Three Categories of Construction
There are many forms of home construction available on the market today. Broadly speaking, these can be broken down into three categories: Site-Built, Modular, Manufactured and the sub-category of On-Frame Modular homes. So, what is the difference between Site-Built, Modular, On-Frame Modular and Manufactured homes, and how can you tell them apart?
The most common form of residential home construction is the “Site-Built” home. A Site-Built home is the kind most often thought of when we think of a single-family residence. A foundation is laid, raw materials are brought to the site, and assembled by a contractor on the property. A Site-Built home is most often made of wood-frame construction (i.e. “stick built”), but can be built in a variety of other materials, including brick or concrete blocks. Site-Built homes are constructed according to local building codes, and can be built in two story (or more) elevations. Depending on the quality of the materials used, as well as the skill of the contractor, Site-Built homes offer endless customizable options limited only by your imagination, the building codes, and your budget. Site-Built construction typically takes from as little as 3 months, to a year or more, to complete.
Modular homes are constructed using similar techniques, and out of much the same materials as a Site-Built home. Rather than being built from scratch onsite, however, they are fabricated in sections at an off-site factory. Once the sections are completed, they are shipped by truck to the building site, and then assembled on a pre-poured slab foundation, crawl space or basement. Modular home construction is becoming more common, due to improved quality control, cost and efficiency over Site-Built construction techniques. Just as with Site-Built homes, Modular homes are built according to local building codes, and can be two or more stories. Site-Built and Modular homes tend to appreciate in value at about the same rate.
Because the sections of Modular homes are to be transported from factory to building site, they are often sturdier than Site-Built construction (e.g. a FEMA study found the Modular homes withstood the forces of Hurricane Andrew better than Site-Built properties, due to the sturdier construction materials used). A Modular home can be ready to install on your foundation in as little as 4 weeks, and the assembly process at the building site usually only takes a few weeks more. In some instances, the Modular home is slightly less costly than standard Site-Built construction, but the flexibility of the design is more limited. Both Site-Built and Modular homes can be financed with traditional mortgages.
Manufactured homes come in various types, including Mobile homes and Trailers. Like Modular homes, they are built in factories. Manufactured homes do not, however, conform to local building codes. Instead, they are built according to the more forgiving Federal standard (the “HUD Code”), and are often made of inferior materials. Built on a non-removable metal chassis, they are transported to the property on their own installed wheels. In the case of larger Mobile homes, sections are joined together when they arrive at the property (i.e. “double-wide” mobile homes that are comprised of two halves, and joined along a centerline). Trailers are typically of smaller width than Mobile homes, and not intended to be joined with other sections. In most cases, after a Manufactured home is delivered, and located near pre-installed utilities (gas, water, electricity, and/or sewer/septic), it is placed on stands or concrete blocks. Often, the open area of the stands/blocks is enclosed with skirting to cover the wheels and chassis. Alternatively, they might be mounted on fixed foundations at the property. While building inspectors do not review the construction of Manufactured homes, inspections and permits are required for any utility hook-ups.
Manufactured homes tend to depreciate over time, and have a shorter usable life-span than Site-Built or Modular homes, due to their design and the materials used. Moreover, they are more difficult to remodel and/or repair. While Manufactured homes can be placed on concrete foundations containing a basement, the structure itself will always be comprised of a single story. Manufactured homes fall under a separate lending category compared to Site-Built or Modular homes. This category is more like a car loan than a mortgage (personal property, as opposed to real property). As a result, Mobile homes and Trailers require a HUD tag and VIN registration, because they are designed with wheels and chassis in order to travel the roadways. Mortgages for manufactured homes typically have a higher interest rate than loans for Site-Built or Modular homes. The resale value of a Manufactured home will also be less than similarly sized Site-Built or Modular homes.
