There is a growing demand for alternative types of housing in communities across the country. As home prices for traditional single-family residences continue to soar, it’s becoming more difficult for people to buy a home. One attractive alternative type of home that is growing in demand is manufactured homes, sometimes referred to as mobile homes.
According to the Manufactured Housing Institute, nearly 22 million Americans live in manufactured homes. The median sales price of a new manufactured home is $78,400, excluding the land. That’s compared with the site-built median home price of $347,500 during the first quarter of 2021.
Manufactured home appraisals aren’t all that different from any other home appraisal. But this type of housing comes with a few unique circumstances when it comes time to perform the home inspection and determine the value.
Defining Manufactured Homes
To qualify for a typical manufactured home loan, the home must have been built after June 15, 1976. It must also have a minimum of 400 square feet of living space and be on a permanent foundation.
The wheels, axle, and tongue must be removed for the home to be classified as real estate. Manufactured homes must align with HUD standards for homes.
You also may have heard of modular or sectional housing. Both manufactured and modular homes are factory built, with manufactured homes constructed on a steel frame and modular homes on a wood beam frame. Modular homes are transported on a flatbed, often in sections, and the installation team cranes those sections onto a foundation.
With manufactured homes, the chassis usually stays attached to the property after transportation and is then removed when the house is placed on the foundation.
Manufactured homes come with certification label numbers, located on data plates, that are attached to the exterior of each section of the home. There is also a manufacturer’s invoice, or certification, typically attached inside a kitchen cabinet or near or on the electrical box.
This document contains the manufacturer’s name, trade or model number, year of manufacture, and serial number. These attachments should never be removed or painted over because they are critical to obtaining a new loan for the property and needed for the homebuying process.
Manufactured Home Appraisals
Appraising manufactured homes isn’t too difficult as long as the appraiser knows what to look for. The appraiser must inspect the property as normal.
If the manufactured home is located on acreage with an individual well and septic system, then certain requirements must be met to qualify for FHA financing. The appraiser must also obtain a sketch of the drain field and location of the well to determine that it is at least 100 feet from the drain field.
In some areas, finding comps for manufactured homes may be a little more challenging than finding comps for traditional single-family residences. The appraiser must attempt to find similar manufactured home sales in the market area to determine value.
If needed, the appraiser may use site-built home sales in certain cases where manufactured home sales are limited. There may also be times when an appraiser can use a wider radius or pick from home sales that aren’t quite as recent. The appraiser must always explain these choices in the report.
One important source of information on manufactured housing for appraisers is the NADA Manufactured Housing Appraisal Guide. This publication lists general manufactured home depreciated replacement values based on factory construction categories and offers a step-by-step process for arriving at the average retail book value for a manufactured home. Another source is Marshall & Swift’s Residential Cost Handbook.
Here at Kairos Appraisal, we have a nationwide team of appraisers who specialize in all kinds of appraisals, including manufactured home appraisals.
Our team works with your mortgage lender to ensure that we have all the information needed to properly perform your appraisal inspection. In terms of appraisal costs, manufactured home appraisals are similar to single-family residential appraisal reports.
If you’re ready to experience the Kairos difference, please reach out to us here or give us a call at 425-967-3794.
