Are you considering buying a modular home? Once thought a cheap and low-quality housing option, modular homes have come a long way in recent years.
They offer home buyers another way to achieve their dream of owning a home and have several advantages over regular, “stick-built” homes.
However, buyers should also be aware that modular homes have some drawbacks and are ultimately considered less desirable than stick-built homes by many people.
Below, you will find a comprehensive look at the advantages and disadvantages of modular homes.
We will cover everything you need to know about modular home construction.
I have been a real estate agent for nearly forty years. In my time in the business, the quality of this housing choice has changed dramatically for the better.
They are no longer considered an inferior product. If you are in the market for a new home, they are worth exploring.
Let’s examine everything you should know.
What Modular Means?
The definition of modular is building with a module or modules. In construction, these modules are formed to complete a structure.
Hence the term “modular home.”
What is a Modular Home?
People often wonder and ask real estate agents what modular homes are. A modular house is essentially built indoors in a factory-like setting.
The manufactured products are covered and transported to their new locations, where a homebuilder assembles them.
Modular homes are properties that are built off-site vs. onsite. These houses are often called factory-built or prefab homes.
You may encounter them for sale in your area. Modular home sales are no different than any other. They may or may not be advertised as such.
What Are The Homes Made Of?
New modular home construction is made of the same quality materials as traditional new construction homes.
How Modular Homes Are Built
These properties are built both in a factory environment and onsite. The process of building is started indoors. A series of modules are constructed.
Once completed, they are shipped to the building site, where the rest of the construction process is completed. An advantage to modular home construction is that you don’t need to complete site construction before starting the project.
Site work and building construction can start concurrently. Modular construction begins with building the flooring system. The wall and roof systems are often built simultaneously. Once completed, the walls are then erected to form a shell.
Once this process has been completed, it can be shipped to the building site. Yes, modular homes can be shipped to the location of your choosing!
Interesting Facts About The Construction
- Modular homes can be constructed on basements and crawl spaces.
- A modular home can withstand winds up to one hundred seventy-five miles an hour.
- They are considered to be green.
- Modular construction takes a much quicker time to build than traditional new construction.
- The taxes you pay on modular construction are the same as on stick-built houses.
- Loans for these houses are usually the same as site-built homes.
- Home insurance for modular properties is the same as traditional stick-built homes.
The Benefits Of A Modular Home
Let’s start with the benefits of building modular homes, making this home very appealing to buyers. These include:
- Cost Efficiency: Using standardized production processes, the homes can be less expensive than traditional construction.
- Time Savings: Building modules parallel to the site work in a factory setting can significantly reduce overall build time.
- Quality Control: Being built in a controlled environment reduces the chances of construction delays due to weather. It can also improve overall build quality.
- Environmental Impact: Modular construction tends to generate less waste and can incorporate energy-efficient designs more readily.
Modular Homes Now Have Higher Quality
Modular home manufacturing has recently improved and can often compete with the traditional stick-built home. Sometimes, the quality can be better when compared to some stick builders.
They are built in a factory setting on an assembly line, which means the building process for all the pieces is under intense quality control.
On the other hand, a stick-built home is constructed from scratch on the land where it will sit.
Being in the real estate business for many years, I can tell you there have been times when a builder has not done an adequate job of keeping the lumber used in construction protected from the elements.
Problems can occur from this neglect, but you only learn about it years later.
Will They Last?
With modular homes being constructed with the same quality materials as stick-built homes, they will certainly last.
What is The Speed Of Construction
These homes can go up quickly, often faster than a traditional stick-built home. Considering all the areas where delays are possible when building a standard home, it is easy to see why this is the case.
The materials for a stick-built home may be sourced from all over the country, and each different supplier must get the materials to the builder on time.
There are many opportunities to go wrong just in the transportation process. A modular home is one of many other homes built by the manufacturer, meaning supplies are usually abundant to finish the job quickly.
Weather can also be an issue with a stick-built home. If it is raining, snowing, or dangerous outside, such as thunderstorms, builders must stop until the weather improves.
