If you are in the market for a modular home, Al has listed some very interesting Frequently Asked Questions (FAQ) that are worth reading.  My thanks once again to Al for contributing useful information.

MODULAR HOMES 101

 

Article Four

 

Further Education About Modular Housing

 

If you really want to learn something about modular homes, you should spend some time snooping on the Internet.  Do a search for modular homes and see what you find.  Read some of the information presented on various web sites and always question what you read.  Remember, it is the objective of the manufacturer/broker/seller of factory built housing to convince you that you cannot live without the product.  Develop an attitude like me, be a ‘born again cynic’, about modular homes. 

 

I recently discovered a website on the Internet that had been developed by what I consider to be a ‘broker’ in the manufactured house industry.  The objective of this web site is to convince you, as the prospective purchaser, to use the services offered by this company, for a fee of course.  This particular broker has developed a list of “Frequently Asked Questions” (FAQ) about factory built housing and posted these on the web site.  I was quite interested in the broker’s answers to its questions and the marketing style in the presentation of its answers.  In my sometimes not so humble opinion, the written presentation of this broker does not bode well for the modular home industry.  I think these and similar sites are constructed too quickly without thorough thought about the basic construction of the site; for user friendliness, clear and concise presentation and above all, apparent honesty.  The web site should have been better presented to convince people of the worthiness of modular homes specifically and the factory built housing industry in general.  Remember, be careful of the zigzag. 

 

There is no value in identifying the broker’s name, but I’ve taken the liberty to reword some of these questions for clarity, restructure answers for ease of understanding and paraphrase here and there.  I’ve also added my own editorial comments and a few of my own answers to the FAQ’s.  The broker’s questions and answers are underlined, so I don’t become confused.

 

Frequently Asked Questions

 

