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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

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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Judge says MH class-action lawsuit heading for trial

Judge says MH class-action lawsuit heading for trial

Following up on our previous report on Moscow, Idaho’s Syringa Mobile Home Park legal fracas, Latah County 2nd District Judge John R. Stegner has told attorney’s representing community owner Magar E. Magar and roughly 140 residents that the case is heading to trial to settle the claims and damages. Elizabeth Rudd of the Tribune  tells ...

29 Aug 2014

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Allegations of Flooded, Fixed, Flipped ‘Mobile Homes’ hit state, internatio…

Allegations of Flooded, Fixed, Flipped ‘Mobile Homes’ hit state, international news

The City of Federal Heights is changing building inspection rules in response to a televised investigation in a manufactured home community by 9Wants to Know, exposing safety concerns when flooded “mobile homes are resold to unsuspecting families,” NassauNewsLives tells MHProNews. Hundreds of flood damaged homes were sold rather than scraped. Tho...

29 Aug 2014

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Freddie Mac’s new Manufactured Housing finance program orignated by Walker …

Freddie Mac’s new Manufactured Housing finance program orignated by Walker Dunlop

The new Freddie Mac manufactured housing community (MHC) finance program announced last spring has been originated by Walker & Dunlop (W&D). The loan was for $10.5 million on Longhaven Estates, an MHC in Phoenix, AZ. The financing was secured for Cobblestone Real Estate, LLC, based in Oak Brook, IL, and Tricon Capital Group, based in...

29 Aug 2014

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Canadians Investing Large in U.S. Housing Markets

Canadians Investing Large in U.S. Housing Markets

“In the U.S., given the affordability and the fact that prices in the suburbs went down more significantly than in the cities you will see more and more options and opportunities outside big cities,” said Benjamin Tal, Canadian Imperial Bank of Commerce (CIBC) analyst. With Canadian markets hot – and some fear over-heating – the [...

29 Aug 2014

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Manufactured Home Community Rent Control on Public Meeting agenda

Manufactured Home Community Rent Control on Public Meeting agenda

The City of Santa Clarita, CA, will host three public comment meetings to discuss draft updates to Santa Clarita Municipal Code 6.02, the Manufactured Home Park Rent Adjustment Procedures. Meetings are open to the public, as well as to residents of manufactured home communities, business owners and managers. The City of Santa Clarita and...

29 Aug 2014

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“The Big One” Cyber Attack coming? Markets and MH Composite all slide

“The Big One” Cyber Attack coming? Markets and MH Composite all slide

Big banks are poised to earn even more, cyber security experts say the ‘Big One’ is coming and fears from the Ukraine were among the factors cited by MarketWatch  moving investors. The three major indexes all lost ground today. Dow 17,078.87 -43.14 (-0.25%). Nasdaq 4,557.70 -11.92 (-0.26%). S&P 500 1,996.76 -3.36 (-0.17%). Yahoo! ...

28 Aug 2014

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New York Times reports Long Island “Mobile Home Park” resales command $1 Mi…

New York Times reports Long Island “Mobile Home Park” resales command $1 Million

It isn’t just Aspen, Colorado or Malibu, California that one sees 7 figure sales involving manufactured homes in ‘mobile home parks.’ The New York Times  reports to MHProNews  that living-in or getaways-to Montauk Shores manufactured home community on the East End of Long Island has been enjoyed by celebrities such as Andy Warhol ...

28 Aug 2014

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TV ad buys down, Online Digital Media Up, Marketers say

TV ad buys down, Online Digital Media Up, Marketers say

In a trend with implications for manufactured homes and other housing marketers, the U.S. TV industry has seen its first big drop in ad buys since the great recession of 2009. More is being allocated to internet based strategies, FT  tells MHProNews. The Wall Street Journal has previously reported on this trend, which according to Media […]...

28 Aug 2014

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“What Recovery?” Unemployed ask Federal Reserve at posh Jackson Hole confer…

“What Recovery?” Unemployed ask Federal Reserve at posh Jackson Hole conference

  Unemployment is a factor in home purchases that industry leaders such as Cavco Industries Chairman and CEO, Joe Stegmayer, cites as a reason for the current level of home buying. While millions have reportedly given up on finding work, others have taken their case public, with a recent example at the Federal Reserve’s Jackson […]...