A modular home is constructed chiefly indoors, where the weather is not an issue.
If you have any time constraints in transitioning from your existing home to a new place, a modular home could be something to consider just for the savings in time.
There Are Environmental Advantages
Modular homes offer several environmental benefits, making them more sustainable than traditional site-built houses.
- Reduced Waste: One of the modular construction’s most significant environmental benefits is its ability to reduce waste. They are constructed in a factory setting. This allows for precise measurement and cutting of materials. The precision minimizes the amount of waste generated during construction. The controlled factory environment also means that leftover materials can be saved and used for other projects, further minimizing waste.
- Energy Efficiency: They are often designed to be highly energy-efficient. The factory construction process ensures better insulation and tighter seams and joints. This leads to less heat loss and lower energy consumption for heating and cooling. It reduces the environmental impact and leads to lower utility bills for homeowners.
- Less Construction Site Impact: Since they are primarily constructed off-site, there is less disruption to the building site. This means fewer disturbances to the surrounding ecosystem. For example, reduced soil compaction and less harm to local flora and fauna. The need for onsite vehicles and equipment is also minimized, leading to lower emissions.
- Durable Construction: The construction is built to withstand transportation from the factory to the construction site. This durability can translate into a longer lifespan for the home. It can reduce the need for repairs and replacements and minimize the home’s environmental footprint over time.
These benefits underscore the growing recognition of modular homes as a green and sustainable housing solution. By choosing modular construction, homeowners can significantly reduce their environmental impact while enjoying a modern, efficient, and durable home.
Video: Understanding Modular Homes
Get additional modular home facts in this helpful video.
Pricing on Modular Homes
Probably one of the most vital questions is the price of modular homes. Like any other construction, the costs will vary depending on several things.
A few essential factors in modular home prices will be the size, location, and various amenities added. Ballpark pricing on modular homes could be anywhere from $80,000 to more than $500,000, excluding the purchase of the lot.
The average cost of a base model is $120,000-$150,000. With finishing expenses factored in, it bumps up to $270,000-$300,000.
Like other new construction, the base price will significantly differ from the cost after extras.
They Are Less Expensive
Are modular homes cheaper?
Because the same manufacturer builds the modular home, there are fewer costs associated with its construction and less possible downtime.
A modular home cost can be up to 15% cheaper than a stick-built home and possibly even more affordable if you are building your home in a location that is hard to get to or far from major manufacturing centers.
Modular Construction Has Financing Options Through Manufacturers
In addition to most home buyers’ standard financing options, you can finance the home through the manufacturer.
Sometimes, manufacturers will offer better financing options than other lenders, which means you get a less expensive home and often get more favorable financing. Favorable financing, of course, is not always the case, but it is certainly worth researching.
Financing Plans Available
Potential buyers may find similar and distinct options for traditional homes when financing a modular home. Some modular home manufacturers offer direct financing solutions. This can streamline the purchasing process.
These financing options are tailored explicitly to modular home buyers. They may include special terms and conditions not found in conventional home loans.
Manufacturers may also partner with financial institutions providing loans suited to the modular home market. These partnerships can facilitate the loan application and approval process. They offer competitive rates and terms that are conducive to the unique aspects of this type of property.
Comparatively, traditional home financing involves obtaining a mortgage through banks or credit lenders, with the property as collateral.
While this route is also available for prefab homes, funding directly from manufacturers or their partnered lenders can offer more specialized packages.
How to Approach Manufacturers for Financing
To initiate financing discussions with a modular home manufacturer, potential buyers should:
- Research Manufacturers: Look for manufacturers offering financing options or partnering with financial institutions. Their websites often provide preliminary information on available financing solutions.
- Prepare Financial Documentation: Compile the necessary documents before approaching a manufacturer or lender. This includes your credit report, proof of income, employment verification, and other documents that can attest to your financial stability.
- Understand Your Credit Score: Your credit score significantly influences the interest rate you’ll qualify for. Knowing your score beforehand helps set realistic expectations regarding financing terms.
