Factory-Built Houses: Types, Benefits, and Tips for Appraisers

By Dan Bradley

Excerpts: Factory-built houses are an important, yet often overlooked, part of the American housing market. Approximately 10% to 12% of new housing starts in the United States are factory-built. There are several advantages to building a house in a factory. For example, certain houses can be constructed for 50% less than a similar-sized site-built home, making quality housing more affordable for thousands of Americans. As an appraiser, your knowledge of factory-built housing is key to a credible appraisal.

This article examines several different types of factory-built houses, their five main advantages, and tips for appraising them.

Factory-built house is a term that refers generally to a number of house types that are constructed or fabricated, at least in part, off site. The prefabricated components are transported to the site and finished or reassembled there. By contrast, site-built, or “stick-built,” homes are put together at the building site from thousands of individual pieces (e.g., studs, nails, sheets of drywall, shingles, wires, pipes, electrical outlet boxes).

For appraisers, understanding the specific type of factory-built house you’re dealing with is key. It tells you which building codes apply, gives you clues about the construction process, and impacts how you approach the valuation.

Factory-built homes include:

  •   Mobile homes
  •   Manufactured homes
  •   Modular homes
  •   Panelized homes
  •   Pre-cut or kit homes

To read more, Click Here

My comments: This is worth reading, especially if you appraise these types of homes. It provides very good, understandable explanations, including identifying the types. For example, GSEs will not purchase or securitize a mortgage on a mobile home manufactured before June 15, 1976. Likewise, HUD will not issue FHA mortgage insurance on a pre-1976 mobile home.

I work in an urban/suburban area, mostly built up, and have appraised very few of these homes. However, they are definitely more affordable housing, which is a very hot topic now.


I Can’t Believe I Just Bought a $5M Mobile Home’: A Look Inside 5 of America’s Most Lavish Trailer Parks

Just for Fun!

Excerpts: Multimillion-dollar price tags usually come attached to massive mansions or luxury condos—but now, it’s becoming more common to find them in mobile home parks in enviable locations.

But these aren’t just any trailer parks, as they’re more commonly known. For one, they usually sit on prime real estate. And the neighbors? They’re traditionally billionaires or A-list celebrities.

Prices in some of these parks can generally range from $1.5 million to more than $6 million, but that hasn’t put off buyers with that type of cash to spare.

Arguably, the most famous trailer park in America is Paradise Cove in Malibu. Here, celebrities “slum it” in mobile homes to be close to some of the most expensive real estate in the world.

In 2019, fashion maven Betsey Johnson sold her small pink house here for $1.9 million; in 2018, former “Baywatch” babe Pamela Anderson unloaded her trailer for $1.75 million; and in 2016, songbird Stevie Nicks sold hers for $5.3 million.

To read more and see the photos, Click Here

My comment: I had to include this fun article related to the article above



Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post seller concessions, all cash sales, liability, new fee survey, unusual homes, mortgage origination stats, etc


European-Inspired $115M Bel-Air CA Mansion Dubbed ‘Villa Del Amor’

Excerpts: 9 bedrooms, 13 baths, 14,941 sq.ft., 1.65 acre lot, Built in 2015

$115 million mega mansion said to be owned by investors Paul Kessler and Diana Derycz-Kessler, known for their luxury candy company Sugarfina, is far and away this week’s most expensive listing on Realtor.com®.

Dubbed “Villa Del Amor,” the $115 million European-inspired villa in Los Angeles was custom built by the couple in 2015. Over-the-top details include imported finishes, nine fireplaces, a wine cellar, media room, fitness center, and maid’s quarters. The stunning 1.65-acre lot offers breathtaking views of the Bel-Air Country Club Golf Course.

To see the listing with 33 photos, Click Here


10% Discount for Paying Cash on Home Sale– Research

Excerpts: Homebuyers who pay cash for a property can spend 10% less on average than those who take out a mortgage, new research from UC San Diego’s Rady School of Management suggests.

State of play: About one-third of home purchases are paid in cash — the highest share in nearly a decade.

The fine print: The researchers analyzed county and Redfin data from millions of home sales and offers nationwide from 1980 to 2021.

They also conducted an experimental survey asking homeowners to consider competing offers from all-cash and mortgage buyers.

Abstract of research report, The Mortgage-Cash Premium Puzzle

All-cash homebuyers account for one-third of U.S. home purchases over 1980-2017. We use multiple datasets and research designs to robustly estimate that mortgaged buyers must pay an 11% premium over all-cash buyers to compensate home sellers for mortgage transaction frictions.