28 Aug 2014

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Nimby Leading Loss of Affordable Housing? County buys MHC to close it

Nimby Leading Loss of Affordable Housing? County buys MHC to close it

De Kalb County, Illinois purchased to close “flood prone” Evergreen Village Mobile Home Park in Sycamore, the Daily Chronicle tells MHProNews. “I don’t have much of a choice, because we’re in a flood plain and I can’t fix houses,” the property owner, Frank Santoro said. “I have to accept what they are going to gi...

28 Aug 2014

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Featured Articles and Reports - August 2014 Vol. 5 No. 11

Prev Next Page:

Enhanced Manufactured and Modular Home Marketing and Sales Results

Enhanced Manufactured and Modular Home Marketing and Sales Results

by L. A. “Tony” Kovach American companies spend 2 billion a year on training. So why don't more manufactured and modular home (MH) retailers and communities invest properly in sales training? Read more

MARKETING

Bacon is so popular!

Bacon is so popular!

by Nadeen Green, JD Yes, indeed bacon is popular. An entire culture has been developed around this pork product in America, and once limited to breakfast and cheeseburgers, bacon has now... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

Architects Have a Duty of Care to Future Buyers of Condominiums for Neglig…

Architects Have a Duty of Care to Future Buyers of  Condominiums for Negligent Design

by Bill Dahlin, Esq. On July 3, 2014, the California Supreme Court decided the case entitled Beacon Residential Community Association v. Skidmore, Owings & Merrill. Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

A New Strategy for Community Owners

A New Strategy for Community Owners

by Steven Lefler Our society has labeled housing for as long as I can remember. I grew up believing “Site Built Homes” typically register in people minds to be “better built,”... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

The Impact of a 1.3 Billion Dollar Manufactured Home Communities Acquisitio…

The Impact of a 1.3 Billion Dollar Manufactured Home Communities Acquisition

by L. A. 'Tony' Kovach We've been reporting off and on for the past few months about rumors and tips that suggested that a deal in the $500 million to the... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

July, 1960 Popular Mechanics highlights Evolution of the Travel Trailer

July, 1960 Popular Mechanics highlights Evolution of the Travel Trailer

By Paul Bradley In a 1960 article titled, “Trailers Join the Country Club,” Popular Mechanics described the evolution of the travel trailer this way: “All this started years ago when people with... Read more

COMMUNITY MANAGEMENT & FAIR HOUSING (LEGAL)

CFPB Proposes New HMDA Requirements: Changes Exemption Threshold and Incre…

CFPB Proposes New HMDA Requirements:  Changes Exemption Threshold and Increases Required Disclosures

by D. J. Pendleton, JD On July 24, the CFPB published a proposed rule that, if later adopted, would change the reporting requirements for those who provide loans to purchase homes. Read more

FINANCING

The Lessons of Valdez - Some things are out of Whack!

The Lessons of Valdez - Some things are out of Whack!

by Ron Thomas, Sr. Let me start this topic with a strong statement. Although I am not what some might call an “environmentalist,” I do appreciate all of the efforts that... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

2015 Louisville and Tunica Manufactured Housing Trade Show Updates

2015 Louisville and Tunica Manufactured Housing Trade Show Updates

by Dennis Hill We keep getting calls from industry professionals and others regarding the Louisville and Tunica Manufactured Housing Shows for 2015. Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

An Opportune Moment

An Opportune Moment

by Bob Vahsholtz The road ahead is hard—the opportunities boundless. The whole housing industry is on the rocks, and the nation’s economy festers. The world is mired in debt; our most... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

A Cup of Coffee with… Tim Connor

A Cup of Coffee with… Tim Connor

1) Who, What and Where: (Your name, and your role/job title at organization or firm and where you are based.) Tim ConnorCEO of Connor Resource GroupDavidson, NC. Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

A Second Cup of Coffee with...Bill Matchneer

A Second Cup of Coffee with...Bill Matchneer

1) Who, What and Where: (Your name, what you've done in the federal government as it relates to manufactured housing and where you currently hang your hat). Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

A Cup of Coffee with… Paul Bradley

A Cup of Coffee with… Paul Bradley

1) Who, What and Where: (Your name, and your role/job title at organization or firm and where you are based.) Paul Bradley, President, ROC USA, LLC, Concord, NH. Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

Tech Talk! Don't You Hate - Viagra, Cialis or Zyrtec links - appearing on y…

Tech Talk! Don't You Hate - Viagra, Cialis or Zyrtec links - appearing on your  web browser or smart hand-held device? A Tech Fix Tip!