- Inquire About Financing Terms: Once you engage with a manufacturer or financial partner, ask detailed questions about the loan terms. Ensure you understand the interest rates, repayment periods, down payment requirements, and fees or penalties.
- Compare Options: If possible, obtain financing offers from several sources to compare rates and terms. This comparison can help ensure you secure the best financing solution for your situation.
Understanding the terms and conditions of any financing offer is crucial. Interest rates, repayment terms, and any additional fees can vary widely, affecting the overall cost of your home.
Potential buyers should not hesitate to ask questions or seek clarification on any aspect of the financing agreement. A couple of my clients have gone this route and were happy with their decision.
Advantages and Disadvantages of Manufacturer Financing
Pros:
- Convenience: Financing directly through the manufacturer or financial partners can simplify purchasing. It integrates the construction and financing of the home.
- Customized Solutions: Some manufacturers may offer financing solutions tailored to the specific needs of modular home buyers, potentially offering more favorable terms than standard home loans.
Cons:
- Interest Rates: Direct financing from manufacturers might come with higher interest rates than traditional mortgages. This will depend on the buyer’s creditworthiness and market conditions.
- Limited Options: Committing to manufacturer financing without exploring other options might limit your ability to negotiate better terms or find more competitive rates elsewhere.
Which Are The Best Builders?
There are several highly-rated modular home builders. When building modular homes, I would recommend speaking to one of the following building companies:
- Clayton Homes
- Deltec Homes
- Commodore Homes
- Connect Homes
- Impresa Modular
You might also consider researching local modular home builders as well. There could be other quality builders of modular construction in your area.
They Are Not Mobile Homes
You may be wondering about the difference between modular homes vs. mobile homes. There is no connection between the two; they should not be compared.
A modular home is not a mobile home or a manufactured home. Although mobile homes have come a long way and are now built to much higher standards than once, they are still not a particularly good value.
Their resale value is not as good as a modular or a stick-built home, and they tend not to last as long as a modular or stick-built home.
Modular Homes vs. Manufactured Homes
Many people think a modular home and a manufactured home are the same. They are not! The difference between a manufactured home and a modular home is that modular construction is held to the same standards as state and local building codes.
On the other hand, manufactured homes follow a Federal code determined by HUD.
Understanding Manufactured Homes
Here is a breakdown of the differences in comparing manufactured homes.
- Construction and Installation: Manufactured homes, previously known as mobile homes, are entirely built in a factory on a chassis or frame with wheels. This makes them portable to some extent.
- Regulatory Standards: These homes are regulated by federal HUD (Housing and Urban Development) standards, which differ from the local building codes that modular and site-built homes adhere to.
- Foundation and Permanence: They can be placed on a permanent or semi-permanent foundation but are designed to be movable.
- Advantages: Manufactured homes offer affordability and flexibility. They are also built to be energy-efficient and come with various customization options.
- Disadvantages: The perception of lower quality can be a drawback. Additionally, they may not appreciate in value as much as modular or site-built homes. They can also face stricter zoning laws.
Can Modular Construction Have Basements?
Yes, a modular home can have a basement, and many do.
Can These Properties Be Moved?
Yes, a modular home can be moved, but it is costly. Moving any house from its foundation is expensive.
Disadvantages Of Modular Homes
Now that we have covered all the pros of modular construction, you may wonder what the disadvantages are.
You should be aware of some issues when considering buying a modular home.
Although modular homes offer plenty of advantages, they are still not quite in the same league as stick-built homes, particularly in the public’s perception.
Something that should never be downplayed is perceived value.
A few years ago, I was selling a home in Franklin, MA, that happened to be modular. This stigma surrounding the fact it was modular made it a more challenging sale.
The home eventually sold, but it took a bit longer than most similar homes at the price point.
While the thought of building a modular home could have numerous advantages in your mind, it may not work for innumerable buyers when it comes time to sell it.
It would help if you got a handle from local real estate agents on how the general area thinks of buying a modular home.
