Everything You Need to Know About Manufactured Home Appraisals

There is growing demand for alternative types of housing as prices for traditional single-family residences soar and it’s becoming more and more difficult for people to afford those homes. One attractive alternative type of home is the manufactured or modular home, which is built elsewhere and then moved to the final site.

In fact, according to the Manufacturing 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 to the national median (site-built) home price of $347,500 during the first quarter of 2021.

Different types of housing come with a unique set of circumstances when it’s time to value them, so let’s dive in and talk about manufactured home appraisals. The truth is that as long as the appraiser knows what to look for, manufactured home appraisals aren’t all that different from any other home appraisal.

Defining Manufactured Homes

To qualify for a typical manufactured home loan, the home must have been built after June 15, 1976, and have a minimum of 400 square feet of living space. It also must 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 properties 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 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.

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, to qualify for FHA financing, the appraiser must also obtain a sketch of the drain field and well location to determine if the well is at least 100 feet from the drain field.

Finding comps for manufactured homes can be a little more challenging than finding comps for a traditional single-family residence. 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 are also times when an appraiser may use a wider geographical radius or home sales that aren’t quite as recent as is usually the case, but the appraiser must 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 huge team of appraisers who specialize in all kinds of appraisals, including manufactured home appraisals. If you’re ready to experience the Kairos difference, please reach out to us here or give us a call at 425-967-3794.

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