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Appraising Modular Homes And Using Stick Built Homes As Comparables

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I don't know. Maybe you are right and I am wrong. But if $200 to $350 per SF is Q1 then I dunno what to call a house that is $350 to $650 per SF to build.
 
I don't know. Maybe you are right and I am wrong. But if $200 to $350 per SF is Q1 then I dunno what to call a house that is $350 to $650 per SF to build.


What I am finding is that once a home reaches Q1 quality there is no upper range. And that makes it difficult. I did an appraisal on a home that cost $800sf to build. I walked in and immediately said, "My cost books will never cover this." And that is the problem with the ratings system. It is possible to have 2 Q1 homes and they not be really comparable.

So we all have that subjective element in our reports. Frankly as long as you are consistent in how you establish your ratings that's what's important.
 
I actually was trying to get guidance on dealing with Modular homes and Fannie Mae, not a debate on the quality of modular homes, (grunt). It appears after conducting more research that Fannie Mae is ok with completing modular homes on a standard 1004 form. Reference B4-1.4-02: Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing (04/15/2014). The one line that would cause me to decline a modular home assignment is the statement that says

" When the subject property is modular, prefabricated, panelized, or sectional housing, it is not required that one or more of the comparable sales be the same type of factory-built housing, although using comparable sales of similar types of homes generally enhances the reliability of the appraiser's opinion of value. Fannie Mae requires the appraiser to include in the appraisal report the most appropriate comparable sales data to support his or her opinion of value for the subject property."

My MLS system here in the DMV area which is MRIS does not have a section for modular homes so it would be pretty close to impossible to locate modular homes and confirm if there is a marketing difference between those homes and stick built homes. I do believe this is an essential component in completing an appraisal for a modular home. If anyone that uses MRIS knows a way to find modular homes besides putting keywords (which may or may not yield results because it would rely on the agents stating such in the remarks) please post a reply.
 

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IMy MLS system here in the DMV area which is MRIS does not have a section for modular homes so it would be pretty close to impossible to locate modular homes and confirm if there is a marketing difference between those homes and stick built homes. I do believe this is an essential component in completing an appraisal for a modular home. If anyone that uses MRIS knows a way to find modular homes besides putting keywords (which may or may not yield results because it would rely on the agents stating such in the remarks) please post a reply.
I have three methods. (1) I keep a data base of modulars I have appraised. (2) I keep one for mod comparables I have used. Lastly, when I have an assignment for a modular I do a wide MLS search and sift through the front photos, I’ve gotten good at spotting mods because there are tell tale signs. Those Cape COD style mods stick out like a sore thumb You’re correct, many agents don’t even know the difference between a mod and stick built and they won’t be identified in MLS as such. If it’s a rural area and my search is for site built, the mods usually sell for the lowest price per SF. . It also helps that for a couple of years I “built” and listed my own modular spec houses and can usually tell a mod from the street by the angles. The mods I owned and sold were highly similar in quality to houses in the neighborhood and I’ve noticed that years later some of them have been re-sold and there was no mention in MLS of them being mods. It’s kind of sad, most people automatically think upgraded doublewide when they hear the word modular.
 
I actually was trying to get guidance on dealing with Modular homes and Fannie Mae, not a debate on the quality of modular homes, (grunt). It appears after conducting more research that Fannie Mae is ok with completing modular homes on a standard 1004 form. Reference B4-1.4-02: Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing (04/15/2014). The one line that would cause me to decline a modular home assignment is the statement that says

" When the subject property is modular, prefabricated, panelized, or sectional housing, it is not required that one or more of the comparable sales be the same type of factory-built housing, although using comparable sales of similar types of homes generally enhances the reliability of the appraiser's opinion of value. Fannie Mae requires the appraiser to include in the appraisal report the most appropriate comparable sales data to support his or her opinion of value for the subject property."

My MLS system here in the DMV area which is MRIS does not have a section for modular homes so it would be pretty close to impossible to locate modular homes and confirm if there is a marketing difference between those homes and stick built homes. I do believe this is an essential component in completing an appraisal for a modular home. If anyone that uses MRIS knows a way to find modular homes besides putting keywords (which may or may not yield results because it would rely on the agents stating such in the remarks) please post a reply.

That wasn't my take away when I read your original post.

Appraising Modular homes and using stick built homes as comparables

I usually turn down the assignment when I notice there is a HUD seal and the home was built in sections at a factory then carried to the site. In my opinion that is a Modular home and can have a stigma in certain markets.