They Have Less Customization
Prefab homes can be built in various configurations, but it is not as easy to customize them as it is to customize a stick-built home because of how they are manufactured.
If you wanted them to, the builders of your stick-built home could build you practically anything you wanted – a living room with lofts, a tower off of your master bedroom, or a circular floor plan.
Modular construction is not quite so flexible.
Modular Construction Has a More Complicated Loan Process
A mortgage for a stick-built home is something that most people are familiar with. However, the payment process for a modular home involves a few more steps.
The builder wants to be paid in full before the house is finished and often wants periodic payments to finance the building process.
You may need to get a construction loan first to pay the builder, which will be changed to a regular mortgage after the home has been completed.
Ensure you understand how to get the best interest rate on your loan.
Sometimes, buyers do not spend the appropriate time researching the best loan programs for their needs.
Understanding precisely what type of loan works best is a big part of not overspending on a mortgage. Potential home buyers should always understand how to get a mortgage.
Understand The Cost Of Land
While the modular home may cost less to build, you will still need to purchase a piece of land to build the home. The cost of land combined with a house can shock people unprepared.
You need to be prepared to buy your land and house if you choose to go with a modular home. One of the areas where costs are underestimated is land development.
If there is no town sewer available in the location in which you are building, make sure you understand how expensive a septic system can be. There can be a difference from one lot to the next of tens of thousands of dollars.
Understand Land Restrictions
Although modular homes are much more favored than manufactured mobile homes, there may still be neighborhoods or municipalities that will not allow you to build such a house.
You want to ensure that the area you want to buy land and build the home will allow it. In many places, these documents are known as restrictive covenants.
It is possible that a restriction was put in place long ago, denying the ability to build a modular home. This was due to the perception that they were inferior products years ago.
People often viewed them as “eye soars” due to their unappealing roof lines. It was not uncommon to see many of the modular houses of years ago look akin to army barracks.
Perceived Quality Issues With Modular Housing
In most instances, the components of a modular home built by a manufacturer will be as good as the components of a stick-built home, but everyone may not be up to date on this fact.
If you want to impress, a modular home may not deliver the same way a stick-built home can. For some people, public perception is irrelevant, but not for everyone.
You may have to wait decades before the average person is clued into many modular homes’ benefits and excellent quality.
One of the distinguishing factors that people identified with years ago was the “popcorn ceilings” that often accompanied their houses.
You could spot a modular when you walked in the door because the popcorn ceiling was a common trait. Talk to most buyers, and you will understand the hatred associated with popcorn ceilings.
Issues With Selling A Modular Home
Homebuilders and Realtors know that a modular home from an excellent manufacturer is a quality piece of real estate.
In most instances, you should be able to appreciate the value of your home just as a stick-built homeowner would. However, you may also encounter extra hurdles when selling the house.
When buyers look for homes online, they look at pictures and scan facts about the property.
When they notice that your home has been prefabricated, they may be initially turned off.
Why buy a prefab when they could purchase a traditionally built home?
If you decide to sell, these initial reactions could make it harder to sell the home.
You will need an experienced real estate agent and a bit of patience to reach buyers who can appreciate your home’s quality and value.
Questions to Ask When Buying a New Home
Whether you are building a traditional home or choosing to go with modular construction, getting some basic questions answered will be essential.
Here is a list of questions to ask a builder. Make sure you get these questions answered to your satisfaction before moving forward.
Many people end up disappointed when building a home for lots of reasons. Vetting the builder is a critical exercise.
How Do Sales Compare to Traditional Housing?
For the most part, modular home sales will be no different than their stick-built counterparts. This is especially true of newer modular construction, which is seen as far more favorable than in years past.
Some older modular construction was very poorly built, and you will probably be able to recognize it.
You can ask a local real estate agent if modular home sales have faired differently than other homes.
Remember that all real estate is local, so what may be true in one area of the country might not hold in another place.
Before consulting with an agent, you might also research modular home sales near me.
