As mentioned in our last article, there is a difference in manufactured homes vs. modular homes. There is also a difference in the details of appraising a manufactured or modular home. While we cannot go into all the differences here, we will mention a few items.
A manufactured home must be permanently affixed to an identified parcel or tract of land to be considered real estate. If it is not permanently affixed, it is considered personal property. So, the question is what is permanently affixed? In the absence of well defined guidelines that identify the criteria necessary to meet the standard of “permanently affixed”, I will address some items that must be accomplished. The tongue, axles, & wheels must be removed, tie downs must be installed, and typically a permanent type of underpinning must be installed.
Appraising a land/home package sale can be challenging as the appraiser cannot use other land/home sales as comparables. When appraising a manufactured home as a component of the real estate, the Sales Comparison Analysis can only be developed using open market, arms-length transactions of similarly sited manufactured home properties. Land/home packages are not appropriate for use in the Sales Comparison Approach since the property, as a whole, has not been exposed to the market for a reasonable period of time.
The sales utilized in the Sales Comparison Analysis should be similar size, age, and quality manufactured homes. Modular or site-built homes are considered to be superior quality in most cases.
Modular homes “off frame” can be compared to other modular homes or stick built homes. The appraisal of a modular home can be very similar to the appraisal of a site-built home. Some investors require an “on frame” be appraised as a manufactured home.
Just for clarity of the definition: A modular home can be built as an “on-frame” or “off-frame” modular. On-frame will be built on a permanent chassis, whereas, the off-frame modular will be built with removal of the chassis frame in mind. An off-frame modular will usually require additional cranes to assist with home placement.
Hopefully, you now have some clarity on Manufactured vs. Modular. It can be confusing and should you have questions, this link may help, click here.
The Valuation Management Group quality assurance team is educated and qualified to do the appraisal review of manufactured or modular homes.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We take the process from ordinary to extraordinary.