MH Profits

[Aggravated in Oklahoma]

Is it true that profits on mobile homes are around $20,000 for dealers? Its just hard to believe that they are able to make that much money on one deal. I guess there is room for haggling huh???

[rmurray]

Actually it much depends on what you call profits...Most large publically held retail companies that report on a public basis are lossing money or making very small returns for thier investors..Investors and owners usually consider profit as the money left after all bills are paid...By that standard...current retail profits are currently less than $2K per house..

You can check them out your self by finding the publically avaiable financial statements of the big players in the industry..

[Mark]

Dunno, my dealers 'profit' on my home was about $6000, after everything related to it was paid. I know this because I saw it on their worksheet in my file. Of course they have to pay electric, insurance, yada yada.. but they sell at LEAST I'd say 2 homes a week.

[jgn]

Aggravated, my guess would be in the 20% bracket so on a 100k home you might be about right on for gross profit (selling price minus cost of goods). Take off of that transportation, site inspection, setup, repair crew, office staff, sales office, lot rent, floor plan for models, sales commissions. My guess is the net would fall in the 3-6% range. A site builder works with a 25% "profit" but because of variables they net in the 10-15% range. You seem to feel profit is a bad thing when it keeps businesses in business.

[David]

PROFIT is of course what everyone is working for.

There should be a limit to profit though, after a certain amount it turns into outright stealing, no one should object to a business making a fair profit, a business should also pay it employees insurance benifits and a retirement benifit.

What percentage should be profit is not for me to decide. Manufactured homes are great and profit is what will make them even better.

David

[cindy]

David..........One must understand what the above posts are trying to convey. It may look as though the profit is high on a new manufactured home, however there are many things that the general public does not realize. The overhead and liability as a dealer is quite high. For example, liability insurance and insurance covering the homes until sold runs, in California, over $1500.00 per month. On top of that we have to pay interest on every home we display and every customer sold unit until escrow is closed. It goes on and on. Remember, if the dealer is "stealing" by the amount they are making on the home, you the consumer will put a stop to that as the dealer will be priced right out of the competition.

[Jim]

I'm not sure that anyone really answered the question here. Assuming the "haggle," what % or $ gross, also assuming a 25% mark-up from invoice, is fair for the consumer without the dealer feeling he has been beat up, or when should the consumer feel like HE has been beat up?

[rmurray]

There are few markets where a dealer would quote a price with 25% clear margin on a home and survive..Most dealers in most markets make far less on the per home basis..

The best way to compare individual models is to compare the exact same home with more than 1 dealer..but be real careful you are comparing everything exactly the same..

Of course..you could always offer a few thousand less..see what happens..

[Steve]

As a 25 year retail veteran, I have found that no matter what amount the retailer makes is going to be looked upon by some as "too much". This industry is one of the very few, if not the only one, where the lenders who finance the homes for the consumer actually dictate the maximum amount of "profit" (it's really the "mark-up") that a retailer can make or charge the consumer. i.e. if the price is too high, financing won't be available. The lender caps the precentage of mark-up or "profit" because they understand that the resale market, in the event of a repossession, will only support a certain price relative to the price of a comparable new home, and they aren't in the business of loosing money.

In short, if the retailer can get financing for you based on the figures quoted they are in line with general industry pricing (which I feel are too low.) and aren't getting "rich" by any means.