Hi, can you please tell me what kind of consideration is given to modular homes? (Are they appraised like manufactured homes?) We don't see many in the Santa Fe area, but I anticipated that we will in the near future as pre-fab "green" building modulars become more popular. Thank you.
The Premier Online Community for Real Estate Appraisers!
-
Welcome to AppraisersForum.com, the premier online
community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.
Appraising Modular Homes
- Thread starter mdeleon19
- Start date
- Status
Jo Ann Meyer Stratton
Elite Member
- Joined
- Jan 16, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Arizona
First the appraiser has to determine if there is a steel undercarriage. Next the appraiser has to verify the building code that was followed while it was under construction in the factory. Click on the link in this section for modular housing labels. If it is a modular home it should have that applicable state seal/tag/label some where in or on the home. If it has a HUD label and/or data plate (AKA Compliance Certificate) it is a manufactured home no matter how many bells and whistles it has. If it is a modular home and has a steel undercarriage, it is an "on frame" modular home and the loan will not be eligible for Fannie Mae. It would be acceptable for Freddie Mac, VA or FHA financing.
If it is an "on frame" or "off frame" modular the 1004 form (same form as site built homes) would be utilized. The 1004C form is for manufactured homes constructed to the HUD building code only. The appraiser should include photos in the appraisal report of any insignias/tags/seals/labels, etc that the appraiser finds. The appraiser should also include photos of and comments about the steel undercarriage if there is one. and comments about the property ineligibility for Fannie Mae. If there is no steel undercarriage, I would suggest the appraiser includes photos of the wood floor joists and definitely have comments about the modular construction. And the appraiser would also need to comment on what procedures the assessment office would utilize. For example, here in Arizona, Affidavits of Affixtures are recorded to enable manufactured homes, mobile homes AND "on frame" modular homes to be taxed as real property. "Off frame" modulars would not have an Affidavit of Affixture in Arizona.
Then for comparables--what would a typical buyer of that modular home consider as a substitute? What would be a typical buyer's reaction as they drive up to the home? Would that typical buyer think "trailer" or house as they see the home the first time? What would their reactions be to the interior? The comparables selected for the report would depend on the reactions of a typical buyer.
The difference for financing purposes between modular homes and manufactured homes is the original building code that was followed in the factory while the home was under construction. Manufactured homes are constructed to the HUD building code, a national building code. Modular homes are constructed to what ever local building code that local governing entity requires for built on site homes, examples are the IRC International Residential Code or UBC Uniform Building Code. Anything done to the home after it leaves the factory does not change the original category.
If it is an "on frame" or "off frame" modular the 1004 form (same form as site built homes) would be utilized. The 1004C form is for manufactured homes constructed to the HUD building code only. The appraiser should include photos in the appraisal report of any insignias/tags/seals/labels, etc that the appraiser finds. The appraiser should also include photos of and comments about the steel undercarriage if there is one. and comments about the property ineligibility for Fannie Mae. If there is no steel undercarriage, I would suggest the appraiser includes photos of the wood floor joists and definitely have comments about the modular construction. And the appraiser would also need to comment on what procedures the assessment office would utilize. For example, here in Arizona, Affidavits of Affixtures are recorded to enable manufactured homes, mobile homes AND "on frame" modular homes to be taxed as real property. "Off frame" modulars would not have an Affidavit of Affixture in Arizona.
Then for comparables--what would a typical buyer of that modular home consider as a substitute? What would be a typical buyer's reaction as they drive up to the home? Would that typical buyer think "trailer" or house as they see the home the first time? What would their reactions be to the interior? The comparables selected for the report would depend on the reactions of a typical buyer.
The difference for financing purposes between modular homes and manufactured homes is the original building code that was followed in the factory while the home was under construction. Manufactured homes are constructed to the HUD building code, a national building code. Modular homes are constructed to what ever local building code that local governing entity requires for built on site homes, examples are the IRC International Residential Code or UBC Uniform Building Code. Anything done to the home after it leaves the factory does not change the original category.
John "Corky" Harry
Member
- Joined
- Jan 31, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Virginia
I just finished an appraisal report where the subject was an off-frame modular. I had a couple of questions and I found the answer on this forum. Thank you very much Jo Ann for your expert wisdom!
Charles Knutson
Member
- Joined
- Jun 3, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Colorado
There is no financing difference between modular and site built -- both are UBC (Uniform Building Code) stick built homes. The difference is that modular are stick built in a factory, and site built are built on site.
There may or may not be a value difference, based on market perceptions of design and quality, but that is a separate issue. Lenders look at modulars the same as site built homes.
Rampart
Freshman Member
- Joined
- Mar 27, 2007
- Professional Status
- Banking/Mortgage Industry
- State
- Florida
A couple of questions regarding modular appraisals
I sure am glad I found this thread. I am a loan officer, not an appraiser, but I too have questions regarding modular home appraisals. I have gotten several appraisal reports back recently with values (based upon sales comparison) $40,000 to $70,000 less than the values computed using the cost approach method. These are all new construction homes, off-frame, 2x6 sidewall construction vice 2x4, some have vinyl siding, some are stucco finished, and all have interior amenities found in similar site-built new construction homes. I'm finding that they are being compared to other homes that are 18-45 years old that really do not compare in construction quality and appeal. The appraisers that have completed the reports are not familiar with modular construction, have not seen the homes (even when invited by the builders), and have no, or limited experience in appraising them.
If Marshall Swift touts using cost approach with new construction, as they do on their website, why aren't appraisers doing this?
