What to Know About Modular Homes
Are you considering buying a modular home? Once thought a cheap and low-quality housing option, modular homes have come a long way in recent years.
They offer home buyers another way to achieve their dream of owning a home and come with several advantages over regular, “stick-built” homes.
However, buyers should also be aware that modular homes come with some drawbacks and are ultimately seen as less desirable than a stick-built home by many people.
Below you will find a comprehensive look at the advantages and disadvantages of modular homes.
What is a Modular Home?
People often wonder and ask real estate agents, what are modular homes? A modular house essentially is built indoors in a factory-like setting.
The manufactured products are covered and transported to their new locations, where a homebuilder assembles them.
Modular homes are properties that are built off-site vs. on-site. These houses are often called factory-built or prefab homes.
Interesting Facts About Modular Homes
- Modular homes can be constructed on basements and crawl spaces.
- A modular home can be built to withstand winds up to one hundred seventy-five miles an hour.
- Modular homes are considered to be green.
- Modular homes take a much quicker period of time to build than traditional new construction.
- The taxes you pay on modular homes are the same as stick-built houses.
- Home loans for modular homes are usually the same as site-built homes.
- Home insurance for modular homes is the same as site-built homes.
The Benefits Of A Modular Home
Let’s start with the benefits of building modular homes, making this type of home very appealing to buyers. These include:
Modular Homes Now Have Higher Quality
Modular home manufacturing has improved significantly in recent years and can often compete toe-to-toe with the standard stick-built home. In fact, sometimes the quality can actually be better when compared to some stick builders.
Modular homes are built in a factory setting, on an assembly line, which means the building process for all the pieces is under intense quality control.
On the other hand, a stick-built home is built from scratch on the land where it will sit. Being in the real estate business for many years, I can tell you there have been times where a builder has not done an adequate job of keeping the lumber used in construction protected from the elements.
Problems can occur from this kind of neglect, but it is only years down the road you find out about it.
Speed Of Construction With Modular Homes
Modular homes can go up quickly, often faster than a regular stick-built home. If you consider all the areas where delays are possible when building a standard home, it is easy to see why this is the case.
The materials for a stick-built home may be sourced from all over the country, and each different supplier must get the materials to the builder on time.
There are many opportunities for things to go wrong just in the transportation process. A modular home is one of many other homes being built by the manufacturer, which means that supplies are usually abundant to get the job done quickly.
Weather can also be an issue with a stick-built home. If it is raining, snowing, or dangerous outside, such as thunderstorms, builders will have to stop until the weather improves. A modular home is mostly constructed indoors, where the weather is not an issue.
If you have any time constraints in transitioning from your existing home to a new place, a modular home could be something to consider just for the savings in time.
Video: Understanding Modular Homes
Get additional modular home facts in this helpful video.
A Modular Home is Less Expensive
Because the modular home is one of many being built by the same manufacturer, there are fewer costs associated with its construction with less possible downtime.
A modular home cost can be up to 15% cheaper than a stick-built home and possibly even more affordable if you are building your home in a location that is hard to get to or far from major manufacturing centers.
Modular Construction Has Financing Options Through Manufactures
In addition to the regular financing options that most home buyers have, you also have the option of financing the home through the manufacturer.
Sometimes manufacturers will offer better financing options than other lenders, which means you get a less expensive home and often get more favorable financing. This, of course, is not always the case but certainly worth looking into.
Modular Homes Are Not Mobile Homes
A modular home is not a mobile home or a manufactured home. Although mobile homes have come a long way as well and are now built to much higher standards than they once were, they are still not a particularly good value.
Their resale value is not as good as a modular or a stick-built home, and they tend not to last as long as a modular or stick-built home.
Here are some additional facts you should know about modular homes.
Disadvantages Of Modular Homes
There are some issues that you should be aware of when you start considering buying a modular home. Although modular homes offer plenty of advantages, they are still not quite in the same league as a stick-built home, particularly in the public’s perception.
Something that should never be downplayed is perceived value. A few years ago, I was selling a home in Franklin, MA, that happened to be modular. This stigma surrounding the fact it was modular made it a more challenging sale.
The home eventually sold, but it took a bit longer than most similar homes in the price point.
While the thought of building a modular home could have numerous advantages in your mind, it may not work for numerous buyers when it comes time to sell it.
It would help if you got a handle from local real estate agents on how the general area views the thought of buying a modular home.
