Do modular homes depreciate in value after bought new?

Question

I am aware that modular homes are basically regular stick built homes (just that they are built inside so that they are built better and faster than regular outdoor construction) built in a few sections and then assembled in a few days.

The only thing is that I've heard that modular's will depreciate in value. This doesn't appear to be true, because its just like a regular house after its built and you can't tell the difference.

It seems like alot of people are confusing the "modulars" with those "manufactured" low grade double wide homes.
Does this misconception about the differences really make the modular homes depreciate?
Whenever you go to sell it, do you just not tell people that they are modular since they are pretty much a regular house?

Answer 1

Well, I differ in the opinion that a modular home is just a stick built home, built off-site.... In my opinion... and Ive worked on a LOT of them over the years... a true modular home is BETTER than site built.

First off -- its built to higher building standards than most local ordinances

A modular home is built stronger. While many new homes are built with truss systems, most older homes are not. ALL modular homes are built with truss systems... the roof loads have been calculated, and built appropriately. An Engineer has had to certify the plans.

Modular homes have the advantage of volume purchasing power. A modular manufacturer buys direct from the appliance manufacturer. Site built homes... they go to the local store, which costs you more.

Modular homes will not depreciate in value any more than the 'site built' homes in the same area will. Most often, they increase in value, along with their neighbors.

Yes.... A lot of people confuse "modular", and "manufactured". They are both built inside a factory building... but they are built differently, with different standards, and different quality parts.

But, even farther than that.... is the difference between manufactured homes.... you can get a 'box on wheels', or you can get a truly high quality home. And it doesnt matter, if its 'single', 'double', 'triple' - wide, or something else.

"Trailers" depreciate. Most inferior quality homes depreciated before they rolled off the dealerships lot. Unfortunately... it is THESE homes that have given the industry its 'black eye', so to speak. Also unfortunately, MOST consumers CANNOT TELL THE DIFFERENCE between a high quality home, and a cheap 'box'. They don't know what to look for.

It's my habit, when traveling, to stop by a dealership, when I am working on homes in their area. One time, I walked into a dealer's office, and I could hear the broker with a customer back in their office. The customer was getting a bit irate, because they did not understand why "the same home" at this dealership, was $4,000.00 higher, than at one of those 'box' sales lots. So, I wandered around the corner, and stuck my head in the door, and said Hi.... explained who I was, and offered to explain the sales brochure for the customer. (The home he was looking at on this lot, was NOT made by the same manufacturer, that I was contracting with....what I am pointing out here, is that I had nothing to gain by pointing out the differences in the homes).

I asked to see his sales brochure from the 'box' lot.... and I began to laugh.... because it was that manufacturer that uses statements like "All load bearing walls...are made of 2x4 construction". I pointed this out.... Then I explained, the ONLY load bearing walls in a mobile home, are the EXTERIOR walls. The home he was looking at with this dealership, was made with 2x6 walls....and 2x4 interior walls.
The 'box' home had 15 year shingles... this one had 25 year shingles.
The 'box' home had 32 mil siding....this one had 40 mil (thicker vinyl siding... stronger, less brittle, and longer warranty)
The 'box' home had HVAC vents down the middle of the home....this home had vents placed at the walls. (Costs more to build this way... but... it produces less noise when in use, and you arent as likely to cut your foot open on a vent, it also had a better furnace and air conditioner)

All told.... the 'box' home was charging an extremely high price for what he was getting.... but the customer didnt understand that.

One of the best things we can do for the whole industry, is educate educate educate. The more people know, the better consumers we will be... the better a consumer we are, the better a manufacturer has to make his product.

One of the FIRST things I ask someone, when they tell me they just bought a manufactured home, is who made it? (not how much did it cost you?) Just because a 'manufactured' home is a doublewide, does not mean its a low grade home. WHO made it, will often indicate the quality of the home. Some companies build better homes, there's just no getting around that.

Have Fun!

Answer 2

I have been looking at purchasing a modular home, rather than a site built, due to the cost. I discovered even windzone 2 manufactured homes still have 2 x 3's in the home, and they depreciate, so a manufactured home is out of the question. A modular home has all 2 x4's, and more bracing around the windows frames and the roof trusses, so if you can afford it, get a modular. It is built to the same building code as a site built home. A modular home appears to be a gamble from the resale point of view, at least, that's what I read. However, I believe if you get a quality modular home, you can find buyers who will appreciate it, should you decide to resell. It will sell for more than what you paid for it. Will it sell for as much as a site built home? No, but why should it since we paid less for our home to begin with, so I have decided to take on this gamble. I would even call a bank and ask if a modular home qualifies for a home equity loan. A manufactured home does not quality for a Home Equtiy Loan, something to consider if you ever fall on tough times. One way to tell if you are getting a quality modular, is if it comes with 2 x 6 exterior walls and get the highest insulation factor available. Also, go to a dealer that also does the installation. Do NOT SIGN a purchase agreement until they give you the estimate for the site installation, which includes a foundation and utility hookups. These costs ran me 20% of the cost of the modular I am looking at, but I also decided to have porches built. It still looks like a much better deal than a site built home. Of course, find your land first, then you will know what type of home you can afford. If you are lucky enough to find property that already has water, electricity, and septic, you'll save alot of money. Also, check the better business bureau website and see if there are any complaints for the manufacturer of your home. Ask the dealer for references of previous buyers of modular homes. Don't let them give you manufactured home buyers if you decide on a modular home. If they can't provide a list of satisfied modular home buyers, just don't buy from them. Depending on how serious you are, contact a real estate agent that you are looking at purchasing a home and heard modular homes are a better value and ask if they have any to show you. My best advice is: constantly ask the dealers are their any other costs commonly associated with installing a modular home that we haven't discussed and ask the same question to the installer.

Answer 3

you can absolutely tell a difference in a site-built house versus an off-site built house and they absolutley will depreciate very rapidly after purchase. And yes, perception is reality, so even if modular is not exactly the same as manufactured, because people think it does, then it basically does. Just like location is important - if people perceive a certain area of town to be dangerous or low-value, then that is what the reality is --- even if no crimes happen there or more crimes happen in ritzy part of town, perception = reality and that's just the way it is.

And, you do need to disclose the nature of the house. The truth of the matter is, it wasn't built on site and really isn't as stable or well-constructed as a site-built house is. A modular home may be just fine, but nothing replaces a home built where it sits.

GL

Answer 4

I know where there are 14 put up over 40 years ago, there are stick built ones in the same sub division, when they change hands more times that not they will bring the most money. There are some companies that assemble better that others. Pick a good one and you will be all right.

Answer 5

there is no logical reason for the unit to depreciate. and once built, someone would have to be told it was a modular. I would buy what I wanted!