A dynamic, representative-seller model implies only a 3% premium, which would suggest an 8% puzzle. Accounting for heterogeneity in selling conditions explains half of this difference, but there is still a puzzle in conditions with high transaction risk.

An experimental survey of U.S. homeowners replicates these patterns and suggests that belief distortions can explain the puzzle in these high-risk states.

To read more, Click Here

To download the 132 page research report, Click Here

My comments: I never thought about an adjustment for cash sales. I have done appraisals for refis soon after a home was purchased for cash since the 1980s, but they were not very common. Cash sales have increased significantly due to the recent lack of homes available for sale. Most sellers always preferred all-cash offers in my decades of appraising. Adjustments are easier now, with more all cash sales.Are you getting too many ad-only emails?


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2024 Annual E and O Insurance Update – Claims, Payment Options, Lawsuits, etc.


Discrimination claims

To date, no real estate appraiser has lost a case or been found “guilty” in

court relating to appraisal discrimination. The only appraisal discrimination cases resolved thus far have been quietly settled – with the settlement amounts undisclosed to the public.

Discrimination claims are very difficult to prove. Instead, attorneys focus on

errors in the appraisal and appraisal reports, which is much easier to prove.

What if you can’t afford your E&O policy now? Check with your E&O

insurance broker for options

See what you can work out financially, such as monthly payments.

Retirees are eligible for “tail coverage” which covers claims from appraisals

done before they retired.

Appraisers who are not doing appraisals now and drop their insurance for

financial reasons may be able to get a more limited “tail coverage” for a period of time, for example 1, 2 or 5 years. You may be able to start your insurance again and not lose prior acts



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Seller Concessions Adjustments Revisited

By Brent Bowen

Excerpts: There seems to be continued debate among appraisers, reviewers, and underwriters regarding seller concessions. A particular point of contention in this debate is whether or not it is appropriate to adjust seller concessions on a dollar-for-dollar basis.

To their credit, in the December 2023 Appraiser Update newsletter, Fannie Mae clarified the issue nicely. The newsletter pointed out that the problem is not dollar-for-dollar adjustments, but no adjustments at all. The “great concern” they cite is appraisals where 4.4 million comparable sales with concessions had no adjustment at all. For appraisers who did adjust, their data indicated dollar-for-dollar adjustments in 86% of cases, which they report as a “brighter side” of their findings. The article clarified why they consider these dollar-for-dollar adjustments a good thing.

But what about possible scenarios when the concession might have resulted in a lesser impact than the concession amount? Consider a market where the vast majority of transactions have the seller pay the title fee. What if there is a contract which stipulates that the buyer will pay the title fee, but that the seller will contribute an amount equal to the title fee as a seller concession? In that case, the concession results in a transaction that mirrors the fee structure customary to transactions in the market. A solid argument could be made in that scenario for no adjustment at all.

To read the article, plus appraiser comments, Click Here

My comments: Read this article! This is the best discussion on seller concessions I have read. Brent Bowen is one of my favorite appraiser writers on topics important to residential appraisers, especially those who work for lenders.

I remember back in the late 1970’s at a California Assessor’s office when we were updating all the records in preparation for switching to computers, including sales history. I was amazed at the many concessions included in the sales, such as a boat or RV. Also there were many “Contract for Deed”, a contract for the sale of land which provides that the buyer will acquire possession of the land immediately and pay the purchase price in installments over a period of time, but the seller will retain legal title until all payments are made.


What’s Happening With Appraisal Fees? New Survey Seeks Answers

Excerpts: To try to gauge where “customary and reasonable” fees are landing and help appraisers strategically adjust pricing within the markets they serve, OREP/Working RE is launching a nationwide survey to collect data straight from the source. The 2024 Appraiser Fee Survey is the fourth such exercise the company has conducted in the last 14 years, offering appraisers across the country the opportunity to anonymously share what they’re experiencing in their markets and then mine the data collected to adjust accordingly.

Knowing what’s occurring on a national scale provides some context and a baseline by way of comparison, but when it comes to actually setting fees, reality rests within the dynamics of every local market. For example, tracking the prevailing appraisal fees in Bend, Oregon, follows the path of expectation through the first three surveys. In 2010/2011, appraisers in Bend were earning a typical fee of $401-$450 for a standard 1004 (single-family detached) order. By 2017, the typical fee in Bend ballooned to $651-$700, and in 2021, the benchmark had pushed past the $751 mark.