I believe modular homes could be completed on the standard 1004 form and not the 1004c form however I am still up in the air with what comparables to use and would like to get opinions from my colleagues in case I accept one in the future. I find myself getting into a back and fourth with homeowners when I turn these down and I want to get a better grasp on dealing with these. Unfortunately, they typically do not tell the lender and I find out after the visual observation which delays there transaction when it is ultimately discovered. I usually can tell by a feel I have when conducting my visual observation. It is just something about the house that causes me to pick up on asking them if the house was built in a factory then transported to the site. When they say yes then I search for the HUD seal in the closet or under the kitchen sink. I understand the definitions of a modular versus mobile home/manufactured home, but I guess what I am looking for is a consensus on how to deal with these and not the general speak from Fannie Mae on this topic.

Your assistance is appreciated.
 
Both on frame and off frame modular homes are reported on the 1004, never on the 1004C. Only homes constructed to the HUD building code are manufactured homes and reported on the 1004C--and there are older models in some parts of the country that do not have a steel undercarriage for support. There is absolutely nothing that can be seen that will identify the type of building code that was followed in the factory. The building code has to be verified by labels, building departments, manufacturers, etc.

Off frame modular homes are eligible for Fannie and Freddie and would be considered site built. They are constructed in the factory on a steel undercarriage that is used as a work table and a way to haul it to the site. At the site, the off frame modular is lifted up off the undercarriage and put in place on a pre-prepared foundation. Then the undercarriage goes back to the factory for the next off frame modular home to be built.

On frame modulars are constructed attached to the metal frame, it provides the structural support for the home and the frame can never be removed. Because of a quirk in Fannie and Freddie eligibility guidelines, F/F will not purchase a loan if the home is an on frame modular. On frame modulars are eligible for FHA, VA and USDA.

Comparables for on frame modular, off frame modular and manufactured homes can either be manufactured homes, modular homes (on frame and off frame), or built on site homes. It all depends on the market where the home is located. When a potential buyer goes looking for a home in that location, what other homes would they also consider as a substitute for the subject. Depending on the quality, finish, amenities, etc, etc, the factory built home could be superior to the site built homes in that neighborhood. It also could be inferior. There does need to be at least two comparables that were constructed to the same building code as the subject, all the rest could be different building codes, depending on that specific market. It might be best to choose manufactured homes as comparables for an on frame modular home; you as the appraiser has to judge what effect that steel frame has on that improvement, it could be discounted, a premium and no effect.

The same answer that applies to every thing in a report is "it all depends".

My smallest county does not have any building codes and no building inspector. Only the distance from the lot line is the only concern for local governing officials. So in that county, if you want a home built to a building code, then a buyer has to choose either a manufactured home or a modular home. The built on site home that costs 100s of thousands of dollars may or may not be in compliance with any type of building code and may have or may not have a single licensed contractor for any thing that was built. See some very strange houses some times.
 
My smallest county does not have any building codes and no building inspector. Only the distance from the lot line is the only concern for local governing officials. So in that county said:
Thank you very much @Jo Ann Meyer Stratton for taking the time to type such an informative explanation so early in the morning. Your input has had the most impact on my decision making in regards to servicing modular homes. The issue is they are not typical in the Maryland/DC/Northern Virginia markets so when I come across them I typically run in the other direction. I feel more confident now doing them and will stick to modular home subdivision if I get an order for them. The particular order I turned down was a modular home that was built one of four in a community of stick built homes. The other three homes did not sell recently so I would not have had any modular within a large distance to add to the report which would have surely been rejected or caused me possible issues in the future. I do believe going forward I will use modular to modular because I do believe there is a marketing difference from my research in my particular market. I will add a stick built in to satisfy the the three comparable rule if need be. Now I have to figure out the difference between the frames and how to spot the homes Fannie Mae will not lend on. If anyone has a photo display or a youtube link to the homes they will not lend on that will help a lot. You would think Fannie Mae would release more informative videos. But a boy could dream :mad2:.
 
http://www.ibts.org/services/servic...e/modular-home-state-certification-labels.htm

For modulars, both on frame and off frame. The manufacturers place the tags/labels in many strange locations since they are a local item and do not need to match any nationwide requirement. Some times they are in the attic or on the rafters and not accessible or visible. Some have papers in a closet or under the sink, etc that is very similar to a Data Plate and some don't. Again because it is local jurisdiction and there isn't any nationwide requirements.

https://www.fanniemae.com/content/guide/selling/b2/3/02.html

Fannie Mae guidelines for manufactured homes. In this section they call any thing with a steel carriage/chassis/steel frame a manufactured home. Then in a different section their guidelines state the only manufactured homes that are eligible for their loan program are ones built to the HUD building code. That sentence eliminates on frame modulars and mobile homes eligibility. Freddie Mac is similar.

Off frame modulars do not have a steel undercarriage, so they are eligible for Fannie and Freddie and because they are constructed in the factory to a local building code they are reported on the 1004 / 70. On frame modulars would also be reported on the 1004 / 70 because of the local building code and if the lender does not plan on selling the loan to F/F, will accept them as collateral. But those lenders are few and far between. They are acceptable for FHA, USA and VA.
 
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