Why are appraisers comparing similar sized homes, without similar appeal, age and construction quality, instead of becoming educated about the home they are supposed to be assigning a value to?
Why are some appraisers still using manufactured homes as comps?
How can an appraiser who drives by a "comparable sale" know its a comparable home when they haven't seen yet what they are appraising?
Just so you know, I do not select the appraiser, nor do I speak to the appraiser before the appraisal. All the appraiser gets from me is a copy of the sales agreement, floor plan, spec sheet and location.
Shouldn't an appraiser who hasn't ever appraised a modular have an obligation to educate themselves, or pass on the job if they are unwilling to do so?
How can a new home be compared to a 40 year old home without the appraiser seeing the new home on just a driveby of the comp?
It boggles my mind, it appears as though its a Skippy in reverse.
Modulars are becoming a very popular product and affordable option to site built homes in Florida. Construction characteristics vary between manufacturors, and in many cases the actual construction of the modular is better than site built homes. Where is the education and the evenness in the appraisal process?
I think too many appraisers have the perception that modulars are nothing more than glorified manufactured homes. The old saying "perception is reality, but reality isn't always the truth" is applicable in this case.
I look forward to hearing your responses.
I sure am glad I found this thread. I am a loan officer, not an appraiser, but I too have questions regarding modular home appraisals. I have gotten several appraisal reports back recently with values (based upon sales comparison) $40,000 to $70,000 less than the values computed using the cost approach method. These are all new construction homes, off-frame, 2x6 sidewall construction vice 2x4, some have vinyl siding, some are stucco finished, and all have interior amenities found in similar site-built new construction homes. I'm finding that they are being compared to other homes that are 18-45 years old that really do not compare in construction quality and appeal. The appraisers that have completed the reports are not familiar with modular construction, have not seen the homes (even when invited by the builders), and have no, or limited experience in appraising them.
If Marshall Swift touts using cost approach with new construction, as they do on their website, why aren't appraisers doing this?
Why are appraisers comparing similar sized homes, without similar appeal, age and construction quality, instead of becoming educated about the home they are supposed to be assigning a value to?
Why are some appraisers still using manufactured homes as comps?
How can an appraiser who drives by a "comparable sale" know its a comparable home when they haven't seen yet what they are appraising?
Just so you know, I do not select the appraiser, nor do I speak to the appraiser before the appraisal. All the appraiser gets from me is a copy of the sales agreement, floor plan, spec sheet and location.
Shouldn't an appraiser who hasn't ever appraised a modular have an obligation to educate themselves, or pass on the job if they are unwilling to do so?
How can a new home be compared to a 40 year old home without the appraiser seeing the new home on just a driveby of the comp?
It boggles my mind, it appears as though its a Skippy in reverse.
Modulars are becoming a very popular product and affordable option to site built homes in Florida. Construction characteristics vary between manufacturors, and in many cases the actual construction of the modular is better than site built homes. Where is the education and the evenness in the appraisal process?
I think too many appraisers have the perception that modulars are nothing more than glorified manufactured homes. The old saying "perception is reality, but reality isn't always the truth" is applicable in this case.
I look forward to hearing your responses.
Wayne Tomlinson
Senior Member
- Joined
- Jan 25, 2005
- Professional Status
- Certified General Appraiser
- State
- Illinois
Good to hear from a banker who really wants to know.
Under the the USPAP, an appraiser is supposed to know all the things that you asked and mentioned. If they don't, and I am sure that you are correct in your description of that, they are supposed to, first, tell you that he/she does not know, if you agree, then they must learn how, or engage someone who does know, and complete the appraisal.
If they don't do that, I think that a discussion with the state licensing board would be interested in hearing about it.
Mr. Frank Gregoire, chairman of the Florida Appraisal board is a frequent visitor of this forum, I expect that he would be interested.
Wayne Tomlinson
Under the the USPAP, an appraiser is supposed to know all the things that you asked and mentioned. If they don't, and I am sure that you are correct in your description of that, they are supposed to, first, tell you that he/she does not know, if you agree, then they must learn how, or engage someone who does know, and complete the appraisal.
If they don't do that, I think that a discussion with the state licensing board would be interested in hearing about it.
Mr. Frank Gregoire, chairman of the Florida Appraisal board is a frequent visitor of this forum, I expect that he would be interested.
Wayne Tomlinson
ZZGAMAZZ
Elite Member
- Joined
- Jul 23, 2007
- Professional Status
- Certified Residential Appraiser
- State
- California
I appraised a modular home in Yucca Valley, CA, when I started in the business a few years ago. I had limited knowledge about modular homes and visited numerous local realtors. None of the realtors had any knowledge about the difference between modular and manufactured homes. I recently toured a modular/manufactured home manufacturer in Corona, CA, which holds weekly inspections for the public. Part of the difficulty in appraising a modular unit is that there is no on-line database or MLS query that can be used to find modular comparables. From what I understand there are modular home communities here-and-there, but modular "construction" on custom sites are virtually impossible to locate. As things considered, Ms. Stratton's comments above are as lucid as anything I've been able to glean in the course of my independent research, and the fact that most MB's aren't aware of the distinction--and don't care either, "as there as the value 'is there.'"
ZZGAMAZZ
Elite Member
- Joined
- Jul 23, 2007
- Professional Status
- Certified Residential Appraiser
- State
- California
JAMS: Although this question might show my lack of understanding of the appraisal process: Is the appraisalof a modular unit required to include similar modular unit(s)? It seems that the market reaction to site built relative to modular units based upon matched pairs analysis would require modular comp(s). Thanks for your insight, as always.
- Status