Mobile home owners and mobile home sellers are average people. Many of them are upstanding and hard-working folks just like you and me. Sometimes even goodhearted mobile home sellers can do things that may seem frustrating or downright malicious.
Over the years I’ve been fooled many times. Some of these errors have been costly, and every single one has been valuable as a well-learned lesson. Human psychology and forgetfulness may play a large role in why some sellers omit certain truths. In short there is one thing you can almost always count on regarding a mobile home seller: they want the most money they can get in the shortest period of time possible.
Below is a short list of 4 ways mobile home sellers may occasionally mislead you while you are trying to purchase their unwanted mobile home property inside a mobile home park.
How Mobile Home Sellers Can Be Tricky?
1. Selling Out From Under Your Offer (Likely)
Over the years I’ve met so many great mobile home sellers and buyers. Occasionally I have been able to negotiate win-win purchase offers to close investment mobile homes. While the process from start to finish may only take a small handful of hours of time consisting of meeting with, understanding, chitchatting and negotiating with these sellers, it can be heart-wrenching when a seller agrees to your price and terms and then suddenly sells to another buyer prior to your closing date.
Realize that in many states a mobile home is not sold until the physical paper title is signed by both seller and buyer and transferred into the new buyer’s name. Even with a purchase and sale agreement, verbal agreement and handshake between you and a seller, the seller can almost always sell their title to someone else before your closing.
What to Do: As soon as you and the seller reach a win-win purchase agreement, close on the property. Remember that you should not be making purchase offers until almost all of your due diligence is complete. Once your purchase offer is accepted, aim to close in the next 1 to 48 hours.
2. Undisclose Repairs the Property Requires (Likely)
Perhaps one of the biggest and most prevalent mistakes a mobile home investor can make is to be too trusting when it comes to believing a seller’s word about repairs needed to their homes. As an active mobile home investor, you should walk every square inch of the mobile home property, inspect and verify previous repairs made to the mobile home, track all leaks to their point of origin and determine repairs needed for yourself.
If the seller tells you something that you or your inspector determines is incorrect or untrue, this may open your eyes to other issues the seller has either maliciously or unknowingly incorrectly told you about.
What to Do: If you are not working with a seasoned mobile home partner or teacher, then hiring an experienced mobile home inspector can be of tremendous value. Follow this inspector around and learn exactly what he or she looks for while inspecting mobile home properties. Additionally, you will want to test and make sure all appliances are in the condition the seller states.
3. Duplicate Titles (Least Likely)
While the last two bullets above may simply be considered sellers being forgetful or acting in a way that best suits their needs, this bullet and the bullet point below are truly malicious acts in order to increase a seller’s profit.
In many states if a seller loses the physical copy of their original paper title, they may simply go down to the local titling office and obtain an original duplicate title. This duplicate title is just as good as the original and will allow the seller(s) to transfer ownership from them to their new buyer. If a mobile home owner wants to, they can go down daily and obtain multiple copies of original duplicate titles, thereby having more than one title to “sell” to well-meaning new buyers.
In rare cases I have heard of a mobile home owner selling their home to multiple parties in the same week or day. This is accomplished by the owner having multiple titles to give out to approved or non-approved buyers in exchange for cash. In these cases the seller can close with multiple buyers over the course of a few hours or days, take all the money and leave.
What to Do: The first person that makes it down to the local mobile home title transferring agency, in many states the local DMV or DOT, to transfer ownership into their name, corporate name or trust name is the new and legal owner of record. After you close on a mobile home, when not closing with a dealer, make sure to take all your paperwork to your local state office and have ownership placed in your control. Aim to do this with 24 hours of closing.
4. Undisclosed Liens (Less Likely)
The very first mobile home I purchased inside of a mobile home park had a private seller-financed lien on the property. This was not an official/recorded lien; however, it was a verbal agreement between the current owner/seller (the current owner is the sweet older lady I was buying the home from) and the previous seller. whom the current seller bought from. The current owner/seller still owed the previous seller over $2,000, which had not been paid. Due to the fact that the previous seller did not place a physical lien on the property/title, I was able to transfer ownership from my seller into my personal property trust — and therefore into my control without even knowing about this money owed.
Soon after closing I received a handwritten letter from the previous seller posted on the mobile home door to alert me that they were still owed $2,000 due from my seller, and they were going to follow through with legal action to collect this money from me. Needless to say, as a 20-year-old kid, I was scared and confused. I talked with a friend and eviction expert who told me if the title was currently in my name, I was likely safe. The previous seller made the huge mistake of trusting the new buyers to pay them without placing a lien on the home.
What to Do: While this error did not affect me, I did feel bad for the past seller. She had trusted the sweet elderly lady buyer to pay her the money they agreed on; instead, the seller got stiffed all this equity when the elderly lady sold the home to me. Since then I always make the effort to ask every seller if he or she owes anyone any money on this property, even if a lien is not recorded on the physical title. If there is a lien, recorded or otherwise, I make sure to pay these parties directly before giving the seller any compensation.
Investors Beware of How Mobile Home Sellers Can Be Tricky
In conclusion, it is so important to know everything you don’t already know. The reason I can sit here and write the advice and stories above is because I have been misled and fooled too many times in the past. It is important to note if/when this happens to you, it is nobody’s fault but your own. As real estate investors, we must expect the unexpected and know that human psychology and human nature are part of the equation. Before investing in any property, make sure your due diligence is complete and every possible concern is addressed.
Love what you do daily,