Another article from Al that I believe you will find very informative and interesting.  Mike

MODULAR HOMES 101

 

 

Article One

 

 

  Low Cost and the Potential for BIG Problems with a Factory Built Home

 

 

 

Why buy a house built in a factory? 

 

My wife and I had the good fortune to sell our San Diego home just as the Southern California real estate market began to fall.  We wanted to move to property we had owned for 13 years, eighty miles east of San Diego, in San Diego County.  Why not?  It would be a new adventure for us and an opportunity to ‘get out of Dodge’. 

 

I do remember talking to a contractor friend of mine about building a house about the same size as our San Diego house at our rural place.  He chuckled and said, “I don’t believe you’ll find any contractors available to work there, due to the Cedar Fire, and if you do, it will be very expensive and take a significant amount of time.”  The Cedar fire had destroyed more than 2,000 homes in the county in 2003 and the construction industry was busy replacing most of those homes causing labor to be unobtainable and materials hard to come by.  It was not likely we could find a contractor willing to pass up the opportunity to rebuild burned out houses in San Diego to drive further east and build a new house for us.

 

Other than the sage advice of my contractor friend, I can’t remember why my wife and I zeroed in on manufactured homes.  A couple of reasons seemed logical at the time.  Our needs and wants were for housing that would not be too expensive, could be placed on our rural property quickly, included details in construction that fit our fire prone rural area and housing sized to accept our life style and our possessions.    

 

We did visit one manufactured housing sales lot in El Cajon, CA and determined those houses did not have “our” floor plan, details we liked and were a bit more expensive than we had anticipated.

 

Somewhere we heard or read that manufactured homes in Arizona were a “quick fix” for housing needs and relatively inexpensive as compared to ‘stick built’ houses.  It might have been a mistake for me to have forgotten what my U. S. Army commanding officer said to me many years ago, “It only costs a nickel more to go first class.”  This was a statement that would come back and haunt me.

 

I believe modular housing is about 25% of the cost of ‘stick built’ housing.  I have the documentation to prove it.  So, if you’re considering a 2,400 SF house a conventionally built house might cost $ 600,000. while a modular house of the same square footage might cost $ 150,000. depending upon its quality, upgrades, additions and deletions.  Quite a price difference!  The modular cost does not include on site improvements that may be needed or required.  To be honest, it’s probably unfair to compare these two housing types.  It is something like comparing a diamond to a cubic zirconium.  Now which is which?

 

We made several trips to Arizona over a few months time and began gathering information.  We visited two factories, talked to more than a half dozen sales people and walked through at least 20 model homes.  In retrospect, we probably should have visited a couple of factories and sales lots in California, but our initial exploration of modulars at the lot in El Cajon dissuaded us from further investigation in California.  

 

THESE ARE SERIOUS DECISIONS

 

A sage comment to you, the reader, from “Uncle Al” is in order.  I believe when folks make very serious life altering decisions it is very important to follow a logical process of gathering data, analyzing that data, making a plan of action and carry out that plan.  That may sound rather academic, but if you ponder those four steps, I think you’ll see the value to you therein.

 

My wife and I have a way of asking very pertinent questions and being somewhat critical when making expensive purchases.  I would urge you, the purchaser, to take up the same demeanor.  Most of the sales people we talked to in Arizona knew a little bit about the product they were selling, but didn’t seem to know much about the ins and outs of moving a house into California.  One of the questions I asked most sales people was, “How is the sales tax in California handled when bringing a modular home from Arizona into California.”  None of the Arizona sales people with whom we spoke seemed to know, or if they did know, they could not explain the sales tax procedure to us and that is only a sample question out of many.  We got very nervous about this lack of knowledge and decided to seek another path to our goal. 

 

Quick note: California sales tax is calculated on the purchase price of the materials, fixtures and equipment in the modular home produced at the factory, less labor costs.  Today that tax is 7.75% and is paid by the escrow agent at close of escrow.