Modular Homes Have Less Customization
Modular homes can be built in various configurations, but because of how they are manufactured, it is not as easy to customize them as it is to customize a stick-built home.
The builders of your stick-built home, if you wanted them to, could build you practically anything you wanted – a living room with lofts, a tower off of your master bedroom, or a circular floor plan. Modular homes are not quite so flexible.
Modular Construction Has a More Complicated Loan Process
A mortgage for a stick-built home is something that most people are familiar with. But the payment process for a modular home involves a few more steps. The builder will want to be paid in full before the house is finished and will often want periodic payments to finance the building process.
You may need to get a construction loan first to pay the builder, which will be changed to a regular mortgage after the home has been completed. Make sure you understand how to get the best interest rate on your loan.
There are times when buyers do not spend the appropriate amount of time researching the best loan programs for their specific needs. Taking the time to understand exactly what type of loan works best is a big part of not overspending on a mortgage. Don’t make one of the mistakes outlined in the article.
Understand The Cost Of Land
While the modular home may cost less to build, you will still need to purchase a piece of land to build the home on. The cost of land combined with a house can be a bit shocking to people who are not prepared for it.
You need to be prepared to buy your land and your home if you choose to go with a modular home. One of the areas that people underestimate costs is with land development.
If there is no town sewer available in the location in which you are building, make sure you understand how expensive a septic system can be. In fact, there can be a difference from one lot to the next of tens of thousands of dollars.
Understand Land Restrictions
Although modular homes are much more favored than manufactured mobile homes, there may still be neighborhoods or municipalities that will not allow you to build such a house. You want to make sure that the area you want to buy land and build the home will allow it. In many places, these documents are known as restrictive covenants.
It is possible that a restriction was put in place long ago, denying the ability to build a modular home. This was due to the perception years ago that modular homes were inferior products.
In many cases, people viewed them as “eye soars” due to their unappealing roof lines. It was not uncommon, in fact, to see many of the modular homes of years ago look something akin to an army barracks.
Perceived Quality Issues With Modular Housing
In most instances, the components of a modular home built by a manufacturer will be every bit as good as the components of a stick-built home, but everyone may not be up to date on this fact.
If you are looking to impress, a modular home may not deliver in the same way a stick-built home can. For some people, public perception is irrelevant, but not for everyone. You may have to wait decades before the average person is clued into the benefits and the excellent quality of many modular homes.
One of the distinguishing factors that people identified modular homes with years ago was the “popcorn ceilings” that often accompanied their homes. You could spot a modular the minute you walked in the door because the popcorn ceiling was a common trait. Talk to most buyers, and you will understand the hatred associated with popcorn ceilings.
Issues With Selling A Modular Home
Homebuilders and Realtors are aware that a modular home from an excellent manufacturer is a quality piece of real estate.
In most instances, you should be able to enjoy an appreciation of the value of your home just as a stick-built homeowner would. However, you may also run into extra hurdles when you try to sell the house.
When buyers first look for homes online, they look at pictures and scan facts about the property. When they notice that your home has been prefabricated, they may be initially turned off.
Why buy a prefab when they could purchase a traditionally built home?
These initial reactions could make it harder to sell the home if you do decide to sell. You will need an experienced real estate agent and a bit of patience to reach the kind of buyers who can appreciate your home’s quality and value.
Questions to Ask When Buying a New Home
Whether you are building a traditional home or choosing to go with modular construction, it will be essential to get some basic questions answered.
Here is a list of questions to ask a builder. Make sure you get these questions answered to your satisfaction before moving forward.
Many people end up disappointed when building a home for lots of reasons. Vetting the builder is a critical exercise.
How Do Modular Home Sales Compare to Traditional Housing?
For the most part, modular home sales will be no different than their stick-built counterparts. This is especially true of newer modular construction, which is seen as far more favorable than in years past. Some older modular construction was very poorly built, and you will probably be able to recognize it.
You can speak with a local real estate agent to see if modular home sales have faired any differently than other homes. Keep in mind that all real estate is local, so what may be true in one area of the country might not hold true in another place.
You might also try modular home sales near me to do a little research on your own before consulting with an agent.
Is A Modular Home An Option For You?
If you are the kind of buyer looking for the best deal and is up to date on the quality of many modular homes, you may be delighted with one.
On the other hand, if you want something uniquely yours, something customized, or a property that will impress the neighborhood, a modular home may not be the right fit.
