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How to build a modular home in California.

Modular homes have become tremendously popular in recent years, particularly in the Midwest and on the East Coast where the climate causes delays or prohibits construction for a significant part of the year.

Here on the West Coast modular homes have been much slower to catch on, but with ever-rising costs and the recognition of quality in construction of our modular homebuilders, more and more homebuyers are making the choice of modular construction in their new home purchase.

A lot of confusion and misinformation exists about what is a modular home, how much and why it is less expensive, whether it will have the same value as a site built house, and how much it can me modified or customized before, during, and after construction. The first important clarification is the difference between manufactured and modular homes. Manufactured homes are essentially mobile homes. They typically are built upon a steel framework, have a pier support system rather than a foundation, are only required to meet the housing standards of HUD (the department of Housing and Urban Development) rather than the UBC, (the Uniform Building Code,) so they are required to display a placard disclosing that it is a manufactured home, and that same disclosure must be made in order to sell it.

Lending requirements are much stricter for manufactured homes and they do not usually appreciate in value as well as modular (UBC) housing does. Modular homes are built to UBC standards, the same as conventional site built homes. In California they must also meet the requirements of the California Building Standards Code (Title 24). Therefore modular homes are not any different from comparable site built homes in terms of their construction or appearance, there are no disclosure requirements, and they are able to appreciate as well as site built construction does. Although not all lenders are especially knowledgeable about modular homes, there is nothing about modular homes to affect the normal appraisal process, and most any lender should be able to arrange the construction lending and the mortgage without any difficulty.

Usually the only issues that might prevent the use of modular construction is accessibility, where some obstacle such as narrow, steep or winding roads, other structures, trees, power lines or other site conditions preclude their use. As more modular builders emerge and existing brands expand their offerings, an increasing number of floor plans are becoming available to choose from, and some builders can provide a modular home based upon custom plans as well. California law requires that a seller of a factory built home be a licensed realtor, and that only a licensed general contractor may construct them. Before you buy, verify their credentials.

Many new home shoppers have been misinformed about the cost of modular homes, partly because of the confusion with manufactured houses, and partly because of a tendency on the part of factories and dealers to minimize the cost of engineering foundations and on site improvements like garages, porches and patios, landscaping, or other expenses which have more to do with local contractors or the communities in which they are being built. It will be wise to avoid unrealistic expectations about some huge savings to be achieved by building a modular home; its still a home in California, and it's probably going to be pretty expensive.

The reality is that the price of a modular home will typically be competitive with a comparable tract home in a similar location or community, where developers have the similar advantages of mass production and purchasing and a workforce that is at least somewhat predictable.

Savings can usually be achieved compared to custom site built homes, a conclusion that is based on our own somewhat subjective experience, as there is little in the way of academic or government statistics available on which to base a more formal analysis. In our evaluations it is reasonable to believe that a prospective homeowner can expect to save between 3% and 8% of the actual cost of the house itself compared to a custom site built home. At today's prices this is not insignificant.

For many people a great benefit comes from the likelihood that they will be able to occupy their new modular home much sooner than they would be able to do with a custom home. We have found that from the time that the permit is issued until occupancy can be as little as five or six months with modular homes, sometimes even faster if the homebuyer is confident enough to make their deposit on the modular house and get the factory started before the permit application is completed. It is not uncommon to see custom homes take a year or more to design and permit and another year or more to build before they are ready for occupancy.

An important consideration in this is that modular homes tend to represent a sort of standard or baseline by which to measure the true cost of housing today. Being a fiercely competitive marketplace itself, and keeping in mind that it is in some ways the last hope for many prospective homebuyers for affordable housing, modular homes are a sort of yardstick by which to measure the pricing of homebuilders generally.

Part of the reason that building a home is so expensive is the risk involved. With the long time frames associated with building a home, the uncertainties of the economy and the pricing and availability of construction materials, the ever-present demands of wage increases and similar costs, a contractor bears a tremendous responsibility with every job, and the risks of being forced into bankruptcy by some miscalculations keep substantial pressures on to prop up prices. Permit fees and utility connections, general liability, workers compensation and health insurance, contractors' as well as performance and payment bonds, all contribute to a huge overhead expense. Combine these with a soaring demand for California homes and therefore the spiraling costs for building materials and you can see why, however lucrative the business of home building appears to be, it is also fraught with perils. (The soaring price for build-able land is obviously a factor too.)