Recently, some makers of Manufactured homes have created Manufactured/Modular Hybrid homes which they claim to be “On-Frame Modular homes.” These so called Hybrids are typically built with lower quality materials to make them more affordable, yet built to the minimum local and state codes (instead of the “HUD Code”) so that they can be marketed as Modular, and thus can be sold & financed as “real property.” They are not true Manufactured homes, nor are they true Modular homes. Like typical Manufactured homes, these Hybrids are built on permanent steel frames. Most lending institutions and local planning offices have become wise to their effort, however. If a home has a permanently attached steel frame, they may still be treated as Manufactured homes, even though they may be code-compliant enough to technically pass as a Modular home. Due to their steel frame construction, these Hybrids can never be more than single story structures.
Note that 2/3rds of all states allow an owner to “de-title” a Manufactured home, and have it designated as real property. This allows the home and the land it rests on to be secured with a traditional mortgage (and to give the property additional legal protections afforded real property, which are not given to “personal property”; see https://nclc.org/images/pdf/manufactured_housing/cfed-titling-homes.pdf for more details). While standards vary from state to state, one common requirement is that the Manufactured home be affixed to a permanent foundation.
In North Carolina the state law allowing this is detailed under NC Code – General Statutes § 20-109.2 (see https://law.justia.com/codes/north-carolina/2005/chapter_20/gs_20-109.2.html). If a Manufactured home is fixed to a permanent foundation and “de-titled”, it can secure mortgages offered under FHA, VA and USDA programs, as well as some conventional loans. Manufactured homes are typically less expensive than Site-Built and Modular homes. They can also be moved from location to location (although, with larger Mobile homes, this can be an expensive and complicated undertaking, because special permits are required, and professional movers needed).
Identifying Site-Built, Modular and Manufactured Home Construction
Identifying Site-Built, Modular and Manufactured home construction can be a challenge. Once placed on their permanent foundations, and fully installed, it is difficult to tell Site-Built homes from Modular homes, given that they are built in much the same way, using similar materials. All prefabricated sections of a Modular home, however, should have a metal tag on the outside of each section (as well as other tags located under kitchen cabinets [under the sink] or in bedroom closets) or may be found inside the electrical panel box. These metal tags should include the name of the company that built the home, where it was prefabricated, and the date it was completed in the factory.
Manufactured homes are easier to identify, however, as they are built to the HUD Code, and are on a fixed metal chassis. The existence of a “metal chassis” is an important distinction in the financing of a home (the aforementioned “on-frame” verses “off-frame” substructure). A quick look “under the hood” will reveal the very different foundations. Manufactured homes must contain the “HUD Tag” required by the HUD Code identifying it as a Manufactured home. These tags can be found variously under the kitchen sink cabinet, in the master bedroom closet, near the back door, and/or in the electrical box, or even on the exterior of the home in newer models (1976 forward). The VIN will be called a “manufacturer’s serial number” on the HUD Tag. On older Manufactured homes (prior to June 1976), it can be harder to find, as the law requiring such universal labeling had not been in place. Original labeling may have been covered over with new siding, through remodel efforts, or even removed entirely. In such cases, a visual inspection of the foundation and chassis areas will be required in order to determine if it is “on-frame” (metal chassis framework) or “off-frame” construction (standard flooring not employing a metal chassis); for more information, see http://co.teller.co.us/assessor/ModularManufacturedORMobileHomes.pdf).
Things to Think About When Buying a Home:
Some areas have not yet approved Modular housing, and thus this form of construction may not be allowed in your area (check with your local building and planning authorities). This exclusion is becoming less common, however, as Modular homes gain greater acceptance. Many areas restrict Manufactured homes and some restrict Modular homes, allowing them only in certain areas (developments specifically designed for them, or rural areas). Reasons typically given for these restrictions include depreciation concerns tied to the limited life-cycle of Manufactured housing or architectural reviews of Home Owner’s Associations. Be sure to check to make sure they are allowed on the land you intend to purchase by having your real estate agent check for Covenants and Restrictions recorded with the Register of Deeds and/or city and county zoning restrictions. Check out this page for links to area Registers of Deeds.
Because Modular and Manufactured homes are lumped together within our public record system, selling your Modular home can be a challenge because home buyers searching top real estate websites may only see the type of construction labeled as manufactured, when in fact, the home is a Modular home. A knowledgeable real estate agent can help clear up such misunderstandings, and assure top value for your property.