Happy Friday!
Okay, so as we are moving through a low inventory market this winter, waiting for spring, buyers are taking a second look at some of those less desirable properties. Putting all rational factors aside, I personally think every piece of real estate is cool in it's own regard. In a sense of like, do you, and whatever you want, because you own real estate and that's freaking cool. Anyways, that's just my own weird perception. In the real world manufactured homes face tons of stigma, and many times are a lending nightmare.
I am currently working on a questionably deeded property. Due to its lack of traditional sales; no one has actually kept proper documentation, and although we are looking to buy cash, it still makes this a lending disaster for a large majority of prospective buyers when we go to sell. Essentially destroying our resale value, and any hopes of looking at this property as a viable investment. Also, it doesn't help that we are at the mercy of the bank, because of course it's also foreclosed on.. for like the fourth time. Plus, the bank is convinced it's a modular, even after the title company tells us it's manufactured! This may be a very extreme example of the manufactured headache, but hopefully you can see how this can be such a cluster, especially since there really is only one question..
Is the house "Manufactured" OR is it "Modular"? I mean it's on a basement right? And what's even the difference, and why does everyone care so much? Looks like whatever it is, it could be plenty livable (after a bit of love) for a very long time!
So, first, lets define what manufactured, and what modular means in the eyes of the lender. Since really they're all pre-fabricated in a factory somehow, and the lender is the only one who actually cares anyways.
Manufactured
Manufactured and mobile are the same word in the lending community, with manufactured being the proper term. This is a house that was brought to a property on wheels, and had a title, very much like a car would at some point. There are certain lending criteria they must meet before any traditional lender will touch it with a ten-foot pole. Firstly, that title must be surrendered to the state, and the property must receive an affidavit of affixture in return. What this does is permanently marry the home to the property making it real/deeded property. In most scenarios, you will only be able to obtain a property of this caliber with a conventional loan. Government loans typically will steer clear of these properties.
Modular
These are still technically built in a factory, but are a whole different animal from manufactured. I mean yeah, it probably still has the steal beams, and maybe even trailer chassis underneath, but it definitely, most certainly isn't a manufactured home. Modular properties are deemed to be "stick-built" or "site-built" in the eyes of lenders, and are treated no differently to them. These can also sometimes be referred to as BOCA homes built to Michigan codes. (BOCA means modular in Michigan)
The funny thing about these is that two identical homes can be built in the same factory, but as they ship out, one can go on to be a manufactured home, while the other rises to the status of a modular. It all depends on how it is titled, deeded, or affixed to the property. That's where the property history plays a major factor into determining what you are buying, and why or why not the lender will lend on it. And if the property is super questionable like my poor deal, title work should give you a solid answer as to what you are looking at. If not, maybe a structural engineer, or appraiser will be able to help identify what you are looking at.
Just please reach out to, and use as many professionals as possible before closing on a deal. Also, keep in mind that a manufactured home does not typically appreciate in value the same as a stick built home will, and you are not going to have the same return on investment. Without taking in all the factors, you could very possibly be the proud new owner of a giant headache that you won't be able to sell down the road.
I am a strong proponent of telling people NOT to make any offer they are uncomfortable with. Real estate is too big of a game, and you shouldn't risk it all on one deal if you can't afford to lose it all! There will always be other deals!
Realistically, with any of my clients I will recommend a traditional stick built home, but when the inventory is down 3,000 listings in our region, those little double wides start looking pretty appealing. Please keep in mind that at the end of the day it's not my job to make your decision. However, I will fight tooth and nail in an effort to make sure your decision comes to fruition, and I will act in your best interests while advising you as your Realtor. You can take that as my promise, look up the word "client" and you will understand better why I take that word with such seriousness.
Have a safe weekend everyone!
Thanks for reading,
Justin Rinks
Century 21 Affiliated
Realtor