One of the possible opportunities for some homebuyers to achieve additional savings is by over-seeing the construction of the house themselves as owner-builders. This is not a task that should be undertaken lightly, but if you are willing to do the footwork involved and invest the time into hiring subcontractors and dealing with building departments then you may be able to realize some additional savings this way. Be aware that the risks described above will be your risks. Also it may be more difficult to obtain flexible financing. California law has many restrictions and requirements for Owner/ Builders. If you are considering being an owner builder contact your local building department about your responsibilities and risks before you decide. Be aware that if you hire workers you will be responsible for workers compensation insurance, tax withholding, etc.

If you are intending to be an owner-builder, you may still wish to retain the services of a general contractor to assist you in preparing specifications and defining the scope of the work for the various subcontracted trades. In any case you should get as many bids as possible from subcontractors for all of the work required. Besides a concrete contractor for the foundation and paving, you will probably need contractors for electrical and mechanical (plumbing, heating, etc.) and any other trade work you do not wish to perform or do not feel qualified to undertake yourself. Some general contractors may be able to perform some or all of the trades necessary to complete the modular home, and although it will be more trouble, it will be well worth it to solicit bids from as many contractors as possible.

When you have a property secured and have selected a modular model, contact your local building department and verify that the property is suitably zoned and that the construction you are planning will be allowed, and what restrictions exist on building on your location. (Always check with the local building department before closing escrow on land you want to build on.) Then it is time to prepare a foundation plan and engineering. Most modular home plans will be provided with a basic foundation layout once you have made a down payment on the modular home. This will provide your local architect or engineer with the information necessary to prepare plans for your properties particular conditions, such as soil compaction and expansiveness, slope, elevation, and proximity to seismic faults. Special circumstances such as custom 1 st floors and garages, septic systems, wells, utilities, drainage, rain gutters, lightning rods, and other site-specific conditions can be considered at this time. Having a really complete plan includes landscaping, and consideration should be given to this early if the cost of this is to be included in the mortgage

There are also many ways that some homebuyers may wish to customize or improve upon the standard modular home offerings, such as upgrading windows, countertops, cabinets, stoves or other appliances, air conditioning, flooring, tile, carpet, porches and patios, roof dormers, special sidings or stucco finishes, custom lighting, wiring for cable, satellite, Ethernet, intercoms, or other modern conveniences available today.

It is a good idea to get an idea of your choices by visiting your local building materials supply stores to better understand and appreciate the seemingly limitless choices available in today's marketplace. It will be far better to make whatever improvements you may want to make in advance rather than remodeling later. Take your list of preferences and contact the modular homebuilder to see which ones they can arrange to provide for you. If they cannot provide the selection of your choice then ask them to deduct that item from the modular home and credit you for the difference so that you may arrange to have a local contractor do the work on site.

As soon as you have a complete exterior plan then it is time to submit your application to the building department. You may have to have a planning review hearing where your neighbors may comment on the proposed construction, and the planning department will assure that your plan conforms to all the local requirements. After the planning department approves the project then the building department will review the plan to verify that it meets all of the engineering criteria of the building code.

When you have obtained your building permits then it is time to contact the utilities, all the subcontractors, and establish a schedule for the orderly completion of the work. If you decide to be an owner-builder, it is strongly recommended that you have a civil engineer verify the construction and dimensions of your foundation to assure that the house will fit on it, and explicit instructions should be included with the subcontract requiring engineered precision (less than 1/4” deviation in 40 ft.) Be sure you know what inspection requirements there are in your building permit, and make sure your subcontractors know them too. Require subcontractors to be present for all the inspections of their work.

Hire a knowledgeable and experienced crane company; most aspects of modular home construction are really quite ordinary residential construction practice, with the exception of using a crane to place it.

Make sure your contractors have workers compensation and liability insurance, require mechanics lien releases with every payment and be sure that you know the names of all workers so that they sign a lien release as well when they get paid. There are few things more aggravating in the construction business than having to pay twice for work because of malfeasance that could have been avoided by enforcing standard construction business practices. If the work is going to be protracted or done in phases, there should be a payment schedule specifying the terms.

Know the law and know your rights, don't pay for any work before its completed and inspected, no matter what. Only pay for materials when they have already been delivered or arrange to pay for them directly with the vender and have that vender provide the shipping. You will have much greater recourse if there is ever a problem this way. If a contractor or subcontractor can't cover their own expenses long enough to finish your work, there are probably risks associated with having them work for you that you should probably avoid altogether. Be sure to maintain the security of your property at all times, gather the keys to the house upon delivery and if you must delegate responsibility for access, keep that as accountable as possible.

Remember that most construction contracts will encumber title to the property with a lien or similar interests. Read all contracts carefully and if you are not sure, have an attorney review it for you first.

If you are not absolutely certain that you are prepared to oversee every aspect of the matters we've described or are not ready to shoulder all these responsibilities and decisions and many more I have probably overlooked in this summary then you should hire a California licensed and insured General Building Contractor.

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