What is it?

[Ted Martin]

We have a builder who is custom ordering modular (NOT manufactures) homes (2x6 wood walls, drywall, 2x10 wood floor joists, wood truss roof systems, UBC code not HUD code) installing on full walkout basements. Now for the unusuall part. the two half are being installed seperated from each other by a site built 14' wide center section, roof section is wood truss. The kitchens are custom built, the mechanical system is installed in the basement. If you didn't see in being built there would be no way to guess that parts of this structure were factory built, nothing special noted in the building permit or county appraiser's data files. Per the Fannie Mae letter what is it, site built or manufactured/modular? The quality or workmanship and materials is at least equal or superior to site built homes in it's market segement.

 

[Jo Ann Meyer Stratton]

It is a factory built home to UBC--it is not a manufactured home built to HUD code. Fannie Mae and other lenders would consider it for financing in the same category as a site built home because the building code utilized in construction is the same as used for a stick by stick site built home. And then it becomes the appraiser's job to determine market reaction. Would a typical buyer only look at homes completely or partially constructed in a factory or would they only look at homes 100% built on site or would they look at both equally? Actually it sounds like you have a panelized home or a pre-cut/kit home that is completed on the site. But it is NOT a manufactured home!

 

[Roger]

Ted,

I have a builder/client doing the same thing. Ceramic tile floors, oak trim and cabinets, etc. Just as good quality as most spec built homes in this area.

Havn't had any sales, yet, though to judge market reaction.

Have you had sales? What is the market reaction in your area?

It is going to be interesting to see if there is any stigma attatched to these factory built homes, even though the superior appearance and quality is evident.

I still call them modulars in my reports, but most of my comps are stick built homes.

 

[Richard Carlsen]

Since BOCA modulars have similar market appeal and acceptance to site built houses in northern Michigan, I would treat it as a custom built house. Even though part of is assembled in a factory, it has the attributes of a stick build house and meets Michigan's building code that the HUD Code manufactured do not.

I would treat it, as stick built with some comments on the mode of construction, making sure the UW knew I was talking about BOCA modular and not manufactured. My comps would be site built or BOCA's if available. We use BOCA's and site built comps interchangeably.

If the floor plan were market acceptable, I would not make a big deal out of the construction as long as it conformed to county/state codes.

 

[Austin]

You guys refer to factory built as if it were a disease. How many site built cars have you ever owned. My father was a broker and one of his best friends is the founder of Nationwide Homes. He was here at our home visiting two weeks ago. He once took me on a tour of the plant. You have never seen such high quality wood products. I had just built my house at the time and couldn’t believe it. They build these homes, finish them out, haul them hundreds of miles and don’t even get a crack in the drywall. They build condos, houses, apartments, and they are as good as if not superior to site built.
I was on the board for the local high school building trades program. They built a home in the school parking lot, and we held an auction and sold it every two years and did this for many years. Built by HS kids and as good as any site built home of similar size in the area. I appraised one once for a refinance and it was the best built home in the neighborhood. The stigma, if one exists, is in the head.

 

[Richard Carlsen]

Factory built is not a stigma. However all factory built items are not the same.

My Saturn is not the same quality as a Yugo even though both were built in a factory.

HUD Code is, by definition, an inferior code to Michigan building standards. Therefore, as an appraiser, I must comment on this when I do an appraisal.

Do I like HUD Code houses? No, not really. I've seen too many cases where they cannot take the rigors of day to day living of a family. They appear to wear out faster. I depreciate them on a different basis in the age-life method I use in the cost approach simply because IMNSHO, they won't last as long.

It is not in my head. No not really. A HUD Code house with a 30 PSF snow loading is not built to the same standards as a site built or BOCA house with a 70 PSF snow loading. It is pure construction engineering.

 

[Austin]

Richard: You make a good point, but if we are going to follow up on your point we will have to change our language on this subject. From now on, instead of referring to site built, factory built, etc., we should say for example: “Built to HUD, or BOCA, or state code, or whatever code, instead of where the pieces were put together.” The house they built at the HS met all local state and national codes. If we use a common construction standard then other than functional design we have no other basis to distinguish the difference. The problem I have with these standards is how do you know what the snow load factor is on a site built dwelling? If you don’t have the same statistics on conventional site built houses, then how can you make comparisons? Is it a Hugo or a Volvo? It is kind of like the agrument I hear about using regression methods to appraise. The argument people give is that the test statistics don't look to good. My response is: "What test statistics do you use with the conventional marketing grid?" They are using two different standards and assuming the conventional method is the standard, again all in their heads.

 

[Richard Carlsen]

I know what the snow load is in a conventional house because the construction was approved by the county based on the Michigan Building Code. Until last July, Michigan was by default, a BOCA code state. The new code is even tougher.

 

[Pamela Crowley (Florida)]

I've seen modulars that were excellent quality construction where it would take a very experienced expert to be able to figure out that they were factory built. I've also seen modulars that I would swear were manufactured to HUD code but.... they were modular to BOCA code.

Stand back and take a good look. How is the 'typical' buyer going to see it. Appraise accordingly and explain it all. Once it's been established that it is HUD code, use HUD code comps. If you KNOW it's modular, attempt to find other modular comps of similar quality construction. If you cannot find other modular comps, use similar quality construction 'stick' built comps with full explanations.

K.I.S.S.

 

[Ted Martin]

Roger,

I've been told the builder has build and sold three over the last year, I haven't had a chance to follow up yet on these sales. This wasn't an appraisal assignment but something new I just found out about. The appraiser that did construction appraisals was the one who told me about them.

Austin,

Not implying that there is anything negative about factor built. I was using the term as a descriptive. There seems to be fairly wide agreement that manufactured refers to a HUD code (performance code, we don't care how you build it but it needs to meet these minimum load and span requirements) home built after 1976 regardless of the number of sections it comes to the site in (1, 2 or more sections). The modular term seems to confuse a lot of people since the term has never been defined by HUD, Fannie or Freddie in any meaningful way. Case in point the lastest letter from Fannie which says manufactures should be compared to manufactured (I agree), and modulars should be compared to modulars (I disagree for the following reasons: A) In my market the buyers don't make a distinction relative to site built homes. B) Buyers only pay for the quality they can see in this market, most of them could care less what it's framed out of or who nailed it together and where the boards were cut and put together. It's more an issue of curb appeal and color selection. C) There is NO public data source for the information necessary to comply with the letter.

My personal residence was a factory built home built to the UBC (specified building code, the you have to use these size boards to meet these load and span requirements type code). What is interesting about my home is that it was build in a factory and measures 24 x 40 and was shipped to the site in ONE section, no marriage wall. The floor joists are 24 foot long 2 x 10's, walls are 2x6, roof is wood truss, interior is sheetrock, oak trim, 200 amp elec, exterior siding is Colorlok, 3 tab roof shingles. The factory is located over 120 miles away. I have never figured out how they can build and ship these structures and make any money. It is not a manufactured home, and the term modular is not accurate. If you were to do the appraisal inspection and were not told it was built off site I doubt you would be able to figure it out (including a search of the public record).

Jo Ann,

I agree. I was also thinking along the lines of treating these homes as kit or panelized homes. Although if the truth be told I would probably treat it as a site build for appraisal purposes. I suspect that the "typical buyer" in my market is going to consider and compare these homes to other site built homes rather than to a HUD code homes.