Modular vs. Stick Built.difference marketability wise?

[Mary Tiernan]

Although you need to do an analysis of sales in your marketplace to determine if thre is a difference in value and marketability, my research in Michigan shows no distinction between BOCA and similar ranch style houses.

This is part of what my reports say when I am aware it is a BOCA:

In this market, BOCA modular houses share equal marketability with site built ranch style houses. BOCA modular houses are constructed in a factory, transported to the construction site, and placed on a foundation. BOCA modular houses are built in accordance with strict State of Michigan construction codes similar to site built construction codes. Due to the similarity in construction methods, the BOCA modular is considered similar to site built housing.

Once in place, the BOCA modular designation is dropped and the house is recognized/marketed as a ranch style house. Differentiating between site built ranch style houses and BOCA modular houses would require access to the original construction plans.

Lack of disclosure regarding BOCA modular has limited the selection of comparables to similar ranch style houses without regard to the BOCA modular designation.

However, keep in mind this is BOCA modular, not HUD manufactured. Many homeowners and lenders are confused as to the difference, it is your job as an appraiser to be aware of the difference and the market reaction to each.

 

[Richard Carlsen]

....unless it looks like and is similar quality to a manufactured home.

I would disagree with you based on Michigan's requirements (my service state).

A modular and a mfg home may look the same and may be of similar quality but they are built to two separate building codes. The HUD Code mfg house may exceed the requirements of the HUD Code but it does not meet the specific requirements of the State Building Code which is, beyond a doubt, a superior building code. And there is no appraiser that I know of who, on doing a visual inspection of a high quality mfg house can honestly say that in all aspects of its construction, the high quality mfg house meets or exceeds the requirements of the State Building Code. In other words, you are not comparing apples to apples. And you are taking on a determination that you as the appraiser are not qualified to make.

In this market, BOCA modular houses share equal marketability with site built ranch style houses. BOCA modular houses are constructed in a factory, transported to the construction site, and placed on a foundation. BOCA modular houses are built in accordance with strict State of Michigan construction codes similar to site built construction codes. Due to the similarity in construction methods, the BOCA modular is considered similar to site built housing.

Once in place, the BOCA modular designation is dropped and the house is recognized/marketed as a ranch style house. Differentiating between site built ranch style houses and BOCA modular houses would require access to the original construction plans.

Lack of disclosure regarding BOCA modular has limited the selection of comparables to similar ranch style houses without regard to the BOCA modular designation.

Mary

A couple of comments if I may.

First off, BOCA is a building code and is no longer applicable to modular frame houses in Michigan since the new state-wide building code went into effect. It stands for Building Officials and Code Administrators International national building code. I think it was last updated in 1999. However, neither the BOCA code or any of the other building codes are applicable anymore in Michigan since the unified building code went into effect several years ago. Modular frame houses must now be built to and approved by the state based on the State Building Code. This is the same code to which site built frame houses are constructed. The only exception to adherence to this state building code that I know of are HUD Code houses which are built to an inferior national standard.

I think it is wise to drop any mention of BOCA in a report since modular frame houses built prior to the new building code were built to any number of building codes and not just to the BOCA code. Modular frame houses built since the new building code went into effect in Michigan are in essence State Code Modular frame construction and should never be called BOCA's.

 

[Mr Rex]

Richard, the codes are different here too. I have personally seen the invoice of a HUD code home and a modular of the same model # home, and the upgrade to mod was $3500. Yes apple to apples, there was no visible difference other than the Code they were built to. From talking to the manufacturer there was no difference at all in the 2 units other than one had HUD seals, the other had Modular Construction Verification stamp, attesting that it was built to State code. He explained that the HUD code home had some price advantages due to the difference in the way they were taxed.

 

[Richard Carlsen]

I know that they can roll off of the same lines with exactly the same building materials but unless one is there watching and sees the state building code permit for the same model that is getting the HUD Code label, I would be very, very hesitant to call them the same in the field. For one thing, financing HUD Codes has been more difficult than those built to state building codes. In addition, there is the market perception of a HUD Code being inferior to a state code modular. Given that, it is my practice that only HUD Codes are used as comps for HUD Code mfg houses and site built and modular constructed frame houses are used interchangeably as comps. The market I serve has enough experience with HUD Code houses over the past 12-15 years to appreciate the general difference in quality.

 

[Colorado Guy]

Oh Rich....where for art thou brother?

Seriously, the term modular is often mis-used. My county reports all factory built homes as modular. Regardless, there is a definite stigma attached to factory built homes IN MY MARKET due to the very high foreclosure rates. An appraiser should be able to determine the differences between manufactured and modular and also know the market reaction for their area.

Mike and I work in the same area - this is more true now they every before. The stigma is high and in most cases true modulars sell for less the stick built, regardless of quality. Does it make sense - IMO that is not the question - the question is the markets recation.

 

[Mr Rex]

Richard, I'll take your word for it. I know a thing or three about HUDs and mods myself. Worked in a local HUD code plant as a teenager, have "set" several modulars as a GC. Live in a town with a HUD plant that also produces the same houses as modular and another modular plant that puts out a house as good or better quality as any site built home. (Handcrafted Homes http://www.handcraftedhomes.com/) The HUD plant is a Clayton Homes plant http://www.clayton.net/ . While they do offer some nicer mods as well, the ones they produce in the plant here locally are what I call Hudular, all the Quality and Panache of a HUD code home but it has a different color stamp so even some appraisers will compare them to a site built home. Not me, it quacks too much for me not to call it a duck.

 

[Richard Carlsen]

While they do offer some nicer mods as well, the ones they produce in the plant here locally are what I call Hudular, all the Quality and Panache of a HUD code home but it has a different color stamp so even some appraisers will compare them to a site built home.

I understand what you are saying. However, remember that I am speaking from within my Michigan market only.

While I do not appraise the 40 to 60 HUD Codes per year like I used to do, I have done enough since the Michigan Building Code went into effect in July of 2004 I think it was, to know that I have yet to see a HUD Code mfg house that meet the Michigan Building Code. The best example and one that is very meaningful up here is the Roof Loading. In the area where I did my last HUD Code (week or so ago), the State Building Code calls for 70 lbs/SF for roof loading due to heavy snow. I have never seen a HUD Code mfg house, including those with 8 foot flat ceilings and 5/12 pitches with over a 40 lb/SF roof loading. If the house is a site built frame or a modular factory built frame house, the minimum roof load must be 70 lbs/SF. Most HUD Code houses in this market, have 30 lb/SF roof loading and I've actually seen some with 20 lbs/SF. IMNSHO manufactured houses and site built/factory assembled frame houses are not the same physically and should not be used for comparison in the sales grid.

 

[Mary Tiernan]

Hey Richard, thank you for the correction.