1. Q.  Are factory built houses built to Uniform Building Code (UBC) standards?   A.   Why of course.  Al’s Answer.  I don’t agree with this answer.   First, I don’t know when this website was prepared, but today there is no Uniform Building Code (UBC).  It was replaced in 2000 by the new International Building Code (IBC) prepared by the International Code Council (ICC) a group formed by the merger of three organizations which published three different building codes.  In an effort to further standardize these rules this effort produced a code that could be adopted by local governments regardless of geographic location or partisan political opinion.  Now it could be true that this particular broker represents builders who construct modular homes that do meet the UBC (IBC) standards, but I seriously doubt it.  A portion of the profit resulting from the sale of the factory built house is that it is built with a somewhat lower quality of this and that.  Your modular may be built under the Federal Government, Housing and Urban Development Department standards, but those standards may be much less than locally adopted government codes and ordinances, including the IBC.  I’m sure that our home would not meet the local laws for electrical systems for detached single family homes.  How is the factory able to avoid the local laws in construction of modular houses?  Because in most cases most local laws do not become effective until the home is permanently placed on your site. 
2. Q.  How long does it take to build a factory built home?  A.  About half the time it takes to build a ‘stick built’ home.  Al’s Answer.  There are so many variables in this question that it is nearly impossible to concoct an answer.  It’s easy to say, “Half the time”, but can that really be a fact?  Depending upon the complexity of the home, some stick built houses may take much longer and others about the same time to build.  There are many variables that affect the construction time.  Our experience leads me to believe that one should have lots of patience when you tie up your money to buy a modular home.  The whole process will probably take longer than you might imagine. 
3. Q.  What kind of quality can I expect in a factory built house?  A.  Quality of a factory built house has many advantages over stick built homes.  Al’s Answer.  I just can’t agree with this answer.  There might be a few quality advantages of factory built over a stick built home, but I emphasize the word ‘few’.  It has been our experience that quite a few elements of our home had to be rehabilitated, repaired or modified entirely due to physical failure (cabinets collapsing), poor to nearly no craftsmanship (several internal walls did not align properly) or just downright unexplainable strangeness (bubbles beneath the vinyl).  In my opinion the quality is not there; but it might be in a more expensive modular selection. 
4. Q.  Can I expect a warranty with my factory built home?  A.  Yes, sometimes a ten year warranty can be obtained through a third party.  Al’s Answer.  I suspect this could be true if you bought a special insurance policy (warranty) for your modular.  Our house had a one year factory warranty on the house and 20 years on the roof.  This also might tell you something about the mind set of the builders producing our modular house. 
5. Q.  Can I design my own modular home?  A.  Why certainly, within reason of course.  Al’s Answer.  The manufacturer wants to encourage the prospective buyer to think they can do just about anything regarding their new home.  Of course, all those changes are going to cost you, just like I mentioned in a previous article.  The fact remains that there are certain structural limitations about the house that cannot be changed.  You do want the roof and ceiling to remain over your head, don’t you?  There are certain structural “bearing” walls that must be in certain locations.  Also, there are factors during the construction of the home that will seriously limit such things as totally rearranging the floor plan, standing the modular on poles high in the air or other strange things.
6. Q.  Is it possible to obtain financing for a modular home?  A.  Yes, you can obtain financing.  Al’s Answer.  At one point in our four year venture to purchase and move into a modular home, I did go to at least six banks including those that can be found throughout the U. S. and small local banks as well.  All but one said they would not finance modular/factory built houses.  Don’t be naïve.  Most bankers still look upon modular/factory built homes as some sort of “trailer!”  I tried to explain to one bank executive of a nationally recognized bank chain that there have been many positive changes to factory built homes over the past twenty five years, but he only reiterated to me, “That’s our policy.”  I then recommended that if he really wanted to climb the ladder in the banking business he needed to prepare a presentation to his corporation board of directors about the profit that can be made in providing mortgages for factory built homes, i. e. change the bank’s policy.  I told him, “The manufactured house train is about to leave the station and you have an opportunity to jump on the train.”  Shortly after that he ushered me out of his office.
7. Q.  What can I expect regarding the resale value of a modular home?  A.  There should be very little difference in selling a factory built home as a stick built because they meet or exceed local government codes.  Al’s Answer.  As much as the manufacturer would like you to believe there is similar resale value in each type home, I doubt it.  From what I know, there are certain limitations about obtaining financing for a factory built homes and I suspect this extends to the resale of modular homes.  Furthermore, our home insurance policy states right on the first page of the policy, “Manufactured House”.  That is evidence the insurance industry looks differently on manufactured housing.  Don’t be fooled, there is a difference if not to you and me, to others. 
8. Q.  How much does a factory built home cost?  A.  A modular home costs about the same as a stick built, but under certain circumstances it can cost 20% to 40% less.  Al’s Answer.  Yes, I agree, these houses are less costly.  In our case I opined that in the final analysis our house was 25% to 30% of the cost of an on-site stick built house.  However, that cost does not include many other on-site costs that would probably have been absorbed into the cost of a stick built house.  To understand this issue you need to do some field work in your geographic area.  If you are one of the fortunate few who have the knowledge, the funding and craftsmanship to build your own home you might be able to build a home with a very cost effective result.  Most people can’t and don’t.
9. Q.  Do I need an on-site general contractor and can I obtain an on-site general contractor on my own?  A.  No, you don’t need one since there are several loan programs which will allow you to be your own general contractor and if you choose to select a contractor we’ll provide you with a few names.  Al’s Answer.  Be careful!  Unless you have done general contracting work before, I would advise against you becoming your own contractor.  Unless you have knowledge of general contracting you need to hire a professional who does.  Needless to say we eventually fired our on-site contractor because he did not know what he was doing and he created many unnecessary problems.  I might add that he was recommended by the factory that built our modular.  He filed a lien against our property that required a lawyer to straighten things out.  It was one of those, “my people will meet with your people”, but it still cost money.  I would highly recommend most prospective buyers of modular homes hire a professional consultant and together conduct a formalized process for the selection of a general on-site contractor.  I’ll have an upcoming article in a couple of weeks that deals directly with the contractor selection process.
10.  Q.  What do modular homes look like?  A. Just like on-site homes.  Al’s Answer.  They can be made to look like a stick built home, but this will always be at an additional cost.  To the educated eye, manufactured houses can be detected.  It’s possible I could be fooled, but there are some ‘features’ that will indicate the house is built off-site and brought to the site.  I suspect if you spend enough money, you could cause a modular home to look like a stick built home.  I suspect now that I’ve said that, I’ll have some people challenging me to see a house and tell them it is either off-site built or on-site built!  I’ll take that challenge.
11. Q.  What does the purchase price of a modular include?  A.  The base price, delivery to the site, applicable state and local taxes, custom options added to the home and we require you to use our ‘set up’ contractors.  Al’s Answer. This broker makes it sound rather simple, but it’s not.  There will always be factors that you as the developer/buyer/home owner cannot control and in this example the broker/seller/manufacturer does not always know or control the external factors.  In the final analysis it’s up to you to ferret out these uncontrollable costs.  A qualified professional can help you.
12. Q. Can you help me to find land for my home?  A.  Yes, we work with a number of real estate brokers.  Al’s Answer.  This too can become a very complex problem.  For example, you need to know if the local zoning will permit the location of a modular home on your property.  That’s probably not a big problem, but there may be so many sites that it will be mind boggling to you.  You need to ask yourself a number of very serious general questions such as your price range, site location related to work and play, surrounding development good and bad, legal lots, deed restrictions and other similar things.  When you have answered these questions you need to consider site topography, available utilities, physical access, aesthetic concerns and more specific site issues.  There are many factors that will demand your attention and become a significant part of your life.  As I’ve said elsewhere, seek some professional assistance.  You may need a professional to help you with this profusion of information.
13. Q.  What’s the cost of what I want to do?  A. There are many variables and the cost for what you want will vary widely depending upon many factors such as real estate costs, land features, permits, utilities, site preparation and foundation, surveying and engineering costs (if necessary).  Al’s Answer.  These cost estimates are not worth repeating here because they change frequently.  The broker’s final total of $195,000 certainly cannot be here in southern California.  I suspect the estimates are specifically low to entice you to bite the hook.  Watch the zigzag.     
14. Q.  How can our prices be so low?  A.  Building materials are bought at a discount, there are savings on labor and modern building techniques to keep the price low.  Essentially these homes are built in a controlled environment (factory) and mistakes are minimized.   Al’ Answer.  I will not argue that factory built homes can be built more cheaply, primarily due to the ability to purchase larger amounts of materials at lower costs and significantly lower labor costs.  However, there is a trade-off between these things and failures along the assembly line.  I’ve seen it in the factory and I’ve seen it in our own modular home.  I would like to clearly state that I do believe manufactured housing is the future in housing construction.  I see the possibility of manufactured housing becoming more and more a part of housing construction in this country.  There will always be a niche for ‘custom built homes’ at higher prices, but the vast majority of us will not be in that market.  The modular industry must get its act together and produce a better product at a reasonable price.  Something that might help attain that objective is to hire more qualified employees at all levels within the factory and the parent company.

 

I hope all this did not give you an upset stomach, but this type of information should be a part of the educational process of all prospective buyers.  The more you learn, the more you’ll be able to intelligently dole out your money and the more pleased you’ll be with your new modular home.  The builders are always going to pocket your money and hopefully you’ll get what you paid for.

 

Al Mercer

August 2008                        

 

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