There may come a day where most homes are built modular, considering all of the financial advantages they offer. But that day is a long way off. Until then, owning a modular home is a choice that only certain people will be happy with.
If you believe you are that kind of person, let your real estate agent know that you are open to modular homes.
Your agent may be able to find you just what you are looking for. Just remember all of the pros and cons of modular homes that have been discussed here.
How to Find Modular Homes Nearby?
Besides relying on a real estate agent, one of the better ways to find modular homes is to do a Google search for them. Some of the search phrases you may want to use could include modular homes near me or modular homes nearby.
By doing this kind of search for modular homes, you will see manufactures in your area. More than likely, you’ll have a few choices on modular homebuilders. If not, you could also search for modular home builders as well. I would suggest modular home builders near me.
As with any other company, it will be smart to do your due diligence on the modular builder you choose to work with. Some will have excellent reputations, while others may not.
Hopefully, you have found this guide to modular homes to be useful.
Frequently Asked Questions About a Modular Home
1. Are modular home prices lower than stick-built homes?
Yes. Typically, the cost for a modular home is lower than traditional new construction.
2. How much does a modular home cost?
The cost of a modular home depends on many factors, including the location, size, and various amenities you add to it. You can expect that the cost of a modular home will be less than traditional new construction.
3. Are mortgages for modular homes harder to get?
No. Getting a mortgage for a modular home is no different than any other house.
4. Who are the top modular home manufacturers?
There are quite a few top modular home builders. You can see an excellent list of the best modular manufacturers in this resource.
5. How can you tell if a home is modular or not?
If a house is modular and was built after 1971, it should have a tag called a Factory Built Unit Certification affixed. The certification states that it has been made according to the universal building code standards required of stick-built homes.
6. Is a modular home a good real estate investment?
It depends on when the modular home was built. Older modular homes are not looked at as favorable as their traditionally made counterparts. However, newer modular homes are built to much higher quality standards and should have an excellent return on investment.
7. Can you put a modular home on a slab?
No. A modular home needs to have a basement. Modular homes are constructed to be placed on a foundation. It can be a concrete or block foundation.
8. Do modular homes last as well as stick-built houses?
Yes. Today’s modular home construction will last just as long as a traditionally built home.
9. Are modular homes safe in bad storms?
Yes. Modular homes are just as safe as any other house. There are some anecdotal claims they may even hold up better in storms than regular housing.
10. What’s the difference between manufactured homes and modular homes?
Manufactured homes are built entirely in a factory and then transported to their homesite. Modular homes are also built-in factories but are not totally complete. Modular homes can be made on a temporary chassis or a permanent one. Those built on permanent chassis are known as “on frame.” A modular home built on a temporary platform is known as “off frame.”
Final Thoughts on Modular Homes
Modular homes have come a long way over the last couple of decades. There are now considered to be a very viable housing choice. Do you own due diligence when pursuing buying a modular home.
Hopefully, you have found this guide to modular homes to be useful.
Other Helpful Home Building Articles
- Should I buy a re-sale home or build a new one – get helpful tips on whether you might be better off purchasing a re-sale or going with new construction.
- Is a modular home a sound housing option – learn whether a modular home should be something you consider or choose another option instead.
- What you need to know when buying a new home – find helpful advice on things to consider when you are purchasing new construction. You will enjoy these new home build tips.
Use these additional helpful resources when buying a new construction home, whether it is a modular or stick-built home.
About the Author: The above Real Estate information on the pros and cons of modular homes was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
I read a lot of your articles and I just want to tell you. Thanks
I always come away with more knowledge and interest in staying in this crazy business we call real estate.
Sherri
Thanks for the compliments Sherri it means a lot!
I enjoy reading your articles. They are very informative and straight-forward. Thank you for sharing your knowledge and expertise. You rock!
Bev
This was a great article! Full of valuable information and answered a lot of my questions- thanks so much!
Lauren
I would guess that one of the reason a model home goes up faster is that the design has been tested. The company that designed the home knows how everything will work together because they’ve done it before. There is less of a chance that a problem will come up that needs to be fixed. Then, of course, there’s the issue of the supplies that are sourced from all over that would add to the build time of a stick built home.
This is a great resource for anyone considering building a modular home. Thanks for sharing!
Thanks for your vast knowledge and information on modular homes.
We have had a hard time finding financing for a modular home that sits on land. The finance co says it’s listed as a mobile home so the financing is a bit harder. Very frustrating