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5 Disadvantages of Modular Homes to Consider Before You Buy

With improvements in technology, manufacturing, and construction, modular homes have increased in popularity over the past decade and home buyers may be tempted by shortened building timelines and cheaper prices. Here are a few downsides to consider before purchasing a modular home.

With improvements in technology, manufacturing, and construction, modular homes have increased in popularity over the past decade and home buyers may be tempted by shortened building timelines and cheaper prices. Here are a few downsides to consider before purchasing a modular home.

When shopping for real estate, buyers will be bombarded by a variety of housing options. Modular homes currently only make up 1.5% of available inventory but are growing in popularity. Modular homes are comprised of fully constructed sections that were created in a factory and shipped to the homesite.

Construction consists of connecting each piece, or module, often using a crane to place full sections of the home. Modular homes are made from the same material at site-built homes, but are pre-fabricated, cutting down on construction time and cost.

Often confused with manufactured homes, a modular home is secured to a foundation and still costs significantly less than a custom built, stick-home. While this may seem like an ideal way to get a custom built home while saving money, there are a few downsides to modular homes that buyers should consider before purchasing.

Limited Custom Options

Compared to stick-built homes, modular homes are limited when it comes to specific customizations. Many modular home builders offer set floor plans that buyers can choose from but can't completely create each modular piece to home buyers specific preferences.

Your stick-home plans could include an all-glass rotunda or a log-cabin style great room but the modular home options are much more limited. Depending on your home building desires, a modular home may not be the best option for you.

Securing Financing

Lending options for modular homes are also more restrictive than a typical stick-built house. Most modular home sellers require payment in full before assemble of your modular home begins. The homebuilder may also require periodic payments throughout the construction process for unforeseen obstacles.

Often times, home buyers are forced to implement workarounds by taking out a construction loan to pay the initial costs, then convert it into a mortgage loan once the home is built. It can be done, but it's not as straightforward as your standard issue home loan.

Land Costs and Restrictions

In addition to the purchase price of your modular home, you're going to need to buy a place to put it. Depending on the area you wish to live, land costs can add a decent upcharge to your overall home building cost. If you desire to live near a city, parcels of land are much more than their rural counterparts.

If you find an inexpensive piece of land, you'll need to ensure it has access to utilities, water, sewage, and more. Drilling for water or building a septic system can take on tens of thousands of dollars to the overall cost of your home build.

Potential Quality Issues

As mentioned above, prefab homes, or modular homes, are made from the same materials as stick-built homes. However, with stick-built homes, supervision of construction from start to finish is common and errors along the way are often caught and fixed. With a modular home, the components are built off-site, so an internal or structural misstep may go unnoticed until time for assembly.

In addition, each piece must be shipped to your building site. Transportation has been known to cause sheetrock damage and building delays. If you choose to select higher quality or heavy materials, shipping costs can go up.

Resale Value

A common myth is that modular homes are worth less than their stick-built counterparts when in fact, modular homes appraise for the same value. However, public opinion of modular homes is still catching up. While the house may be worth the same as its next-door neighbor, many homebuyers would prefer a stick-built house because of preconceived notions about modular homes.

Clever Partner Agents help buyers find and purchase the house that will best suit their needs. If you're interested in purchasing a modular home, a Partner Agent in your area will help you find land in a neighborhood that suits your needs. Call today for a no-obligation quote.

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Reuven Shechter

Reuven Shechter is the Outreach Coordinator at Clever Real Estate, the free online service that connects you with top real estate agents to help save on commission. He spreads the word about Clever, disseminating studies to journalists and developing relationships with media outlets. Reuven is passionate about investing in real estate and creating lasting success for families. His writing has been featured in Max Real Estate Exposure, Leverage Marketing, and more.

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