Pole Frame Home Vs Traditional Stick-built Home

[George Hatch]

Submitted for your consideration:

20 years ago (believe it or not) I appraised the proposed construction of a 9-unit subdivision that was being built on an infiil basis in one of San Diego's suburban communities.

The most recent resale of these was back in 07/2016 for $397k. It's a 1404sf unit with 3bd/2ba, comp shingle roof and very average quality construction when compared to the site built homes around here. They built the 2-car garages onsite.

10 days prior to that sale another unit of conventional site-built construction sold, 06/2016 for $426,000. It's slightly larger (1510sf) and has a very similar quality interior buildout except it has a more open kitchen (which is a design issue, not a quality issue). The lot sizes are similar but this unit has nicer landscaping.

So there is a $30k difference but a little of that is the landscaping, a little is the very slightly superior exterior appeal, and the rest can be chalked up to modular vs site built.

 

[Mark K]

So either you have some pretty ignorant consumers or in your area some very unscrupulous mod/manuf. builders.

Some ignorance and naivety on the part of the buyers and, yes, very unscrupulous mod/man sellers. The sellers are similar to sleazy used car salesmen.

As to George's photo, we have nothing like that in this area. I know of no subdivisions that allow mod/man houses. Most are in the rural areas on an acre or two. Also, our land is cheap compared to CA. How much of the value in those photos is in the land? Below is the typical double wide mod/man in this area.

 

[George Hatch]

You're right about land values and other costs - they're way higher in the coastal regions of Calif. My point is that there is a range of quality levels available among the factory-built units. By the time you get into the similar-to-site-built quality levels the market does seem to treat them similarly at resale.

With the project I appraised they still had a crawl space but they sunk it subgrade a couple feet so it wouldn't be so obvious. Other options include a full concrete slab or even a full basement.

 

[Mark K]

My question is more to the value difference in % compared to the improvements only. $30K difference at $400K is about 7% of the total.

If the land, land improvements, legal costs (permits, etc.) are deducted what is the remaining value of the improvements and what's the difference in %. ?

If the improvements are only $200K of the $400K, then the $30K difference (mod/man vs. stick built) is 15%. If I was completing an appraisal I'd probably make a quality adjustment based on 15% of the estimated value of the improvements and not 7% of the total value. Again, just thinking out loud here. I'd never compare a mod/man to a stick built in this area. Like comparing apples/oranges or aardvarks/elephants.

 

[Deleted member 128537]

My question is more to the value difference in % compared to the improvements only. $30K difference at $400K is about 7% of the total.

If the land, land improvements, legal costs (permits, etc.) are deducted what is the remaining value of the improvements and what's the difference in %. ?

If the improvements are only $200K of the $400K, then the $30K difference (mod/man vs. stick built) is 15%. If I was completing an appraisal I'd probably make a quality adjustment based on 15% of the estimated value of the improvements and not 7% of the total value. Again, just thinking out loud here. I'd never compare a mod/man to a stick built in this area. Like comparing apples/oranges or aardvarks/elephants.

The problem with valuing modular homes and manufactured homes is there is clearly a range of quality that is pretty wide. I remember the day my company put up a very nice modular home in a PUD. Some of the people in the neighborhood were upset that this would bring down the value of their homes. It actually resold for the highest price in that neighborhood. I remember people walking into my house (I have a modular) and were amazed it was a modular home. They just walked in and said, “This is a really nice house.”

On the otherhand I’ve been in modular homes that were pretty cheap (Q5 construction for sure). And I’ve been in site built homes I could say the same thing. So I think to say just because it’s a modular home it is going to be lower is probably not feasible. I think one has to look at each home on an individual basis.

I remember doing a manufactured home a few years back for a sale and when I walked in I was really impressed by the quality. And in fact I had to use other similar site built homes to really adequately value it.

Clearly the “typical” manufactured home is not as good of quality as the “typical” site built home. I will grant that. But I would be careful to just take a flat percentage deduction just because it is manufactured or modular. This type of building has improved immensely over the last few decades.

 

[George Hatch]

My question is more to the value difference in % compared to the improvements only. $30K difference at $400K is about 7% of the total.

If the land, land improvements, legal costs (permits, etc.) are deducted what is the remaining value of the improvements and what's the difference in %. ?

