Helping Consumers Become "Swindle-Proof"

The Complete Buyer’s Guide to Manufactured Homes and Land: How to find a reputable dealer and negotiate a fair price on the best kept secret in American housing, by John Grissim. Rainshadow Publications, 2003. 235 pages. $19.95 (Paperback).

The book is pitched to educated first-time home buyers, and presents a huge amount of sophisticated information about financing, land-home packages, construction quality, leasehold communities and above all, negotiating a fair deal. In view of Grissim’s many warnings about shady marketing and finance practices, buyers would be wise to understand as much as they can.

Chapter One’s title sets the tone: “Great Product, Checkered Past, Flawed System.” Grissim is impressed with new home quality, and says manufactured home life span is the same as for site-built units. Even minimum-price single-section homes get a nod of approval as “humble” units that can be “fine starter homes.” This is a book for consumers, not policy analysts, so the reader is invited to trust Grissim’s judgment instead of research citations about comparative quality. It’s the minefield of lightly regulated marketing and finance systems for manufactured housing that he especially wants to guide us through. “The home was a little slice of heaven, but the deal was from hell,” he writes.

There’s a readable summary of the industry’s origins and its spectacular boom-bust cycle in the nineties, culminating in today’s historic production slump and repo glut. This is housing’s Enron. Manufacturers, lenders and retailers are blamed equally for encouraging reckless subprime lending that busted the industry, dispossessing thousands of homeowners.

For all the good information, one would like to be a little clearer about just how much net benefit awaits at the end of the long and twisted shopping trail. Grissim writes “high-end manufactured homes are quite close in cost to comparable site-built dwellings.” Given the emphasis throughout on relatively high-end homes, more information is needed on the lifetime cost savings of manufactured housing, and how they vary in different markets.

Buyers are advised to avoid dealer financing if possible. Those who need the flexibility of subprime terms should supply their own credit score to several lenders and get written quotes. Rip-off schemes using prepaid interest points, credit life insurance, downpayment loans and extended warranties are explained in a lucid and accessible style.

Given that two-thirds of manufactured homes are now placed on private land, Grissim’s advice about buying and developing sites is especially welcome. There’s a detailed look at common deed restrictions that prevent manufactured home placements, a decentralized regulatory barrier to manufactured housing that will be hard to change. Grissim steers buyers toward general contractors to handle the many stages of preparing a land-home package.

Extensive and up-to-date information about the industry places buyer tips in context, and makes the book interesting even if you’re not in the market for a home. “Anatomy of a Dealership” tells us that factory-owned dealerships are so estranged from their parent companies that 90 percent of them source wholesale financing elsewhere. There’s a detailed explanation of how lender and manufacturer rebates work. Grissim’s industry and retailer interviews give his accounts of life on the sales floor an authentic ring. One chapter reviews all 25 top manufacturers, based on “an informal consensus distilled from conversations with knowledgeable industry insiders.” It’s a useful survey, but virtually all companies are said to produce “good” quality homes, leaving the reader wishing for more – but that’s probably another book.

Maximizing the wealth-building potential of manufactured homes doesn’t quite get the attention it deserves. Although Grissim properly emphasizes land ownership as a key to building equity, he doesn’t extract cautionary lessons from the fact that many double-section manufactured homes still depreciate, despite having their own lot. In the thorough discussion of foundation types, for example, there’s a missed opportunity to point out how important the buyer’s foundation choice is in determining how the resale market will perceive the home.

As he reflects on why the manufactured housing industry has seemed “stuck” for so long at the margins of US housing, Grissim cites lack of imagination as a root cause. The industry, he says, “still sees its primary market as the low-income buyer with flawed credit and in need of affordable housing.” Bare-bones homes and subprime loans are the so-called value proposition. Given housing advocates’ focus on the same group of buyers, is it any surprise that they’re so alienated by this industry?

The author’s basically sunny outlook on manufactured housing is most apparent in the discussion on warranty service, which he says is the shortest chapter in the book because of the “terrific quality” of a manufactured home. AARP surveys and Consumers Union research are not so sanguine, and point to an unacceptably high proportion of complaints, many of them unresolved by warranty service. With typical thoroughness, Grissim also presents several detailed sidebars summarizing CU’s findings on this point.

Grissim is impatient with industry participants who talk reform and go back to practicing business as usual. “The industry doesn’t need more roundtables; it needs a posse,” he says, asserting that bad actors in finance, retailing and installation are readily identifiable in this relatively close-knit industry. He also hopes a new breed of “swindle-proof” consumers will force change. With this solid book, they have their tool.

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