While most potential homebuyers come to us seeking their “forever home,” there are many who know that the future could involve selling their home down the line. Whether you’re aspiring to get into real estate or know your family’s lifestyle may evolve down the line, it’s important to know about the appraisal process. Here’s everything you need to know about appraising your modular home.
What is a Modular Home?
Before diving into the appraisal process, it’s best to understand that the term “modular” refers to the construction process rather than the architectural or structural style. Modular homes are built in sections within a climate-controlled production facility, then delivered to a home site in pieces. A builder then installs the modular units on a permanent foundation, where the home is usually completed in about 60 to 120 days.
Once a home is assembled and finished, it is almost indistinguishable from a well-constructed, site-built home, which is why modular refers to the method of construction and not necessarily a type of home.
Misconceptions about Modular Homes
There is a common misconception of the word "modular," and to those still unfamiliar, this word might connote trailer homes. This could not be further from the truth! Modular homes are similar to site-built homes because they are permanent structures. This is an important distinction to make, as appraising a modular home is an entirely different process (with an entirely different result) from appraising manufactured, or mobile, homes. Modular homes also go through stringent quality assurance checks throughout the building process and must comply with the same applicable codes as homes built on-site.
Appraising Your Modular Home
When you’re getting ready to sell your modular home, you’ll need an appraisal to get an estimate of a property's value and is required by a bank or mortgage lender to receive a home loan. This is to match the property's value to the investment.
When you’re ready to sell your modular home, an appraiser, or a professional licensed to evaluate and determine the value of your home, will come to assess your property. Appraisers undergo regular education and training to keep their certification and training in real estate appraisal regulations.
A modular home appraisal process is the same as a site-built home's valuation process. An appraiser will visit the property, look at the neighborhood, perform measurements and conducts a physical observation of the property. They will then gather information to get a “comp,” which is a record of homes’ current selling prices of a similar style and square footage. From that information, your appraiser will make a fair determination about a home's value and render an appraisal estimate of the home.
Why Modular Home and Site-Built Appraisals Are the Same
It is important to know that the appraiser makes no distinction in assessing in his comps between a modular home and a site-built one. Modular homes are held to the same exact appraisal standards and processes as site-built homes. This is because modular homes are required to satisfy the same HUD codes and standards as site-built homes. Therefore, appraisers will evaluate and assign value in the same way.
A variety of people can hire an appraiser for different purposes. A bank may hire an appraiser to ensure they are giving a potential buyer the appropriate loan. Appraisers may also work with homeowners who are selling their own homes.
How to Prepare for Appraising Your Modular Home
If you’re getting ready to sell your modular home and looking to boost your home’s value, you may be surprised that projects can’t always equate to a dollar-for-dollar investment. If you're considering diving into a new home improvement project, be prepared for the appraiser to tell you that the increased value you receive may not exceed or even equate to the money you poured into the project. Here’s why: most necessary renovations end up coming out in your modular home’s appraisal, anyways.
Before appraising your modular home, finding time with a certified appraiser to learn about what they’re looking for is your best bet.
Here’s another way to think of it: think of basic updates and maintenance as ways to prevent a decrease in your modular home’s value.
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Since 1972, we’ve been bringing dream homes to life throughout the Midwest. Contact us today to discuss how you can build your dream home with peace of mind that, down the road, it will keep its value.