Cost of Low Volume MH Sales for Retailers, Communities, Factories and others

by L. A. “Tony' Kovach We will demonstrate that the cost of not selling more homes is always high.  Capital is tied up in your inventory, location, general overhead, personnel, marketing,... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

Lead, manage or get out of the way

Lead, manage or get out of the way

by Tim Connor, CSP The world is changing at the speed of light. Everything is being touched by this accelerated pace of change. No person, entity, industry, profession, and no part... Read more

MANAGEMENT

Knowledge is Potential Power - 4 Steps and 91 words = Enhanced Manufacture…

Knowledge is Potential Power - 4 Steps and 91 words =  Enhanced Manufactured Housing  Professional Success Infographic

by L. A. “Tony” Kovach We'll share an infographic that explains in 4 easy steps how any MH Industry professional can learn more to earn more. Here is the infographic... Read more

MANAGEMENT

ZigOn Qualities of Success

ZigOn Qualities of Success

by Zig Ziglar Dr. William "Bill" Ross was truly one of a kind and was known for his sense of humor and his zest for life. He had exuberance for... Read more

PERSONAL REFLECTIONS, MOTIVATION and INSPIRATION

Four Ingredients for MH Sales Success

Four Ingredients for MH Sales Success

by Tim Connor, CSP There are four significant areas when it comes to consistent high sales performance. They are: Self-image and self-esteem. Read more

SALES

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MHLIVINGNEWS.COM FEATURED HOME OF THE WEEK

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Press Releases

2015 Louisville Manufactured Housing Sho…

2015 Louisville Manufactured Housing Show is filling up fast and early!

Attendees, mark your calanders now, pre-registration will open on October 1, 2014. Exhibitors, Reserve your space now.  See download linked here.

the MHMSM Team 02 Sep 2014 Corporate Press Releases

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RV/MH Heritage Foundation Inducts the Cl…

RV/MH Heritage Foundation Inducts the Class of 2014 into RV/MH Hall of Fame

(Back row l-r) Thomas "Tom" L. Kern, Style Crest Enterprises; Ed Evans, EPM; Gary McDaniel, YES! Communities ; Richard "Dick" King, King Insurance (second row row l-r) Barry Cole, Manufactured Housing Insurance Services; Bob Livingston, Good Sam; John D Roba, Roba and Associates (front row l-r) Mrs. James F Shields. accepting on behalf of her husband,James F Shields (deceased), Pan Pacific RV Centers; Debbie Brunoforte, Little Dealer, Little Prices and Peter B Orthwein, Thor Industries. ELKHART, Ind., August 5. 2014 -- The Class of 2014 was inducted into the RV/MH Hall of Fame (Hall) last night in Elkhart, Indiana, in a gala ceremony before a record breaking crowd of more than 440 family members, friends, and colleagues from across the country. The Class of 2014 includes: Debbie Brunoforte, Little Dealer, Little Prices;...

the MHMSM Team 05 Aug 2014 Corporate Press Releases

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Steve Lefler - Modular Lifestyles and Ne…

Steve Lefler - Modular Lifestyles and Newport Pacific – Successfully Gaining Acceptance for Super Energy Saving, Green Manufactured Homes

Learn more at the article linked here, or by calling Steve Lefler, Vice President of Modular Lifestyles, Inc., a division of Newport Pacific Family of Companies at Ph. (888) 437-4587. Email steve@modularlifestyles.com. Steve is a Dual DRE and HCD Salesperson. Advanced Green Building Professional. CEC Solar Wind Retailer/Installer. http://www.modularlifestyles.com ##

the MHMSM Team 01 Aug 2014 Corporate Press Releases

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Sun Communities, Inc. to Acquire America…

Sun Communities, Inc. to Acquire American Land Lease Manufactured Housing Portfolio from Green Courte Partners for $1.32 Billion

Increases Sun Communities' portfolio to 245 communities totaling nearly 90,000 sites in 29 states with a combined enterprise value of approximately $5.1 billion Southfield, MI, July 30, 2014 - Sun Communities, Inc. (NYSE: SUI) (the "Company") today announced that it has entered into an agreement to acquire a portfolio (the "ALL portfolio") from Green Courte Partners, LLC ("GCP") sponsored funds. The ALL portfolio consists of 59 manufactured home communities, including those acquired from American Land Lease, Inc. by GCP in 2009. The communities comprise over 19,000 sites in eleven states, including nearly 11,000 sites located in Florida. Over 14,000 sites, or 73%, of the ALL portfolio are age-restricted.  In connection with this transaction, the Company will assume GCP's right to acquire an additional manufactured home community pursuant to a binding purchase...

the MHMSM Team 31 Jul 2014 Corporate Press Releases

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Mountainside Financial launches Dodd-Fra…

Mountainside Financial launches Dodd-Frank compliant non-MLO, MLO SUN Manufactured/Mobile Home Direct Loans and Refinancing

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the MHMSM Team 08 Jul 2014 Corporate Press Releases

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