Is It An Option For You?
If you are a buyer looking for the best deal and are up to date on the quality of many prefab homes, you may be delighted with one.
On the other hand, if you want something uniquely yours, something customized, or a property that will impress the neighborhood, a modular home may not be the right fit.
There may come a day when most homes are built modular, considering all their financial advantages. But that day is a long way off. Until then, owning a modular home is a choice that only certain people will be happy with.
If you believe you are that kind of person, let your real estate agent know you are open to them.
Your agent may be able to find you just what you are looking for. Just remember all of the pros and cons of modular homes discussed here.
How to Find Modular Homes Nearby?
Besides relying on a real estate agent, one of the better ways to find modular construction is to do a Google search for them. Some search phrases you may want to use could include modular homes near me or modular homes nearby.
By doing this kind of search, you will see manufacturers in your area. More than likely, you’ll have a few choices on modular homebuilders.
If not, you could also search for modular home builders as well. I would suggest modular home builders near me.
As with any other company, it will be wise to do your due diligence on the modular builder you choose to work with. Some will have excellent reputations, while others may not.
Modular Homes For Sale Near Me
When you have not started working with a Realtor and want to research the availability of modular home sales, do a Google search.
Searching for modular homes for sale near me should provide some potential results. You will likely discover there are fewer options for modular homes for sale.
Far fewer modular properties have been built. There are significant benefits to having a Realtor for new construction. Buying new construction without a Realtor could be a considerable mistake.
Find an excellent buyer’s agent to help in your search.
Frequently Asked Questions
1. Are Prices Lower Than Stick-Built Homes?
1. Are Prices Lower Than Stick-Built Homes?Yes. Typically, a modular home costs less than traditional new construction.
2. How Much Does a Modular Home Cost?
The cost of a modular home depends on many factors, including the location, size, and various amenities you add to it.
You can expect a modular home to cost less than traditional new construction.
3. Are Mortgages Harder to Get?
No. Getting a mortgage for a modular home is no different than any other house.
4. Who Are The Top Modular Home Manufacturers?
There are quite a few top modular home builders. This resource provides an excellent list of the best modular manufacturers.
5. How Can You Tell if a Home is Modular or Not?
If a house is modular and was built after 1971, it should have a tag called a Factory Built Unit Certification affixed.
The certification states that it has been made according to the universal building code standards required of stick-built homes.
6. Are These Homes a Good Real Estate Investment?
It depends on when the modular home was built. Older prefab homes are not considered as favorably as their traditionally made counterparts.
However, newer modular homes are built to much higher quality standards and should have an excellent return on investment.
7. Can You Put a Modular Home on a Slab?
No. A modular home needs to have a basement. They are constructed to be placed on a foundation. It can be a concrete or block foundation.
8. Do They Last as Long as Stick-Built Houses?
Yes. Today’s modular home construction will last just as long as a traditionally built home.
9. Are They Safe in Bad Storms?
Yes. They are just as safe as any other house. There are some anecdotal claims they may even hold up better in storms than regular housing.
10. What’s The Difference Between Manufactured Homes and Modular Homes?
Manufactured homes are built entirely in a factory and transported to their homesite. Modular homes are also built-in factories but are not complete.
Modular homes can be made on a temporary chassis or a permanent one. Those built on permanent chassis are known as an “on frame.” A modular home built on a temporary platform is called an “off-frame.”
Final Thoughts
Modular homes have come a long way over the last couple of decades. These are now considered to be very viable housing choices. Do your due diligence when pursuing buying a modular home.
Hopefully, you have found this guide to be practical. You should now have a much better understanding of a modular home.
Other Helpful Home Building Articles
- Should I buy a resale home or build a new one – get helpful tips on whether you might be better off purchasing a resale or going with new construction.
- What you need to know when buying a new home – find helpful advice on things to consider when purchasing new construction. You will enjoy these new home-build tips.
Use these additional helpful resources when buying a new construction home, whether it is a modular or stick-built home.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided information on what modular homes are. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
