Thanks for the replies.
Because modular homes (factory built in sections, delivered and assembled on site) are rare birds in the county that I usually work, time and time again I see that the market response is less than that of site built.
I know that there are higher quality modulars that I've seen as displays at the sales offices down in Denver, but still....at least in this market area....the buyers seem to be able to sniff them out and will not pay as much for them.
I will readily admit that my experience is limited in appraising factory built homes, simply because there aren't very many of them around here, but every time I do get an appraisal order for one I notice that appraisers who came before me would pick site-built homes as comps to hit the 'needed value' on refinances, not disclosing that the home is factory built, even when there may be comps of similar construction (factory-built modular) that they could have used. Had they chosen those comps, their values would have been significantly lower.
Based on what some of you have posted, there are markets that don't discern a difference.
On one occasion I had a loan officer and a modular home dealer trying to bully me into using only site-built comps in the area for a proposed new construction modular. It was huge......two stories, 3500 sf on a full walk-out basement. The LO's estimate of value was around $550,000 to secure the loan which included rolling the existing land loan into the deal, and come h*ll or high water they were determined to make that deal fly. The nearest modular comps that were around that size were nearly 20 miles away, closer to the Denver metro area, and had recently closed in the $300,000 to $350,000 range on fairly similar sites. The modular home dealer had fits when the LO told her that I was charging an additional fee for having to go out of the area for modular comps. The LO gave her my phone number and the debate began. She insisted that this home was going to be of equal quality to site-built homes of similar size in that neighborhood, even though the list of upgrades was lame at best (vinyl floors, standard oak cabinetry, vinyl windows, lots of 'we haven't decided yet' items) compared to the upgrades in the site-built homes, and that I did NOT have to disclose that the home was factory built. She went ballistic when she found out that I wanted to use at least two other modular homes as comps (same builder, by the way <_< ).....and within a couple of hours after our conversation ended the LO called me and cancelled the order, arrogantly stating that the dealer had found a 'good' appraiser that would use site-built comps. Good riddance, I said.
As a side note, it's been nearly two years now since that little episode and the land is still vacant. Not sure what happened.
The point of my ramble is that, based on the experiences in my own market area, it makes my hair go up a bit when I see modular home dealers pushing this notion that appraisers and lenders should value this type of construction as if it were identical to site-built homes, even though in some areas the market (buyers) indicates otherwise. I would advise all appraisers to analyze their own market areas and see if this is true before they make a decision on their comp selections.
I was taught that if the home is an off-site, factory built modular it should be disclosed in the appraisal report. Once that is disclosed to the lender, they will almost invariably expect the comps to be similar construction.
So what do most of you do? Do you disclose if you know?
