With Strings Attached

We get inquires on a regular basis from people who want to buy one of our homes and move it onto their own land. Our homes are sold with strings attached. As a land lease community, we price our homes based on the assumption that they will remain in place so that we receive land payments over the long term. Still, the question is hard to dismiss. Many potential residents ask if they can move the home. The answer is a qualified yes.

Although we’d loathe seeing a home leave, like most things in life, it’s negotiable if the price is right. We crunched the numbers and determined that a home already on site was intrinsically worth $10,800 to us on top of the additional value of the home itself. This reflects the tangible and intangible resources (time, lost income stream, degree of irreplaceability, etc.) that would be expended replacing the lost asset.

We set the retail price of our homes at market value for the home alone plus a $10,800 premium if the home is to be relocated upon sale. A typical 1990s 2 BR singlewide would be $6,000 plus $10,800 for a total retail price of $16,800. A typical late model 3 BR doublewide would be $33,000 plus $10,800 for a retail price of $43,800. These prices are intentionally high. But an insistent buyer with cash in hand can purchase a home at the retail price and move it immediately.

Unlike buyers who want to remove a home, those who are willing to leave it in place receive a Madison Woods Placement Discount of $10,800 based on the assumption the home will remain in the community for a period of time. This discount is rescinded if the home is removed, but $100 per month is credited towards reducing the surcharge for every month the home remains in Madison Woods. Residents who have financed their home with us can move their home at any time after paying off the outstanding loan balance, plus a portion of the surcharge remaining. For example, if a buyer wanted to move the home after 72 months, they could do so by paying off the loan balance plus $3600. The surcharge has been reduced by $7200. At the end of the 108th month, the surcharge is zero. By that time, many of the moderately priced homes will no longer have a loan outstanding with us. In these cases, the homeowner can move their home at will.

We choose this approach because we sell our homes on contract using an Agreement for Title, while leasing the land under a separate document. Another approach would be to encumber the homeowner with a long term, multi year lease. We were concerned that the terms of such a lease, being very uncommon in residential real estate, would be leniently enforced in magistrate court. We decided to create easily understood, defined price conditions under which the home could be moved. We hope this clarity minimizes the likelihood of litigation, and barring that, maximizes the likelihood of judicial enforcement.

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