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 dig into the ins and outs of buying a used tiny home, how to make sure it’s a good deal, and the pitfalls to be aware of.
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. But what makes things more complicated is that it may seem like the prudent choice to value the one built by licensed professionals above the DIY build but there are more aspects that go into it than just that.
If you’ve ever researched tiny homes in the past your 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.
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 four-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 this information with a clear request to the information you need. We always recommend short and to the point email like this.
I am interested in the tiny house you have for sale. I’d like to find out more information about it. Can you please let me know the following information.
Thank you and I look forward to hearing from you!”
This basic yet important information should be readily available from the seller and if it’s not, we’d take that as a yellow flag to pursue with caution.
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.
Certifications give us the confidence and security that the tiny home was built to a established third-parties guidelines and inspected regularly throughout the construction process.
Licenses give us the confidence that a builder has at the minimum, studied and taken tests to prove his knowledge and understanding of best building practices.
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.
For a tiny house company to become certified it requires a very extensive and expensive inspection and testing process before it licenses a builder as an approved and certified RVIA manufacturer. And even thereafter, they perform regular inspections on the tiny homes they build.
This gives you the confidence that the small home was built to standards set in place and inspected by RVIA inspectors.
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.
The NOAH Certification incorporates safety, structure, and energy efficiency standards that are widely used in the RV, Tiny Home, and Residential industries.
They also have a great resource for DIY builders which allows them to inspect and certify a tiny house that is being built from an individual DIYer.
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.
They have a great inspection quality assurance program and are comprised of licensed electrical, structural, mechanical, and foresee engineers.
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)
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. We always recommended verify it by requesting a picture of the certification and reaching out to the applicable Agency that issued the certificate to confirm it was in fact inspected and certified by them.
If all this checks out, move on to the next step below.
If you have come this far, then you have got the relevant history from the seller, verified the small home has a certification from RVIA, NOAH, or PWA and was built by a licensed builder or DIYer that was held accountable to a proven building standard.
Why is this part the last step in the 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.
We look at this as the first layer of insurance on your purchase. For example, if you’re looking at buying a $25,000 tiny house and could spend $500-$1,000 to make sure it doesn’t have any major issues it’s a no brainer. And if it does have any issues, you’ll be able to either back out of the deal and avoid a major headache or determine the cost to fix the issue and negotiate that off the purchase price.
We typically recommend either a Home Inspector or a local Licensed Contractor for the inspection.
These are professional and trained inspectors that have typically done hundreds of inspections on residential homes. Experienced ones have seen it all and can easily alert you to current issues and potential ones. They cost anywhere from a few hundred dollars to $1,000.
Another option is to hire an independent licensed contractor to perform an inspection for you. This is a good option if you have someone you trust or know of a very reputable contractor in the area where the used tiny house is located. This is not their typical job but seeing as they are licensed, trained, and have a keen eye for construction makes them a great choice. You’ll typically need a referral or prior relationship to get them to inspect the home for you.
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 tips.
Most sellers price in an expected 10%-25% price reduction from their starting purchase price. That means, if a seller thinks his/her tiny home is worth $10,000, they will list it for anywhere from $11,000 - $12,500.
So we typically always recommend offering 25% - 30% below the offer price to end up with an around 15% reduction from the original asking price.
Of course, none of this is one size fits all. You’ll have to make a valuation of the tiny house yourself and determine if the seller has the price above the market value or not to determine what your offer should be.
For example, some sellers may undervalue their small home and list it below market price in which case there will be many offers. So a quick and above asking price offer may be the only way to get a chance to buy that particular tiny house.
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.
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.
To ensure your purchase is protected, we always recommend providing the funds to the seller through a trusted bank wire transfer and that you have made arrangements to take ownership and possession of the tiny house at the time of purchase and transfer of the funds.
This may mean you need to fly out to where it’s located or have a third party moving company like Mobile Home Movers be there to pick up your tiny house at the time of transfer of ownership.
You did it! 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!
Looking to buy a used tiny house? Here are a few good places to find tiny homes for sale!