Appraising a Manufactured Home…or is it a Mobile??…maybe it’s a Modular??
Manufactured homes, mobile homes and modular homes are homes that terms that people (sometimes appraisers) incorrectly use interchangeably. Hopefully the following information will help differentiate the varying types of real property. There will also be a further breakdown on the criteria for Conventional and FHA appraisals for a manufactured home.
The term Mobile Home and a Manufactured Home are two different products. “Mobile Home” refers to homes built PRIOR to 1976 when the HUD code governing building standards for factory-built homes was instituted, greatly improving quality standards.
Homes built AFTER 1976 are “Manufactured Homes” and are built to a higher standard of quality than yesterday’s “Mobile Homes”.
The manufactured home has its’ own form called the Manufactured Home Appraisal Report (Form 1004C). Manufactured Homes are built entirely in a factory under the federal building code administered by the Department of Housing and Urban Development (HUD). These homes are constructed to meet the Federal Manufactured Home Construction and Safety Standard Act of June 15, 1976. Due to the lack of standards when building “Mobile Homes” prior to 1976 it forced governmental agencies to intervene. The federal standards regulate manufactured housing design and construction, strength and durability, transportability, fire resistance, energy efficiency and quality. The HUD Code also sets performance standards for the heating, plumbing, air conditioning, thermal and electrical systems. HUD is the only federally-regulated national building code. Each home or segment of a home is labeled with a red tag that is the manufacturer’s guarantee the home was built to conform to the HUD code. On-site additions, such as garages, decks and porches, often add to the attractiveness of manufactured homes and must be built to local, state or regional building codes.
The home owners that have a mobile home built prior to June 15, 1976, even with modifications, do not meet the HUD standards and cannot be accepted as compliant with the HUD Code. As the homeowner, you may find a licensed engineer willing to inspect your home for compliance with your state’s housing code for other financing but FHA does not insure mortgages on manufactured homes built prior to June 15, 1976. Most other mortgage companies follow FHA’s policy. After doing research it was noted that Fannie Mae or Freddie Mac loans will not approve mobile home financing. A buyer will need to find a mortgage company that specializes in mobile home loans: the rate will be higher and the amount down by a potential buyer will be higher but their are loans.
An additional breakdown of eligibility for financing a manufactured housing unit must:
-FHA requires a floor area of not less than 400 square feet
-Conventional requires a floor area of not less than 600 square feet
-Be constructed on or after June 15, 1976 in accordance with the MHCSS.
-Exist together with land “as a real estate Entity in accordance with state law”
-Have been moved from the factory or dealer directly to the site.
-Be designed to be used as a dwelling with a permanent foundation built to comply with the PFGMH(Permanent Foundations Guide for Manufactured Housing)
-Have the finished grade elevation below the manufactured home (or the grade beneath the basement floor) at or above the 100-year return frequency flood elevation.
-Be designed for occupancy as a principal residence by a single family.
Once eligibility has been confirmed there are specific items/information when on site that need to be noted and specifically stated in the Conventional or FHA appraisal report: these are found on the HUD data plate and the certification label. I typically take numerous pictures of these items to include in the report and to pull all the necessary information off for the report.
The HUD data plate is a paper or sticker located in the interior of the manufactured house, often adjacent to the electric service panel, in the utility room, or inside a kitchen cabinet. This data plate provides additional information that is required to be reported in the appraisal, such as manufacturer’s name, serial number and model, date of manufacture, and wind, roof load, and thermal zone maps.
The manufactured house must have a certification label, which is also called a “HUD seal” or “HUD tag.” It is a two-inch by four-inch aluminum plate permanently affixed to the exterior of each section of the manufactured housing unit. It is usually red in color and is located at one end of each section of the house, approximately one foot up from the floor and one foot in from the road side. Etched on the certification label is the certification label number, which usually consists of a three letter prefix with a six- or seven-number sequence. This is referred to as the HUD label number. Label numbers are not required to be sequential in a multi-section house. the certification label is usually affixed with pop rivets, which means that it can be removed by someone with tools, even though it should not be removed. All sections of the unit are required to have a label. (This means a “double-wide” unit will have two certification labels, and a “triple-wide” unit will have three certification labels.) The label merely contains the HUD certification number. It specifies no other information about the dwelling. Manufactured homes generally come in single or two-section units and their dimensions range from 8 feet or more wide and 40 feet or more long. Manufactured homes can be placed on a basement and include multiwides and expandable manufactured homes.
To research further Manufactured Home Property Eligibility Requirements access the following link: https://www.fanniemae.com/content/guide/selling/b2/3/02.html
For more information regarding the Permanent Foundations Guide for Manufactured Housing including crawlspaces, skirts, basements, chassis, etc will be found at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/guidebooks/4930.3G
Along with all of the information needing to be retrieved when on site while appraising a manufactured home a FHA appraisal still includes all the traditional criteria when doing the inspection. Windows, roof, outlets, appliances, toilets, water, smoke detectors and the remaining items that FHA requires inspection and functioning criteria all still need to be checked and reported. For further detail and information on FHA appraisals please note the additional article in this website.
And lastly, there is the modular home. A modular home is made in a production facility and built in two or more sections in a controlled factory setting that are then transported and assembled on location. The assemble process typically uses a traditional concrete foundation (permanent). Unlike a mobile home, a modular home cannot be moved once built. These homes are treated just like a traditional home you’d buy in a neighborhood. They offer outstanding features, a huge assortment of pre-designed homes, and their price per square foot are sometimes lower than the traditional stick built home.
Modular homes are homes assembled at the building site. Modular homes are built to either local or state building codes as opposed to manufactured homes which are also built in a factory but are governed by a federal building code.
Modular homes can be completely customized to meet the home-buyers needs and tastes. Some modulars are so similar to the eye as a stick built house that sometimes it is diffucult to differentiate. If the home is a modular built after 1971, it should have a tag called a “Factory Built Unit Certification” attached. This certifies that it has been built to the requirements of the Universal Building Code (UBC), which is the same requirement of stick-built homes. Such UBC stickers are typically found under the kitchen sink.
With all the additional criteria and liability of the appraisers’s job when on site when performing an appraisal on a manufactured home it is not surprising that not many appraisers are unwilling to do appraisals on these properties. Doing primarily appraisals in Harford County, Cecil County, Baltimore County, Anne Arundel and Carroll County there tends to be more manufactured, mobile and modular homes in rural areas. The more rural areas of Harford and Baltimore County are in the northern region of the counties where you would more typically find these home styles. The remainder of the counties look be be scattered throughout. This typically adds another layer of difficulty to the appraisal report due to the lack of comparable properties available. With our experience as appraisers and dealing with the multitude of unique and complex appraisals throughout the years we provide quality to our clients for any and all reports regardless of the degree of difficulty.