By comparison, appraisal fees in the Miami metropolitan market followed a similar path over the same time frame, though not as positively pronounced or well-defined. In 2010/11, the typical fee for a standard 1004 was slotted evenly between $301-$350 and $351-$400. In 2017, it was an even split between $351-$400 and $401-$450, suggesting some modest improvement. In 2021, the typical fee had settled in the $451-$500 range.

This type of comparative data is available to all appraisers and industry stakeholders for free at WorkingRE.com. The fourth installment of the fee survey should give appraisers a snapshot of how colleagues and competitors are adjusting to present conditions occurring within the markets they serve, but the value of the data will be dependent on the level of participation.

To read more, Click Here

My comments: The article discusses fees n the past, including Customary and Reasonable. If you do lender appraisals, please take this new survey! The long article has many details and comments from previous surveys and today’s AMC appraisal market.

The worst time I experienced was 1980-1985, when rates were 18%+. Most appraisers were staff appraisers at lenders and almost all were laid off. I purchased my dupex for 15% interest rate in late 1985 and thought it was a bargain. Of course, the price was $120,000 with a low mortgage payment. Worth well over $1,000,000 now.

In my almost 50 years of appraising, lenders never significantly lowered their appraisal fees when business was slow. Then AMCs took over and the race to the bottom started, where we are there now.

Last Friday’s newsletter had the topic “Low Appraisal Fees”, including that CFPB is looking for comments on high lender fees, including appraisal fees. Plus, where and how to submit your comments. Also included was “Appraisal Fees & Value: Lessons from Picasso & Steinmetz” with comments from Cyndi Chance, Appraisal Institute new CEO about AMC low fees.

To read last Friday’s newsletter, Click Here


A Silo, A Container, or a Wine Barrel? Which One Would You Live In?

Just For Fun.

Take a break and check out this fun blog post.

By Jamie Owen

Excerpts: I’ve seen a fair number of silos while driving through rural areas in Northeast Ohio. I never thought about them being repurposed into a home. But that’s what some clever folks in Idaho are doing! Check out the videos in the blog post. You’ll never look at silos the same.

Other cool buildings are made out of repurposed items. For instance, shipping containers are another way to build homes. This is not a new idea anymore. See the video of one made into a swimming pool.

However, the progress being made in the styles of homes is remarkable! Wine Barrel Home, Swimming pool

By the way, if you’re not ready to buy a shipping container to live in, how about one to swim in? Our friends purchased a shipping container and converted it into an amazing pool! (Scroll down the page to the bottom comments section.

To read more and see many fun videos, Click Here

My comments: I can always count on Cleveland Appraisal Blog to have something I have never thought of before ;> It is very creative and interesting. He also includes local stats as he should. You do a blog to get more non-lender business, especially from real estate agents.

I sometimes put silo homes in this newsletter, mostly rentals from Airbnb.

Few, if any, grain silos are in Northern California, where I live, but there are some interesting converted shipping containers!


HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.

Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.

Mortgage applications increased 15.6 percent from one week earlier

WASHINGTON, D.C. (June 12, 2024) — Mortgage applications increased 15.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 7, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 15.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 26 percent compared with the previous week. The Refinance Index increased 28 percent from the previous week and was 28 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index increased 19 percent compared with the previous week and was 12 percent lower than the same week one year ago.

“Mortgage rates were trending lower over the course of last week until a stronger than anticipated employment report resulted in a bounce back, with the weekly average for the 30- year fixed mortgage rate decreasing to 7.02 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Lower rates earlier in the week meant a strong increase in refinance activity, particularly for VA borrowers, who jumped on the chance to lower their rates. Overall refinance activity was more than 27 percent above one year ago.”

Added Fratantoni, “On a seasonally adjusted basis and compared to the holiday-adjusted level from the prior week, purchase activity also increased. Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market.”

The refinance share of mortgage activity increased to 35.2 percent of total applications from 31.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.

The FHA share of total applications decreased to 13.1 percent from 13.2 percent the week prior. The VA share of total applications increased to 14.7 percent from 12.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.02 percent from 7.07 percent, with points unchanged at 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 7.18 percent from 7.21 percent, with points increasing to 0.54 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remaining unchanged at 6.87 percent, with points decreasing to 0.92 from 0.96 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.60 percent from 6.75 percent, with points decreasing to 0.55 from 0.63 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 6.45 percent from 6.37 percent, with points increasing to 0.81 from 0.63 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.


Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone: 510-865-8041

Email:  ann@appraisaltoday.com

Online: www.appraisaltoday.com

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