If the improvements are only $200K of the $400K, then the $30K difference (mod/man vs. stick built) is 15%. If I was completing an appraisal I'd probably make a quality adjustment based on 15% of the estimated value of the improvements and not 7% of the total value. Again, just thinking out loud here. I'd never compare a mod/man to a stick built in this area. Like comparing apples/oranges or aardvarks/elephants.

Here's the thing - on that assignment I had no choice. There weren't any other units like those proposed within reasonable proximity to even consider using them as direct comps. I had to analyze units in other areas of SD County for their respective relationships with site built units nearby. So my analysis wasn't limited to just the one set of data, but to several such sets in various areas - and the conclusions were consistent.

20 years later this little infil subdivision has a track record that has been pretty consistent. Just as an example, the one unit I cited above had a previous resale in 2013.

As it happens, the two properties cited above are about 100 yards away from each other so these units were listed for sale and directly competed with each other. And as I say, the site-built unit had a much more private location (the mfg unit fronts a subcollector street for the neighborhood) and slightly better exterior fenestration and landscaping. So the real difference after consideration of these factors might have been closer to 3% or 4% than 7%. This is a pattern I saw repeated 20 years ago and can still see today in this region. On the lower end, to the extent the quality/designs are similar there's little/no difference.

which is to say when the mfg unit actually is of inferior quality materials or a more plain design they will sell for less. But that would be true for site-built as well.

 

[gregb]

There is a small tract of modular residences in the city of Ventura. The majority of realtors and appraisers in the area consider these homes to be stick-built (mostly because they do not know better), resulting in realtors marketing these homes as stick-built and appraisers valuing them as stick-built. Every time I get an assignment in that tract, I am ready for the expressions of incredulity from the parties involved.

Atypical marketing remarks for the tract:

Agent Remarks: EASY to show! Call Kim to set up showing time. Call Dawn Peck at Guild Mortgage.805-312-0450. This is a manufactured home. You own the land.
Marketing Remarks: Super nice place! Only 2 streets of these were built. You own the land. Property is move in ready. Seller has upgraded over the years they have lived here. Vaulted ceilings, gourmet kitchen with granite & stone, 2 upgraded baths & wood like floors. Oversize laundry utility room with tons of storage. Great back yard with hardscape, garden & fruit trees. Great location towards end of not a through street! Feels like your own park (right across street), HOA offers pool/spa & clubhouse. Best priced home off the Avenue! Great home for young family, retired couple or growing family!

 

[glenn walker]

View attachment 35314 There is a small tract of modular residences in the city of Ventura. The majority of realtors and appraisers in the area consider these homes to be stick-built (mostly because they do not know better), resulting in realtors marketing these homes as stick-built and appraisers valuing them as stick-built. Every time I get an assignment in that tract, I am ready for the expressions of incredulity from the parties involved.

Atypical marketing remarks for the tract:

Agent Remarks: EASY to show! Call Kim to set up showing time. Call Dawn Peck at Guild Mortgage.805-312-0450. This is a manufactured home. You own the land.
Marketing Remarks: Super nice place! Only 2 streets of these were built. You own the land. Property is move in ready. Seller has upgraded over the years they have lived here. Vaulted ceilings, gourmet kitchen with granite & stone, 2 upgraded baths & wood like floors. Oversize laundry utility room with tons of storage. Great back yard with hardscape, garden & fruit trees. Great location towards end of not a through street! Feels like your own park (right across street), HOA offers pool/spa & clubhouse. Best priced home off the Avenue! Great home for young family, retired couple or growing family!

I would consider new manufactured and not have to do anything but have it delivered and dropped on a permanent foundation.. You have to consider not only value or cost of home but what is the effective life of the person moving into it - I know that sounds harsh but often older seniors go to their last dream and hopefully they make many more years but I have had some relatives who we relocated and they were gone in 12-24 months or had to move into assisted care or closer to doctors and hospitals so our initial plan did not work out too good and a nice manufactured or modular will go 30 plus years .

 

[Terrel L. Shields]

MHs depreciate far faster than either modular or post & beam. Assuming the post and beam is otherwise conventional looking like the one I posted above (its the one with porch posts). Vinyl siding or metal will work in the rural areas I know. A true "barn" looking (I.e.- Morton) one will suffer substantial functional obsolescence.

Personally I would build post and beam, metal roof and vinyl siding. Cheapest cost except MH but without the huge up front depreciation of a that manf. House.

 

[Tim The Enchanter]

but what is the effective life of the person moving into it -

Oh my.