by L. A. “Tony” Kovach It is often NOT what you think! Not many self-respecting webmaster wants to plug certain drugs or other products on their website. Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

Wind Speed and Add-Ons to Manufactured Housing – Response to the NBC News …

Wind Speed and Add-Ons to Manufactured Housing  – Response to the NBC News Today Show report of testing by IBHS

by Ron D'Ambra After reviewing the NBC Today presentation, one could conclude that without question, of  course the roof would blow off when the carport roof failed, because they compromised the... Read more

GENERAL MANUFACTURED HOUSING INDUSTRY TOPICS

Strategic planning vs. strategic doing

Strategic planning vs. strategic doing

by Tim Connor, CSP Strategic planning is a vital management function. Over the years I have worked with a number of corporations facilitating their strategic planning events as well as following... Read more

MANAGEMENT

ZigOn Employment Security

ZigOn Employment Security

by Zig Ziglar We frequently hear that "people refuse to change because change is stressful." I would like to suggest that not to change is even more stressful because the world... Read more

PERSONAL REFLECTIONS, MOTIVATION and INSPIRATION

Who is your competition?

Who is your competition?

by Tim Connor, CSP There is a tendency for many salespeople to see their competition as only those businesses selling a similar product, service or idea. In other words, salespeople selling... Read more

SALES

Upcoming Events

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MHLIVINGNEWS.COM FEATURED HOME OF THE WEEK

Classifieds

Press Releases

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

Using online articles, banner ads and video, Mountainside Financial is announcing the launch of the evolution of their direct lending platform promotion. As a division of San Antonio Credit Union (SACU), Mountainside has a unique 14 year history of making direct to consumer loans on manufactured and mobile homes. Direct loans are often done in "partnership" with brokers, communities, Realtors ®, other housing professionals and manufactured home retailers who refer consumers to them. Anthony Ducharme, Direct Channel Manager for Mountainside, explained how they created their new SUN System with Manufactured Home Professionals in mind who needed a compliant process to navigate SAFE Act and Dodd-Frank regulations enforced by the Consumer Financial Protection Bureau (CFPB). "If you've been originating your own loans, talk to us. If you want to have a legally complaint...

the MHMSM Team 08 Jul 2014 Corporate Press Releases

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Call for Nominations for the RV/MH Hall …

Call for Nominations for the RV/MH Hall of Fame Class of 2015

ELKHART, Ind., -- The RV/MH Hall of Fame Selection Committee has issued a call for nominations for the Class of 2015. Darryl Searer, Hall president, said, "The Hall welcomes nominations from all RV and manufactured housing sectors -- manufacturers, dealers, campgrounds, housing communities, suppliers, user groups, trade media, associations, etc -- for the class of 2015 and beyond. "The nomination guidelines and forms available online atwww.rvmhhalloffame.org/pages/nominations.cfm." According to the guidelines, anyone can nominate a person to the Hall of Fame that meets the eligibility requirements. The only people who may not be considered are those who currently serve on the Hall's Selection Committee. To be eligible the nominee must be, or have been, an active participant in any segment of the recreation vehicle, campground or manufactured housing industries for a minimum of 25 years....

the MHMSM Team 08 Jul 2014 Corporate Press Releases

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Southwest Region Manufactured Home Commu…

Southwest Region Manufactured Home Communities Showing Rent and Occupancy Growth, Outpacing National Average, According to JLT & Associates’ 14-Year Market Summary Report

Grand Rapids, Michigan – JLT & Associates (JLT), the nation’s #1 market research company for the manufactured housing industry, today announced a 14-year summary report of its manufactured home community rent surveys for 6 Southwest markets. Recognized as the industry standard for manufactured home community market analysis for over 20 years, JLT Rent Surveys provide detailed research and information on communities located in 72 markets throughout the United States, including the latest rent trends and statistics, marketing programs and a variety of other useful management insights. The most recent JLT Rent Surveys for the Southwest region cover 261 manufactured home communities encompassing 69,728 homesites in Albuquerque, Greater Kansas City, Greater Phoenix, Las Vegas, Tucson and Salt Lake City. This summary report is based on rent and occupancy trends from 2000 to 2014. Findings...

the MHMSM Team 01 Jul 2014 Corporate Press Releases

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