 

After several trips to Arizona factories and sales lots we settled upon a particular floor plan we liked with additions, deletions and upgrades throughout the house to fit our needs and criteria.  Our proposed modifications would result in some construction changes to the house.  Don’t be a naïve buyer, all but one of our changes added additional cost to the basic house

 

The name of the game with manufactured or modular housing is to present buyers with a “basic unit”.  Of course the manufacturer/seller know it is unlikely you will accept every thing about the house.  So you ask the question, “Could we make a few minor changes to the house?”  “Why certainly”, is the answer along with a big smile, “But of course you realize that there are additional costs for those changes.”  LOOK OUT, the hook is in and playing the fish begins.

 

Getting Professional Help

 

I’m not suggesting you run out and find a psychiatrist although at times we felt we might need that type of professional help.  To shorten this long story let’s just say we hired a small housing consulting company in San Diego who would represent us.  This company also had a line of communication with factories in California and Arizona.  This turned out to be a great decision, at least for us, for they took on the role of our guide and agent directing us through the maze of many things we had to face in our trek to buy and move a modular home onto our property.  You of average means and superior intelligence might be able to do it on your own, but I’m glad we didn’t try.

 

A word of caution is now in order.  If you don’t have an understanding of your needs and wants in purchasing a modular home, find someone who is familiar with these homes and start talking and asking questions.  A good representative, not necessarily a sales person, can lead you through the important questions you should be asking yourself before you spend your money.  We negotiated a fee with our consultant to provide those services and we owe that company our deepest gratitude.  We couldn’t have navigated this process ourselves.  

 

Once you have selected someone to help, ask to visit a couple of factories with your representative.  Most factory managers are happy to show you around their domain and you might be very surprised at what you see.  Believe me; you will be happy you made the trip.  After your factory visit buy your professional agent lunch.  I think it is money well spent.   

 

The Factory Experience

 

I will not delve deeply into the universe of factory built housing, but suffice it to say that in any factory operation there is an opportunity to obtain vast quantities of materials in one location, under one roof, hire inexpensive and sometimes unskilled labor and produce an assembly line product rather quickly.  So, in some respects it’s the best of all worlds for manufactured housing corporations (cheap and fast equals more profit).  But it may not be the best of all worlds for you, the buyer, (cheap and fast may mean serious problems).

 

Mistakes are made in factory construction and installation and you may not know about these problems until you move into your new home.  You may find a plumbing fixture was not assembled correctly, so the shower will not drain properly or a roofing component was not sealed properly and it does drain rain water, directly into your bedroom! 

 

When we visited these factories my wife and I learned very quickly they were a cacophony of noises, activities and, upon more stringent observation, somewhat dangerous.  We were invited into these factories without any hesitation and told to wear hard hats as we were ushered through these enormously large buildings.  The houses we saw under construction were being built on an assembly line. 

 

Modular houses start life as metal sub-floor frames and are pulled horizontally (sideways to the long axis of the house) across the floor by big cables hooked to metal ‘blocks’ (wheels) in the floor.  It is an assembly line, but not a fast one.  As the bare frame very slowly moves across the floor large panels are placed upon the steel frames to form a sub floor.  Room walls are added and certain improvements made inside the house, such as electrical wiring and plumbing pipes.  Finally, when all the walls are in place, the roof trusses are placed on top of the walls and work starts on the roofing, siding and other items to partially enclose the house section if there is more than one section.  Each house can be two or three sections, possibly more, that are moved out of the factory into the open yard on axles and wheels and the sibling sections lined up together.  Each section is identified by spray painting a number and letters such as 62A and 62B, so all the sections of the same house will be delivered to the same site.     

 

Factory work can be dangerous and I recall at one factory seeing seven or eight people lined up at the first aid station in various forms of discomfort with bleeding fingers, bruises and other relatively minor injuries. Reminds me of what Jack Parr used to say, “I kid you not.”  All of the injured were standing on their own two feet and I presume that was a good sign.  We were warned by the gentleman ushering us through the place,”Pay attention, be alert and watch your step.”  Yep, we were wearing our factory provided hard hats.  When house sections weighing up to 10 tons are being assembled it doesn’t take much imagination to see how very dangerous the factory can be.  No, I have not communicated with O. S. H. A.

 

By visiting the factory, the prospective buyer has an opportunity to see how these large rectangular boxes are constructed.  Even if you don’t know anything about construction, I believe a factory visit is appropriate for you.  And most important, if you take a tour through a factory, ask questions.  Lots of questions! 

