What Are Modular Homes?: Pros, Cons, and Cost

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Last Updated: July 27th, 2021

Guest Post by Bill Gassett

What is a modular house?

If you've always wanted to build your own home, many things can put you off the idea. You would need to hire architects and a team of contractors, as well as manage the build. This could lead to a lot of stress and certainly a lot of expense.

However, a modular home offers you the chance to build your own property without many of the problems associated with a traditional build. Lots of folks wonder exactly what is a modular home. Let's take a look at what you need to know about modular homes to help you decide if this type of home is right for you.

How are modular homes different?

With traditional home building, the construction process can take many months, with delays due to the weather being a common problem. A modular home can be constructed in a matter of weeks, with most of the work being carried out off-site in a factory. These can sometimes be referred to as factory-built or prefab homes.

They are then transported to the construction site, where a crane lifts them onto the foundations. The prefab sections fit together, allowing the home to be assembled very quickly. There then needs to be work carried out to finish the home. This means connecting the utilities and adding the finishing touches to the home.

They are permanent homes that appraise the same way as traditional home construction. You can expect to pay the same taxes and insurance as you would for a regular house.

Are modular homes more expensive?

Thanks to how these buildings are put together, there are many cost savings for the owner. Since the homes are built in a factory, this saves a great deal as they can be inspected on the production line.

Typical costs for a modular property are around $100 per sq ft. However, this can increase if you opt for a more complex or unusual layout and design. The cost to build a traditional home starts from around $150 per square ft, so the savings are quite clear.

Are modular and prefab homes the same thing?

Generally speaking, they are the same thing. Prefab, short for prefabricated, refers to homes constructed off-site in sections, which is essentially the same thing as modular buildings.

Are modular homes the same as manufactured homes?

Manufactured homes, often referred to as mobile homes, aren't the same as modular homes. Manufactured homes aren't permanently located in one place, as modular constructions have to be. You can choose to move your manufactured home to a new location, but this isn't possible with a prefab or modular home.

The term mobile home officially refers to manufactured homes constructed before 1976. Though the term is still commonly used, the U.S. Department of Housing and Urban Development officially calls this type of housing manufactured.

Do modular homes all look the same?

While manufactured homes look very similar, this isn't the case with modular properties. There are many styles of modular homes available, and you can customize as you wish. There aren't any design limits.

You can make changes to a manufacturer’s design to create the home of your dreams.

What are the pros and cons of choosing a prefab home?

There are many reasons this type of housing might be right for you, but they're also negatives you need to consider. Let's take a look at the upsides and downsides of modular construction.

The advantages of choosing a modular building

If you like the idea of a shorter build time and lower costs to complete the home, a modular build could be more attractive. You also won't have to worry about inspections during the build; this is all done during construction in the factory.

You can have the home customized to your specifications without the need to hire an architect. There won't be so many worries about the weather delaying the build process, and the construction will be completed much faster.

Since the home sections will be constructed in a factory, they can be built using environmentally friendly materials and methods. They can also be manufactured to a higher energy efficiency standard and higher tolerances. Typically, modular homes are constructed to green building standards.

The downsides of modular constructed homes

You need to own the land you build the modular home on, but it can't just be any building plot. This type of property is usually harder to be constructed in a stick-built neighborhood. In fact, on many occasions, there will be restrictive covenants prohibiting modular homes. You'll need to check on this situation before moving forward with your plans.

There is still some work that needs to be done before the prefabricated home sections arrive at the construction site. There also has to be foundations and connections to utilities, such as plumbing and electrical wiring.

Usually, you can't finance a modular build through normal mortgage loans. It is possible to get a construction loan to cover the costs, but this is usually only good for a year. Once the home has been constructed, you can then turn the construction loan into a normal mortgage for a longer period.

Before you order your prefab building, you need to do your research on the manufacturer. Though these types of homes have to be built following building code, not all manufacturers produce the same product standard. Like any other builder, there are what would be considered great and not so great modular companies.

It will be just as essential to do your due diligence when buying a modular home as you would with a stick-built property. Remember, there are pros and cons to consider when buying new construction. At times, folks regret their decision to build a home versus buying an existing property.

Does the modular home stigma still exist?

Years ago, when you heard modular home, you would immediately think of a cheap, inferior product. Not surprisingly, it was understandable and, in fact, true. More often than not, a modular was constructed with shallow-pitched roofs that made the home look like an army barracks. The interior had limited quality features like crown moldings, and popcorn ceilings were standard.

Today, when people do a little research, they quickly discover these downsides no longer exist. Modular homes are now considered to be an excellent product. Does that mean some people don't incorrectly assume there is still inferior quality? No, they do. Real Estate agents and those in the modular industry often have to educate consumers on how things have changed.

How do I buy a modular home?

There are many options available if you've decided modular is the right type of property for you. You can order homes that have already been fully designed and only need a few things done to them once they've been assembled. If you have a larger budget or looking for certain features in your home, you can customize the design before manufacture.

Like most things these days, you can even buy modular homes on Amazon. Despite this, you will probably be better off going directly to a manufacturer in your area. This will allow you to customize the home as you need it.

Final thoughts 

Choosing the modular option when building a home has a lot of advantages. You are likely to save money and be able to move into the home faster. You can go to a manufacturer and buy a design off-the-shelf or create something that exactly fits your requirements.

Whichever approach you take, you will end up with a home that is a permanent structure that should be equal to any site-built home. It might have cost you a lot less than a traditional home would have cost to build, meaning you can make your money go further.

Bill Gassett has been a real estate agent for the past 34 years working for RE/MAX Executive Realty in Hopkinton, Massachusetts. He is also an avid writer for numerous real estate publications including The National Association of Realtors, RIS Media, Inman, as well as his own blog "Maximum Real Estate Exposure."

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