When it comes to buying a tiny house, you really only have two options; purchase one from a tiny house builder or buy one used.
In this post, we’re going to cover the ins and outs of buying a used or new tiny home, how to make sure it’s a good deal, and the pitfalls to be aware of.
Be sure to check out The Complete Guide to Buying a Tiny House if you'd like to go more in-depth.
First off, it’s important to note that not all tiny homes are created equal. Some of them are built DIY style and some by licensed professionals.
If you’ve ever researched tiny homes in the past you're aware there have been plenty of builders who have done a shabby job on their client’s tiny homes(just like in any industry). While we believe that the vast majority of builders have good intentions in their heart, often times a mix of minimum construction experience and lack of knowledge on building science and proper material application, lead to the ‘professionally’ built tiny house being just as susceptible to defects as a back yard DIY built tiny home.
According to Rachel Ison who is a solicitor at pearce Legal, choosing to buy or sell property is a major decision. No matter how big or small the property is, you have to make sure all the processes are followed correctly to avoid ownership problems in the future. When buying a property, you have two choices to make: either get the assistance of an experienced conveyancer or solicitor or to do the whole process by yourself. However, before making this decision you need to carefully consider all the factors involved. For example, you need to know the difference between the cost of hiring a professional convenayer and DIY conveyancing, you also need to consider the time you’ll take conveyancing, and the transaction’s complexity. Once you consider all these factors, you will be able to make the right decision.
So, the question becomes, How do you decide if the tiny home was built well and how do you minimize your risk after you have bought it? Find out below.
Just like any major purchase, whether it’s a small house, boat, car, house, land, valuable asset, there is always a due diligence phase followed by a series of inspections and verifications. We break this process down into a 6-step process; History, Certifications, Inspections, Negotiation, Agreements, and The Gut Check.
To make sure your tiny home was built properly, you need to find out how, when, where, and by whom it was built. This is a great place to start as it doesn’t cost you anything and finding out this information will be a key determining factor in pursuing this particular tiny house further or not.
Ask the seller for information that's specific to it's history with a clear request to the information you need. Once you receive this information you’ll be able to make a calculated decision as to whether it’s worth pursuing further or not.
Some questions we ask ourselves at this point are:
If all of the information and questions you’ve asked yourself thus far have checked out, we’d recommend continuing to the next stage of the purchasing process.
Licenses and certifications are crucial to buying any type of small homes including mini homes, cabins, modular homes, and tiny homes on wheels. They give us two amazing insights into the integrity of the builder and the process as to which they built it.
In short, if the used small home for sale was built by a licensed builder and is certified by a third party your risk of defects in your tiny house dramatically goes down. Now, this isn’t a blanket statement that you should follow blindly as we have discussed above. It’s simply one part of the process of buying a tiny home that you look for and when combined with the other steps you slowly build up to a lower-risk deal when buying a tiny house.
In addition to this, having a tiny home that is licensed and/or certified makes it much easier and cost-effective to finance and insure your tiny house and park it in more places.
Certifications to look for on used tiny houses:
By far the most popular and trusted certification in the industry is from RVIA. It stands for Recreational Vehicle Industry Association and has roots clear back to 1963 when it was just getting started. It is the go-to license and certification for every major RV and Travel Trailer in the US.
The National Organization for Alternative Housing is another great certification to look for. Although it is not as widely known, it is much more specific to tiny houses and has a great program for builders. Again ensuring that the small house is built to the predetermined standards set by trusted professionals.
Another great but lesser-known certification to look for is the Pacific West Association Certification. PWA is an accredited and recognized third-party agency that has been in the RV and Tiny Home business for over 30 years.
For the DIY and self-built individual, they also have a step-by-step process to certify homes built DIY style to ensure safety, quality, and resale value.
If the tiny home is certified, the builder should have either a Certificate and Insignia or an MCO(manufacturer Certificate of Origin). Find out more about the Top 3 Certifications and items you should receive from the builder or owner before proceeding with buying the tiny house.
Overall, the licenses and certifications of a used tiny home are a huge part of the purchasing process. Make sure your tiny home has one of these certifications.
If all this checks out, move on to the next step below.
Why is this part the last step in the due diligence process? For two reasons; it typically costs a little bit of money and it takes time. So it’s best to use the process of elimination from the two previous steps so that by the time you get to this stage, you really only have one or two tiny homes you’re very serious about.
Just like any major purchase, it’s always wise to get a tiny home inspected by a third-party specialist. This brings to light in any issues that may be overseen by both the seller and buyer. This one step could save you hundreds if not thousands of dollars over the long run.
Always make sure that your inspection includes a written report with pictures within 7 days of the inspection. This report will help you understand the condition of the tiny house and will also give you valuable information to negotiate with.
While we’re on the note of negotiation, we thought we’d mention a quick few thoughts.
Make sure to do your research on the price and determine what you believe the home to be worth then take into consideration what the inspection report has to say about it to come up with your offer price. Keep in mind that tiny homes with certifications are almost always valued at a higher price but you typically get more confidence and less future issues.
Part of the negotiation process is coming up with the Agreements. Preferably, you should request that the seller provides the agreement rough draft documents and then have them reviewed by your attorney.
You'll want to make sure there is a clear understanding of who will fix any issues found in the Tiny Home Inspections. It should also be clear who will fix an appliance and third party products - this will typically falls on the manufacturer of those appliances and products.
For a complete guide to negotiation of a tiny house check out The Complete Guide To Buying A Tiny House.
At this point, you hopefully have an accepted offer on a tiny house you love and at a price that fits within your budget.
You’ll need to make sure your purchase is protected by a solid contract. Of course, we always recommend consulting with an attorney but the agreements should generally include a Bill of Sale and/or a Purchase Agreement.
Make sure it has ALL the details of the purchase and that it has clauses that describe what happens after the sale if there are any issues. Again, we can’t stress this enough that a few hundred bucks towards attorney fees could save you from a big headache and hundreds of dollars down the road.
The next step is to make sure you’re all set up before taking ownership of your tiny house. This includes getting the proper insurance and registration from the DMV. This all takes time so make sure you do this well before the closing date in your agreement with the seller.
Before closing on your tiny house, we recommend going back over all the documents, and the prior 4 steps to make sure you haven’t missed anything and that you have all your ducks in a row.
How do you feel about the deal? Of course, nerves and emotions get involved in every deal but really try to separate those from the logic and facts to perform a double check on this big purchase.
Make sure that the owner is all set to transfer title, MCO(Manufacture Certificate of Origin), DMV Transfer of Ownership, and any other applicable documentation.
This may mean you need to fly out to where it’s located or have a third party moving company be there to pick up your tiny house at the time of transfer of ownership.
If you come this far, it’s likely because you are about to or have just completed the last steps of buying your own tiny house!
As you can see, buying a used tiny home has a lot of moving parts but if you follow these steps, hire a Home Inspector or Licensed Contractor, and consult with a licensed attorney, you’ll dramatically decrease your risk and increase your happiness with the whole process and your very own Tiny House!
If you're interested in diving deeper into all these topics, check out The Complete Guide to Buying A Tiny House with a 75% discount for a limited time only.