 

Houses that are constructed quickly may contain problems that may not be recognized until after you live in the house.  After living in our house for over two years we are still finding problems.  At one factory a representative told us they finish four houses each day; at another factory we were told they finish six houses per day.  As I recall our house was supposed to be built in less than 90 days, but it did not commence construction in a timely manner and took much longer within our perceived time schedule. 

 

The factory will not start building your house until they receive a work order and money for the house is in an escrow account.  Oh yes, then you’re at their mercy. 

 

You might wonder how the money transaction takes place.  Ours was through an escrow account set up with a title company in San Diego.  Our escrow account covered such things as the cost of the modular home, transfer/registration fee, escrow fee, sales tax on accessories, transport/delivery fees and brakes and axels (presumably wheels too). 

 

We had sold our San Diego house and we felt extremely pressed to move.  Fortunately for us, the buyers of our San Diego house were understanding and patient people. 

 

Ask your representative for a preliminary schedule and preliminary budget.  You should understand there will be changes to these tools due to external factors you have no control over.  A preliminary schedule and a preliminary budget are akin to a global positioning satellite system (GPS) to help you navigate through this jungle of modular housing.

 

Factory Mistakes

 

I’m sure everyone knows that people make mistakes, especially in a factory situation.  Some are small mistakes, but some can be quite serious and impact your life when you try to live in one of these homes.  It doesn’t take any stroke of genius to realize that when employees are hustling around completing six houses each workday in an environment as crazy as a factory, there’s going to be a mistake or two or three or more!

 

For example if you have a southwestern type home, such as ours, there is no roof overhang and the roof is shielded from view with a parapet wall.  When rain water falls on the roof it needs to have a location to leave the enclosed roof.  With southwestern type homes water leaves via a device called a scupper.  These are fabricated metal pieces inserted into the parapet wall at the lowest point in the sloping roof.  In our 2,300 square foot house that is 73 feet long by 32 feet wide we have seven scuppers on one side and seven on the other. 

 

Things happen and can usually be traced right back to the assembly line.  In the scupper situation, 12 out of the 14 scuppers on our house were properly installed and two were not.  Presumably, this was not known by anyone until we moved into our house and it rained and snowed.  Then the drips started inside the house. 

 

We live in the mountains where weather can reach extremes in summer, as well as winter.  So, these two problematic scuppers, along with their big brother—the roof—did not do their job, water seeped under the upper edge of the scupper, backed up under the shingles and flowed into the attic of the house.  It then accumulated in the lowest portion of the attic and came seeping through the drywall. 

 

If you have the unfortunate experience to have this same problem I would warn you that it doesn’t happen immediately.  It takes some time, but when you see the ceiling drywall sagging and you hear the drip, drip, drip of water falling on furniture and the floor, you’ll know what is happening.  We eventually did and I can tell you it will create a mess. 

 

The factory did send a representative out to make repairs.  Not only does the drywall have to be removed for an area commensurate with the area of the wet drywall, but the insulation also has to be removed.  The insulation in our house is the type that is blown in or dumped in at the factory and when that insulation becomes saturated with water it is one big heavy soggy mess.  In one of our two problems, yes it happened twice, the drywall began to sag and as we stared at it, the heavy water cracked what was left of the drywall and it began to drip into the room.  We were stunned at what we were observing.  We were not very amused when we saw a five foot crack in the sagging drywall in our bedroom appear and then to our amazement the latex paint actually stretched and tried to hold the two broken pieces of drywall together for a time.  Within 30 minutes the drywall came crashing down along with the soggy insulation, ruining our carpet and creating an unbelievable mess to clean up. 

 

My wife was beside herself since we had only moved into the house 10 days before the big dump from the attic.  I tried to be somewhat philosophical for it exposed our eyes to how the attic was constructed.  And would you believe it, this factory used a technique of construction I couldn’t imagine; it had glued the drywall to the trusses.  No nails or screws, just glue!  Another factory cost saving measure, of course. 

