Merit Home, custom order pay in full before leaves factory?

[Larry]

Randy,
In order to purchase a custom order 32 x 80
double wide from Homes of Merit, the dealer is telling me that the home has to be paid for (with exception of 5k which will be paid after site walk through). is this OK? Or should I back out?
Thanks!

[rmurray]

This is unusual....but not uncommon....especially if the home is a very unusual custom job...Just remember to watch the papers you sign...There should be a resonable cancelation penalty listed....maybe as high as 5K...If it is not mentioned in the docs you sign...cancelation penalties are defined in the law...

I assume you are in FL....on a custom ordered home...with out a specfic written waiver of your rights...the amount a dealer can keep is limited to $ 1000 (If I remember right)...Check out the laws to be sure...

the biggest worry right now is the financial health of the dealer...Many are in terrible shape right now and might not be able to produce when the time comes...thankfully for you...Florida requires a preformance bond for the dealer and has a state run fund to help customer in this situation...but..if you are concerned..maybe you can work out some program with putting the money into an escrow account with an attorney...to be released in well defined stages...

I do not blame the dealer...for wanting to be sure you have the money to pay him....and that it will not go away in the next few weeks,,,,but you have to look out for your self...You could always decide to finance the home...and pay it off at closing....Good Luck

You picked one of the best home on the market...They will do a good job....just be sure you and the dealer carefully review the order confirmation...They WILL build it exactly to that confirmation..I would get a copy when I settle the deposit issue...

[katie]

Are there real estate attorneys who specialize in manufactured home purchases? This whole process seems too scary to me, especially in light of your statement about so many dealers being in terrible financial shape. Of course, if we have to hire an attorney to look out for our interests from the get-go, that adds to the cost of the home. This is what I planned to do - tell me if it makes sense.

1) I find the home I want; 2) I check out the dealer to make reasonably sure that he's reputable and will not go bankrupt overnight; 3) I go over the papers with the dealer, making sure that every option and specification I want is listed; 4) I take the papers to an attorney to read over and explain (if necessary); 5) If the contract seems equitable, I sign it and return to the dealer; 6) I make the down payment (is it at this point that the down payment is made?); 7) I wait for the house to be built and set up; 8) I arrive on the site to walk through the house and make a punch-out list; 9) I go to closing with an attorney and sign the papers; 10) I move in!

Is that pretty much the scenario?

[Randy Eaton]

Hello Larry,

The funding process begins once the home has been delivered to the customer’s site. In most states the sales center will notify the lender once the home has been delivered. At this point the lender will usually go to the customer’s site and take a picture of the home. This can take up to fourteen days before the sales center receives payment in full. If a problem arises, for instance the sales center delivers the wrong home or the home was severely damaged during delivery, the buyer can notify the lender and halt the funding process. This protects the buyer and puts pressure on the sales center to correct the problem before they can receive funds from the lender.

It sounds like your situation is normall and I would have no problems going ahead with the transaction. Holding back $5,000 until the walk-through process is a good idea which is not done in many states. So, it sounds like you have your bases covered. Let us all know how things turn out. God Bless!

Randy Eaton

[r murray]

I think you have a good idea how to take care of your self...Do not be scared....just be careful....Now hurry and get the process started before the interest rates rise..

[Larry]

Clarification: The dealership is saying the house has to be paid for (except 5k) before it leaves the factory! (yes, because it is a custom layout I designed myself) My site is in Georgia, and my own land.

I couldn't get any lenders to agree to this, but the dealer has one that will...? so I am pre-approved for the loan... 9% (vs. 7% from a lender, if I
could close on my own property!)

I haven't even received a good faith estimate of closing costs yet... been 10 days since approval of loan... so am being verrry cautious, and feeling manipulated...

Trying to work thru it all because I agree, Merit builds a great product, and we are getting a lot of quality home for the money.
But their policy makes it difficult to buy...

God's blessings on you too! And thanks for writing such an excellent book on how to buy a MH home!
Thanks to all for the feedback!

[Randy Eaton]

Hello Larry,

I understand the factory is trying to protect themselves but this does not sound right to me. Most banks do fund after the home is delivered to the property. A lender will send a letter of approval to Merit saying they will fund upon delivery. Now most builders do require a 10% or 20% down payment before they start to build the home. But all the money up-front except $5,000 sounds strange to me. Plus you have to pay a higher interest rate in order to meet their demands. I personally would try to work something out. Contact the owner and try to reach a realistic agreement one that is fair to both.

Randy Eaton

[rmurray]

Homes of Merit does not build any homes without payment in advance...Usually the dealer floorplans the unit with an inventory lender...although some still buy COD...In those cases the dealer is approved and must pay for the home upon delivery to his lot..

What you are talking about here is the dealer is afraid that he might be stuck with your very custom home...The suggestions I made are very reasonable....If the dealer does not have the funding to work with you..you do not want to deal with him...BUT..you have to understand where he is coming from....Although the order is perfect for your family....he might not think it would be a good home for his inventory...

You are right...9% is way to high...we are closing homes to good credit customers with enough equity at 6.25% now...with construction loans as cheap as 1% and no payments for 4 months..

If you are having additional fears..call the Homes of Merit sales manager...His name is Mark Klinger...at..386-755-3073

OR...call me toll free at 888-706-0811.....my name is Bob Murray...I know other dealers that service the whole of GA for Homes of Merit....I am sure I would be able to help you..