 

One time would be enough for anyone, but this happened again, about 18 months later.  It happened in another room almost directly above our computer, printer and scanner which fortunately were not damaged.  This time I used a pocket knife to poke a couple of holes in the sagging drywall permitting the water to drip out into two buckets.  This first aide action kept the cleanup to a minimum.  Again the factory sent someone out to make the repairs and these repairs started, just like the first time, by removing drywall and insulation and applying mastic underneath and around the edge of the roof scupper to properly seal it.  Then the worker used a garden hose and flooded a section of the roof with water near the repaired problem scupper, behind the parapet wall.  He was checking for leaks above the ceiling before proceeding with other repairs.  There was no more leaking and the worker proceeded.  New bat type insulation was installed between the trusses; new drywall was installed, textured and painted.

 

How could this have happened twice in a home that was constructed less than two years before?  The answer must be factory errors and poor quality control.  Do they ever do any inspection at the factory?  Remembering my old U. S. Army commanding officer I realized that I had failed to heed his advice.  Had I spent a few bucks more, would we have not had this problem?

 

Our house had several of these factory caused problems.  It reminds me, when I was a boy my father bought a new 1951 Mercury.   We were very proud of that car.  With less than 200 miles on the new car the flat head V8 motor stopped running.  My father had it towed back to the dealer and mechanics dismantled the engine.  They found certain oil passages in the crankshaft had not been drilled at the factory and called it, “an assembly line problem.”  The result of that mistake was a new motor had to be installed.  Fortunately, my father didn’t have to pay for it, but whatever inflated price the dealer charged to replace the engine was ‘eaten’ by the factory. 

 

This sort of thing is not good for the ‘bottom line’ of any corporation in any business.  I believe this happens more frequently with modular homes than you might imagine, but the consumer just doesn’t know about it.  I can’t say I know about many modular mistakes, but I do know there are several factory representatives covering all of the southwestern United States making corrections for those factory mistakes.

 

Corporate Profit, Perceived or Real

 

My analogy of my father’s 1951 Mercury brings up an important point.  If corporations are trying to make as much profit as possible, it behooves them to be a little bit more analytical about their selection of materials and their building process.  For example, if the factory must buy 500,000 kitchen shelf holders for their houses and they find they can buy plastic at a cost of .05 cents or metal at a cost of .10 cents, my recommendation is that they buy the metal shelf holders and find another place to cut costs. 

 

This is almost a philosophical issue, but my theorem is that home items used every day, such as shelves, cabinets, internal and entry doors, electrical fixtures, bathroom and kitchen plumbing fixtures and so on are not places to cut corners to reduce cost. These are things residents use each and every day and if, for some reason, they don’t work or they break, the owner will not be happy.  Whereas a slight downgrade of the sub floor panels might not be noticed or cared about by most owners.  When kitchen shelves collapse, as happened to us, or the plumbing fixture does not drain properly the owner’s complaint will probably be followed by additional cost ‘eaten’ by the manufacturing corporation.  Another piece of advice from “Uncle Al”, someone always pays for these material decisions and it only costs a nickel to go first class!

 

So, does it make business sense to purchase cheap materials and fixtures along with short cuts in construction at the factory as ‘cost saving’ measures for the modular home manufacturer?  I don’t think so, when the factory/business/corporation also has to pay representatives to drive sometimes hundreds of miles to the house site and make repairs.  These so called, ‘cost cutting measures’ will come back to bite the manufacturing business, one way or another!

 

I suspect most new module home owners are not as stubborn and persistent as we were regarding getting problems fixed.  And most new module home owners are not as fortunate as we were to have an honest, trustworthy representative who insisted these things be made right! 

 

These examples are why one should visit the factory and look carefully at what is being done there.  No, you will not see everything, but you might gain knowledge that could save you time, grief and money someplace down the road.

 

Here is a list of things to stir up your thoughts before visiting the factory.

 

1)    Watch as the framing, sub-floor and floor is installed.

2)    Watch as the modular “box” is enclosed.

3) Watch as connections are made for utilities.

4) Watch as fixtures and equipment are installed

5) Watch as walls are textured, painted and other finishes applied inside and outside.

6) Watch the roofing as it is installed.

7) Watch how the exterior siding, or in our case, stucco is applied.

8) After watching, do you like what you see?

9) Ask questions of others and add your own thoughts to this list.

 

I’ll have another article on modular homes in about a week.  See you soon.

 

 

 

Al Mercer

dadamercer@yahoo.com

7/2008

 

 

 

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